On Friday investors returned to the buy side as volume finally picked up on both the S&P and NASDAQ indexes. On The S&P new 52 week highs were better than 2:1 against new lows.
The S&P ended the day up 34 points to close the month at 4169 and added 36 points to the week.
The NASDAQ closed up 84 points to 12,226 and rose 154 points for the week.
Also on Friday the 100 day moving average finally moved above the 200 day wiping out the down signal from April 24 2022. That was the last down signal from the market pullback last year.
Let’s review the closing technical indicators from Friday Apr 28 to see what we should expect for the first trading day of May.
Stock Market Outlook Chart Comments At The Close on Fri Apr 28 2023
The index closed with a bullish candlestick for Monday. It closed above all major moving averages and reached the Upper Bollinger Band. The Bollinger Bands Squeeze is in full swing and now looks set to move the S&P higher.
On Friday the 100 day moving average finally moved above the 200 day which sets the index back into a bullish stance and wipes out the last remaining down signal which stretched all the way back to April 24 2022.
The S&P chart is bullish for Monday although dips are somewhat likely as the index is up at the Upper Bollinger Band.
There are 7 up signal since January and no down signal in the chart.
Stock Market Outlook review of Fri Apr 28 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 down signal on Tue Apr 25 2023. That down signal was almost gone by the close on Friday.
- 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 placeand rising sharply.
- 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, positive and nearing 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:
4250 is resistance
4240 is resistance
4225 is resistance
4210 is resistance
4200 is resistance
4190 is resistance
4180 is resistance
4175 is resistance
4150 is resistance
4135 is resistance
4125 is support
4100 is support
4090 is support
4075 is support
4050 is support
4030 is light support
4025 is light support
4000 is support
Stock Market Outlook for Mon May 1 2023
For Monday the technical indicators are showing a lot of strength to start the month of May. At the same time, we get the Fed’s decision on interest rates on Wednesday and that might keep stocks in check today and partly on Tuesday. Overall though, investors are bullish that the Fed may pause rates or signal that a pause is likely after one more rate hike.
May is that month termed, “Sell in May and Go Away” which is based on historical returns which show the months of May to October tend to be the worse 6 months for stock market returns. That may well end up being the case for May in 2023, but so far investors are showing resilience. That may mean if the Fed does not raise rates or signals that a pause in further rate hikes after May are likely, stocks could enjoy a further rally through May. This would be bullish.
For Monday, stocks should enjoy the latest up signal from the S&P. That will however mean some dips in the morning but a higher close, even a slight one, is likely for Monday.
Potential Economic and Political Market Moving Events
For this week the Fed’s interest rate decision on Wednesday followed by Friday’s April non-farm payroll numbers are the two key economic events that will move markets.
Monday:
9:45 Manufacturing PMI
10:00 ISM manufacturing