Friday saw stocks jump higher as treasury yields pulled back slightly. It seemed enough to get investors back buying and the index closed above the 200 day moving average again.
The S&P climbed 64 points for a 1.6% gain to end the day at 4045.
The NASDAQ rose 226 points, for almost a 2% gain to close at 11689.
It was a strong finish to the week and a nice start for March. As well, a new up signal was generated on Friday which should help the bulls move the market higher at the start of this week.
Let’s review the closing technical indicators from Fri Mar 3 to see what we should expect for Mon Mar 6 2023.
Stock Market Outlook Chart Comments At The Close on Fri Mar 3 2023
On Friday the S&P pushed back from being oversold to close above the 50, 100 and 200 day moving averages.
The index also closed above the Lower Bollinger Band but below the 21 day moving averages. This is nullish.
The closing candlestick is bullish for Monday but also signals a good chance of some weakness mid-morning on Monday.
The Upper Bollinger Band is turning lower and the Lower Bollinger Band is turning sideways. At present this is neutral. We should see the Upper Bollinger Band turned back up shortly, if the SPX can climb.
The 200 day moving average is rising which is bullish. The 21 day is falling which is bearish. The 50 day moving average moved above the 100 day moving average intraday on Friday. This is bullish and another up signal.
At present there is just one down signals in place since April 24 and 5 up signals since Jan 13. We need to see the 50 and 100 day moving averages climb above the 200 day to end the last remaining down signal.
The chart is 70% bullish for Monday.
Stock Market Outlook review of Fri Mar 3 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and negative. It should turn positive Monday or Tuesday.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) down signal was weaker on Friday. There are signs that the strength to the downside is eroding quickly.
- 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.
- 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 moving away from 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 rising sharply.
- 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 but negative.
- 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:
4250 is resistance
4220 is resistance
4200 is resistance
4180 is resistance
4150 is resistance
4125 is resistance
4100 is resistance
4090 is resistance
4075 is resistance
4050 is resistance
4030 is resistance
4025 is resistance
4000 is light support
3975 is light support
3965 is light support
3950 is good support
3930 is light support
3900 is good support
Stock Market Outlook for Mon Mar 6 2023
The technical indicators received a strong boost on Friday, partly because the index was oversold but also because Treasury yields dipped slightly easing pressure on stocks enough to spark the rally.
Investors have looked for a reason to jump into stocks and they finally got one on Friday.
As well a new up signal was generated intraday as the 50 day cleared above the 100 day. This is bullish.
Monday will see some weakness intraday, probably mid-morning, but the close will be higher to start the week.
Potential Economic and Political Market Moving Events
On Monday there are just factory orders. This should not affect markets.
This is a busy week for stocks though with Fed Chair Powell testifying before the Senate on Tuesday and House on Wednesday and then the unemployment report on Friday. The week could start strong but end weaker. A lot depends on Powell as well as Friday’s unemployment report.
Friday:
10:00 Factory orders are expected to come in at -1.8%
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