On Friday investors sent stocks lower through most of the day with the index testing 4100 three times in the afternoon but the support level held and buyers returned once again in the final hour. The rally was on good volume to try to retake 4125 on the SPX. Losses were small by the close but investors remain worried about banks and the debt ceiling.
The S&P closed lower by 6 points to 4124 and the NASDAQ lost 44 points, ending the day at 12,284.
Let’s review the SPX closing technical indicators on Friday to see what to expect for Mon May 15 2023.
Stock Market Outlook Chart Comments At The Close on Fri May 12 2023
The index closed with a bearish candlestick for Monday. The closing candlestick is pointing to further dips on Monday but continuing with an overall sideways move for the SPX.
The SPX closed at the 21 day moving average which is bullish.
The Bollinger Bands Squeeze is continuing and looks steady to see stocks eventually move higher. The 50 day is ready to move above the Lower Bollinger Band which will be bullish.
All major moving averages are climbing which is bullish and the 100 day continued to move higher above the 200 day.
The 21 day moving average is also rising.
The S&P chart is more bullish and than bearish for Monday.
There are 7 up signal since January and no down signal left in the chart.
Stock Market Outlook of Fri May 12 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative as trading volumes are declining.
- 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 on Friday and the histogram is almost set to turn 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 falling but 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 a neutral 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 and turning negative.
- 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 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
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 15 2023
For Monday the technical signals are shifting to bearish primarily as trading volumes are declining. The S&P chart is still positive despite the closing candlestick on Friday.
MACD has remained stubbornly negative but it continues to slowly erode the down signal.
The index is positioned to dip on Monday, possibly below 4100 but the close, while negative, is expected to not be much lower than Friday’s close.
The debt ceiling talks continue to keep many investors to the sidelines as they wait for the two sides to come together with a resolution. Once there is a resolution, expect the index to pop.
Potential Economic and Political Market Moving Events
Tuesday is the big day for economic reports with retail sales, industrial production, business inventories and housing reports up for release.
Monday:
8:30 Empire State Manufacturing survey is expected to come in at -5.0 from the previous 10.8 indicating a slowing economy. This will not impact market action on Monday.