Another rough day on the markets on Friday, but again investors pushed back at sellers into the close and ended the day well off the lows.
The S&P closed down 34 points at 4328 but intraday it broke below 4300 and reached 4285 almost as low as we saw on Tuesday when the S&P fell to 4279.
The NASDAQ fell 224 points for a 1.6% loss which was far worse than what we saw on the S&P. It closed at 13313.44 and remains below all three major moving averages.
By the close of trading on Friday, the technical signals had changed from Thursday’s close when a move higher seemed likely.
Let’s review the SPX close on Friday to see what investors should expect for market direction on Monday.
Stock Market Outlook Chart Comments At The Close on Fri Mar 4 2022
On Friday the SPX pulled back and failed to regain the 200 day moving average. The closing candlestick however is bullish but almost everything now depends on the Russian invasion of Ukraine. We saw this on Friday with news Thursday night of Russian shelling of the Zaporizhzhia nuclear power plant in the southern city of Enerhodar, Ukraine. The chance of a nuclear disaster sent shocks waves which pressured the stock markets lower to start the day on Friday. For now it is obvious that investors are remaining focused on what is occurring in Ukraine. Many investors are worried the war will expand into NATO countries.
The Upper Bollinger Band is falling further and the Lower Bollinger Band is simply drifting lower. We should see another Bollinger Bands Squeeze this week and at present the squeeze looks set to send the index lower.
Of prime importance is the further dropping of the 21 day moving average which is now set to fall below the 200 day on Monday to set up a third major down signal for the index. This will be followed by the 50 day falling below the 100 day. That will be another very bearish signal.
All the major moving averages are falling lower with the 200 day still holding the 4400 level.
The chart remains very negative but as we saw on Thursday, it won’t take much to see a bounce back if the war reaches a resolution and the fighting stops. Even a temporary ceasefire will assist. At present any ceasefire seems like a long way off.
Stock Market Outlook review of Fri Mar 4 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and rising.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Wednesday March 2. On Friday March 4, the signal was weaker. The MACD histogram is flat but still positive.
- 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 for a second straight day.
- 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 in place.
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.
- 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 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.
Support and Resistance Levels To Be Aware Of:
4500 is resistance
4490 is light resistance
4475 is light resistance
4450 is light resistance
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
4150 is good support
4000 is good support
Stock Market Outlook for Tomorrow – Mon March 7 2022
The technical indicators are mixed but even though there are some underlying bullish charts, the bears are in control on Monday. A bounce could easily be seen but the chance any bounce on Monday can hold is slim without a positive change in the war.
The February non-farm payroll numbers were excellent and beat estimates. That did assist the markets on Friday and stopped them from falling lower at the open, as well as intraday. But those numbers alone cannot get the market back rising. On Monday the focus again will be on the Russia-Ukraine war. That means a lower open is probable. Bounces are likely but the close should be flat to lower.
Stock Market Outlook Archives
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