Friday continued the selling from Thursday with steady selling into the close as investors dumped shares and send the S&P lower by 121 points for a 2.77% loss and a close at 4271. The NASDAQ fell 335 points for a 2.55% loss and a close at 12839. The Dow Jones fell 981 points for a 2.8% loss and a close at 33,811.
This puts the S&P down 10% for 2022 and 11.3% below its 52 week high. For the NASDAQ it is down 17% for 2022 and 20.8% below its 52 week high. The Dow Jones is down 8.5% from its 52 week high made Jan 5 and for 2022.
Let’s review Friday’s closing technical indicators to see what to expect for Mon Apr 25 2022, to start off the end of April.
Stock Market Outlook Chart Comments At The Close on Fri Apr 22 2022
On Friday the closing candlestick was bearish for Monday. The candlestick ended the day below all the major moving averages and below the Lower Bollinger Band. The candlestick often signals an attempted bounce may occur but it won’t hold yet. Further downside is being signaled by Friday’s closing candlestick.
The 21 day moving average continued to move lower which is bearish. It could fall below the 100 day early this week which would end the up signal from April 12.
Meanwhile the Bollinger Bands Squeeze is ending as the index is falling lower. The Upper Bollinger Band is rising and the Lower Bollinger Band is falling. This is bearish.
The 200 day moving average is no longer rising but still just above 4400. The 50 day moving average fell below the 200 day on Thursday April 23 for a new down signal.
The 100 day moving average is also dipping lower.
The chart is now 95% bearish for Monday. A lot of technical damage has been done to the index. There is a strong chance the index will fall again below 4200 and possibly retest 4150 this week.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal Friday April 8. On Friday the down signal gained strength. The histogram also gained strength.
- Settings: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9.
Ultimate Oscillator: The Ultimate Oscillator is falling and starting to enter oversold readings.
- Settings: The Ultimate Oscillator settings are: Period 1 is 5, Period 2 is 10, Period 3 is 15, Factor 1 is 4, Factor 2 is 2 and Factor 3 is 1. These are not the default settings but are the settings I use with the S&P 500 chart set for 1 to 3 months.
Slow Stochastic: The Slow Stochastic has an down signal in place and is nearing oversold readings.
Settings: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic tries to predict the market direction further out than just one day.
Relative Strength Index: The RSI signal is falling and oversold.
- Settings: The relative strength index is set for a period of 5 which gives it 5 days of market movement to monitor. It is often the first indicator to show an overbought or oversold signal.
Rate of Change: The rate of change signal is falling.
- Settings: Rate Of Change is set for a 21 period. This indicator looks back 21 days and compares price action from the past to the present. With the Rate Of Change, prices are rising when signals are positive. Conversely, prices are falling when signals are negative. As an advance rises the Rate Of Change signal should also rise higher, otherwise the rally is suspect. A decline should see the Rate Of Change fall into negative signals. The more negative the signals the stronger the decline.
Support and Resistance Levels To Be Aware Of:
4550 is light resistance
4525 is light resistance
4500 is resistance
4490 is light resistance
4475 is light resistance
4450 is light support
4400 is support
4370 is light support
4350 is light support.
4300 is good support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4150 is good support
4000 is good support
Stock Market Outlook for Tomorrow – Mon Apr 25 2022
For Monday the outlook is bearish. The technical indicators are all bearish but as many start to fall deeper into oversold readings, we should see a bounce attempt. However unless there is a catalyst to move higher again, the index is setting up to retest 4200 and probably 4150.
A bounce though could happen at any time but it would be an opportunity to buy more SPY put options as the index is still under strong selling pressure.
This week there are no events on Monday that could be considered market moving. For the rest of the week there are a number of potentially market moving events. The primary ones I have listed below.
Potential Market Moving Events
8:30 Durable Goods Orders
9:00 Case-Shiller US Home Price Index and FHFA Home Price Index (year-over-year)
10:00 Consumer confidence index
10:00 New Home Sales
8:30 Pending Home Sales
8:30 Initial jobless claims and continuing jobless claims
8:30 Red GDP first estimate
8:30 Employment cost index
8:30 PCE Price Index
8:30 Core PCE price index
8:30 Nominal personal income and consumer spending
8:30 Real disposable incomes and real consumer spending
9:45 Chicago PMI
10:00 University of Michigan consumer sentiment and 5 year inflation expectations