Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible

Prior Trading Day Summary:

Friday saw stocks open flat and try to climb within the first 15 minutes. When that failed the selling continued. The early afternoon saw a rally attempt once the SPX fell below 5000 but the bounce could only recover to 5000 shortly before 2:00. From there the index slipped and closed down 44 points at 4967.

The NASDAQ lost 319 points ending the week at 15,282. For the week the NASDAQ lost 893 points with much of the carnage in the semiconductor sector.

Let’s review the closing technical indicators from Fri Apr 19 2024 to see if the outlook for Mon Apr 22 2024 is unchanged with the indexes deeply oversold.

Stock Market Outlook: SPX Closing Chart For Fri Apr 19 2024

The index closed just above the 100 day moving average and below the Lower Bollinger Band. With the index sitting close to the 100 day moving average a bounce should be expected but there was no bounce at the 50 day.

The closing candlestick is signaling deeply oversold and the shadows at the close are signaling a bounce for Monday but still further weakness.

The 21 day moving average is falling sharply which is bearish.

The 50 day moving average is moving sideways. It is at 5118, unchanged from Friday. This is bearish.

The 100 and 200 day moving averages are still climbing. The 200 day is at 4731 which is bullish but the 100 day is starting to turn sideways.

The Lower Bollinger Band is falling and nearing the 100 day. This is bearish. The Upper Bollinger Band is rising which is presently bearish.

The S&P chart is bearish and signaling that another bounce attempt from deeply oversold should occur. The SPX is down 5.65% from its March 28 high. A pullback of 5% if typical in a bull market and often signals a bounce. So far all bounces have been met with sellers, particularly those with early morning bounces.

SPX Stock Market Outlook review of Fri Apr 19 2024 – Chart courtesy TradingView

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Mon Apr 22 2024 

The technical indicators are all deeply oversold and all are at readings where a bounce could happen at any time. Every bounce last week ran into sellers, no matter how strong the bounce initially appeared. On Friday all bounce were slight and quickly found sellers. However on Friday, some signals suggested buyers are nibbling. The SPX on Friday saw 67% of all volume being traded to the upside and 60% of all stocks on New York were advancing despite the lower close. On The NASDAQ on Friday 52% of all volume was being traded to the upside and 48% of all stocks were rising. This is advising that the many investors saw Friday’s drop as an opportunity to pick through some of the carnage.

For Monday stocks have another chance to bounce. The 5000 level is still support on the SPX and while the 50 day moving average was sliced through last week, the 100 day is where a lot of investors may begin to feel the sell-off is overdone. There is a good chance the SPX may try to retake 5000 on Monday or Tuesday but if the selling continues it will be easy for the 100 day to break. That would setup the SPX for a deeper correction of anywhere from 8% to 10%.

For Monday watch for a bounce and take profits where they appear. Stay skeptical of any bounces and protect capital in case the correction will deepen before it bottoms. On Monday there are no economic events which usually favors the bulls, but PMI is on Tuesday which means, any bounce on Monday is suspect should the PMI number disappoint which could send the index lower.

Potential Economic and Political Market Moving Events

The main events this week are PMI on Tuesday with a more important indicator, the PCE on Friday.

Monday:

No events