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Stock Market Outlook for Mon Aug 5 2024 – Bounce Possible But Lower Close

Aug 4, 2024 | Stock Market Outlook

Prior Trading Day Summary:

On Friday stocks started the day with a plunge following lower than expected jobs growth in July. The unemployment rate rose to 4.3% and only 114,000 jobs were created, far below estimates of 175,000 to 189,000. Analysts warned Friday morning that the Fed’s “late to the party” interest rate cut which is being held off until September at the earliest will probably be a case of too late. A recession was predicted by many analysts. If the economy does enter a recession, equity prices will reset and that means lower prices for most equities. The selling was steady throughout the day with any bounce attempts quickly sold into.

The SPX closed down 100 points on 5.2 billion shares trade to end the day at 5346. 70% of al stocks were falling, the highest percentage of stocks since July 24 when the SPX lost 128 points. The S&P is now down 5.7% from its 52 week high made on July 16 of 5669.

The NASDAQ slipped into a correction as it closed down 418 points on 6.9 billion shares traded to end the day at 16,776. 77% of all stocks were falling and there were 332 new 52 week lows, the highest number of new lows since the first two weeks of April. Friday marked a drop of 10.15% for the NASDAQ since its all-time high of 18,647 on July 10.

Let’s review the closing technical indicators from Fri Aug 2 2024 to see what the signals advise to expect on Mon Aug 5 2024.


Stock Market Outlook: SPX Closing Chart For Fri Aug 2 2024

The index touched the 100 day moving average in Friday’s carnage before closing back above it. This is bearish.

The closing candlestick has a long shadow which indicates a potential bounce to start the day on Monday but a retest of the 100 day and a break of it is likely.

The 21 day moving average is falling which is bearish.

The 50 day moving average is slowing its climb which is bearish.

The 200 day moving average is still climbing. The 200 day is at 5069 which is bullish and the 100 day is also climbing to 5306. Both the 100 and 200 day moving averages are seeing their rise slowing considerably. This is bearish.

The Lower Bollinger Band is below the 50 day moving average and falling which is bearish. The Upper Bollinger Band is turning higher which holds out some hope for a bounce back but a turn lower for the Upper Bollinger Band this week is likely.

The S&P chart is bearish with only the closing candlestick offering a chance for a bounce.

SPX Stock Market Outlook review of Fri Aug 2 2024


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is falling, negative and very oversold.

  • Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thur July 18. On Fri Aug 2 2024 the down signal gained more strength and the histogram shows clearly the down signal is strengthening.

  • 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 negative. It is no longer oversold.

  • 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 a down signal in place and is oversold.

  • 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 sharply and negative. it is 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 signaling Monday will end lower.

  • 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.

Stock Market Outlook: Support and Resistance Levels

5675 is resistance
5650 is resistance
5630 is resistance
5600 is resistance
5575 is resistance
5550 is resistance
5520 is resistance
5500 is resistance
5490 is resistance
5475 is resistance
5465 is support
5450 is support
5425 is support
5400 is support
5375 is support
5350 is support
5325 is support
5310 is support
5300 is support


Stock Market Outlook for Mon Aug 5 2024 

For Monday more selling should be expected. A bounce is possible but all the technical indicators are warning that stocks are heading lower before any meaningful bounce might occur. That means any bounce on Monday should be used to trim positions and take profits. This is another busy week for stocks but last week too many stocks disappointed investors which also resulted in selling. This week we could see a similar result with too many stocks not beating estimates and gaining, year-over-year. Monday will lower.


Potential Economic and Political Market Moving Events

Monday:

9:45 Final services PMI

10:00 ISM services

 






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