On Friday stocks staged another strong day with an even stronger finish. The advance continued to broaden on Friday.
The Sep rose 58 points to close at 4109 and the NASDAQ rose 208 points to end the day at 12,222.
For the month of March, both indexes continued the advance from January and ended the first quarter back at the highs of the year. Heading into April, which is often a strong month for stocks, let’s review the closing technical indicators from Fri March 31 to see what we should expect for Mon Apr 3 2023.
Stock Market Outlook Chart Comments At The Close on Fri Mar 31 2023
The index closed with a bullish candlestick for Monday and above all the major moving averages. The closing candlestick is signaling the market is very overbought and will dip back on Monday, at least in the morning.
The Upper Bollinger Band is turning up and the Lower Bollinger Band is turning down. Both are bullish signals as the Bollinger Bands Squeeze is ended with the index moving higher.
The 200 day moving average is at 4000. The 21 day is turning back up and will cross above the 100 day moving average on Monday for another up signal.
The 50 day continues above the 200 day which is bullish. The 100 day is moving sideways above the 21 day which is the only bearish signal from the moving averages.
At present there are 4 down signals in place since April 24 and 3 up signals since Jan 13.
The chart is more bullish for Monday although it signals the market is very overbought and will dip lower. The dip though will be an opportunity to setup more trades.
Stock Market Outlook review of Mon Apr 3 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) up signal from Mar 21 gained more strength. The histogram is also positive.
- 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 rising and positive. It is signaling overbought.
- 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 up signal in place. It is also signaling overbought.
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 rising and positive. It is also overbought.
- 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 rising and positive.
- 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:
4100 is resistance
4090 is resistance
4075 is resistance
4050 is resistance
4030 is resistance
4025 is resistance
4000 is support
3975 is light support
3965 is light support
3950 is good support
3930 is light support
3900 is good support
3870 is light support
3850 is good support
3825 is light support
3810 is light support
3800 is good support
3775 is good support
Stock Market Outlook for Mon Apr 3 2023
The technical indicators are all bullish and signaling up for stocks. However they are also warning the index is currently overbought. That means Monday will see some selling and a dip lower, probably in the morning. Dips however, are opportunities to setup more trades as the rally has further to run. April is one of the strongest months for stocks.
This is a short week due to the Easter holiday weekend coming up. On Friday, the March non-farm payroll numbers are still being released. The effect of those number won’t be known until next week.
For Monday watch for dips, but I will be taking advantage of them. I expect a higher close.
Potential Economic and Political Market Moving Events
The biggest market moving event is the March non-farm payroll numbers due out Friday. The economic reports on Friday were good and show the economy is holding up well despite rising rates. Friday’s jobs numbers will tell us more about the state of the economy.
Monday:
9:45 S&P final US manufacturing PMI is expected to be unchanged at 49.3
10:00 ISM manufacturing is expected to be reported at 47.3%
10:00 Construction spending is expected to be unchanged.