Friday saw stocks climb still higher. The index moved above 4100 for the first time since early June. The S&P closed at 4130 up 57 points. The index is now down 14.28% from its 52 week high.
The NASDAQ also climbed rising 228 points to end the day at 12,390. The NASDAQ is still down 23.57% from its 52 week high.
July was the best single month for the S&P since 2020.
Let’s review the closing technical indicators from Fri July 29 to see what to expect for the first trading day of August. Historically the first trading day of August has been negative 68% of the time since 1990.
Stock Market Outlook Chart Comments At The Close on Thu Jul 28 2022
The closing candlestick is bullish for Monday. It closed above the 100 day moving average and above 4100 for the first time since early June This is bullish.
The 21 day moving average is rising and could move above the 50 day early this week. That would be the first major up signal, if it occurs and another bullish signal.
The Upper Bollinger Band is rising and is above the 100 day moving average which is bullish.
The Lower Bollinger Band is falling as the Bollinger Bands Squeeze is ended. This is bullish.
All the moving averages are falling except the 21 day.
There are 4 down signals still in place and there have been no up signals since the start of April.
The chart is 75% bullish for Monday.
Stock Market Outlook review of July 29 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is unchanged and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Monday June 27. On Friday the up signal strengthened. The histogram also improved. Both are bullish signals.
- 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 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 and is 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 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.
- 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:
4200 is light resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light resistance
4000 is strong resistance
3975 is light support and is a decline of 17.5%
3900 is light support and is a decline of 19%
3850 is light support and is a decline of 20%
3825 is light resistance.
3800 is good support.
3775 is light support
3750 is light support
3730 is light support
3700 is good support
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Mon Aug 1 2022
For Monday the technical indicators are flashing overbought signals. However there is still room to the upside before the market will be heavily overbought.
Normally with all the technical indicators pointing in the same direction, up, investors should expect some dips and that seems likely for the first trading day of August as some investors will want to take profits. There is still a strong belief by many analysts that this is a bear market rally which can’t last. With the index at 4100, we need to see the index hold 4100 and push higher before believing that this is more than just a bear market rally. We will get some strong indicators this week.
For Monday stocks are overbought which means dips are likely but the outlook remains bullish for a higher close, even a small to moderate one.
Potential Market Moving Events
The biggest market moving event this week is on Friday morning at 8:30 when we get the July unemployment numbers. I will be putting together a SPY ETF trade ahead of those numbers being released.
Monday:
9:45 US Manufacturing PMI – expected to be 52.2.
10:00 Construction spending – expected to be 0.4%
Stock Market Outlook Archives
Stock Market Outlook For Wed May 6 2026 – Choppy But Higher Still
Morning Investing Strategy Notes for Tue May 5 2026
Stock Market Outlook For Tue May 5 2026 – Overbought and Lower
Morning Investing Strategy Notes for Mon May 4 2026
Stock Market Outlook For Mon May 4 2026 – Dips Likely With Possible Lower Close
Morning Investing Strategy Notes for Fri May 1 2026
Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
