Friday’s unemployment report was a stunner. In January the economy added 467,000 jobs and November and December were revised up for 709,000 more jobs than previously reported. The 10 year Treasury rose and markets gyrated.
In the end though the bulls managed to hang on despite a morning drop. The S&P closed up 23 points to end the day at the important 4500 level. This has been a major support level for the index.
The NASDAQ rose 219 points for a 1.58% gain to close at 14,098, back above 14000.
Friday’s action gave both the S&P and NASDAQ a second positive week with the S&P now down just 0.33% for February and the NASDAQ down just 1% for February.
Let’s review the technical indicators from Friday to see what investors should expect for Monday, the second week of February.
Stock Market Outlook Chart Comments At The Close on Fri Feb 4 2022
The closing candlestick on Friday is indecisive for Monday. The candlestick closed below the 50, 21 and 100 day moving averages but intraday it touched the 21 day moving average before falling back. It ended the day above the 200 day at the important 4500 level.
The 21 day moving average is continuing to fall.
The Upper Bollinger Band is still falling which is quite bearish and suggests more selling is coming.
The Lower Bollinger Band is now trending sideways which is bearish at present but if the Upper Bollinger Band turns back up this sideways action will be bullish.
The 50 and 100 day moving averages are falling which is bearish. The 200 day moving average is sideways which is neutral.
The chart is more bearish for Monday than bullish but often the candlestick we saw at the close on Friday, signals a further attempt to climb higher.
Stock Market Outlook review of Fri Feb 4 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) issued a confirmed up signal on Friday Feb 4. There was some strength to the up signal.
- 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 positive and falling.
- 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 weak up signal and as you can see in the technical indicator, the signal could turn negative easily.
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 trying to rise.
- 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 which often indicates we are going to see some wider price swings.
- 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:
4800 is resistance
4725 is resistance
4700 is resistance
4670 is resistance
4655 is resistance
4600 is resistance
4550 is light support
4525 is light support
4500 is good support
4490 is light support
4475 is light support
4450 is medium support
4400 is good support and the 200 day moving average
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
Stock Market Outlook for Tomorrow – Mon Feb 7 2022
For Monday the market is sitting rather indecisive but despite the chart being bearish, investors are picking away at stocks which is bullish. Any invasion of the Ukraine will change the market direction to bearish, but for now, the S&P has a new confirmed up signal in place and there is enough strength to see the day end positive. To some degree the 10 year Treasury may play a role on Monday. If it rises further from Friday, weakness is bound to enter the markets. If not on Monday then on Tuesday.
Dips should be expected for Monday and could be back as low as 4525 or 4520 but a close above 4500 looks quite probable to start the second week of February.
For now, any deep dips and I will be buying SPY calls and/or the TQQQ on the NASDAQ 100 as I think any deep dips on Monday will result in a bounce intraday. However if the markets move a lot higher in the morning, especially early morning, I will be considering SPY put options as I think a close somewhat above 4500 is likely but not above 4550 or 4575 by the close. The final hour or half hour will be volatile on Monday.
Stock Market Outlook Archives
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