Friday July 22 saw the S&P break above 4000 early in the day, but by 11:00 AM sellers took over and the index slipped down to 3940 intraday. By the close, the index was at 3961 down 37 points. For the week however the S&P was higher.
The NASDAQ also fell on Friday but with SNAP’s earnings stunning the market, it was obvious the tech heavy index would end the day lower. The NASDAQ lost 1.87% to end the day down 225 points to 11,834. Meanwhile SNAP Stock ended the day down 39% to $9.96. In what was a disastrous day for the stock, more than 329 million shares traded hands. The NASDAQ was higher for the week.
The final week of July is a busy week with the Fed funds rate expected to increase 0.75% on Wednesday at 2:00 PM.
Let’s review the closing technical indicators from Friday to see what to expect for Mon Jul 25 2022.
Stock Market Outlook Chart Comments At The Close on Fri Jul 22 2022
The closing candlestick is bearish for Monday but still closed above the 50 day moving average for the fourth day. It closed below the Upper Bollinger Band which is a bearish signal. The closing candlestick indicates the rally is slowing, but there is indecision which is shown by the long shadows, both tails and head.
The 21 day moving average is continuing climbing which is bullish.
The Upper Bollinger Band is rising and is above the 50 day moving average which is bullish.
The Lower Bollinger Band is trending sideways, indicating the rally is slowing. The Bollinger Bands Squeeze appears to be pushing for higher stock prices, which 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 50% bullish for Monday.
The next goal for the index is to retake 4000. The ultimate goal of any rally at present is closing and holding above 4100 but that may be beyond this rally. For Monday the S&P chart is pointing to indecision.
Stock Market Outlook review of Fri Jul 22 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling 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 still had strength and the histogram continued improving.
- 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 no longer 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 for Monday but as you can see it is on the verge of a down signal which could come as early as Monday’s close.
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 positive. It is no longer 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 falling 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:
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 resistance 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 Jul 25 2022
For Monday the technical indicators are showing indecision as is the S&P chart. The market is no longer overbought but most signals are pointing sideways rather than up or down. Couple those technical signals with the closing candlestick and Monday looks choppy, indecisive with a slight bias still to the bulls.
For Monday there is probably a 40% chance the index will close higher and a 60% chance it will close lower. Dips down to 3925 could easily happen on Monday but a break of 4000 seems difficult for investors on Monday.
Potential Market Moving Events
This is a very busy week with a number of market moving events including the next Fed funds rate increase due on Wednesday at 2:00 PM.
Monday:
8:30 Chicago Fed national activity index
Stock Market Outlook Archives
Stock Market Outlook for Thu Apr 25 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 24 2024
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible
Morning Investing Strategy Notes for Fri Apr 19 2024
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
Morning Investing Strategy Notes for Tue Apr 16 2024
Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold