On Friday stocks spent the day trending primarily sideways after opening with a sharp bounce only to find sellers still waiting to take profits. The lunch hour and early afternoon saw the lows of the day with the S&P trading several times below 3940. As we have seen often in this bear market, the index rallied in the final hour to close up on the day by 18 points at 3963 but not at the opening high of 3980. For the week the S&P ended with a slight loss in what had been a choppy week of trading.
The NASDAQ ended Friday flat with a gain of just 1 point but for the week it was also lower. The day ended with the S&P at 11146 losing 177 points over the week.
As well on Friday leading economic indicators came in lower than expected at -0.8% which some analysts saw a positive reason for a slowing of interest rate hikes. Other analysts saw it as another sign the economy is moving into a recession.
On Friday I left to visit friends in Detroit over the weekend for an early Thanksgiving get together as my friends will be with family over the actual Thanksgiving weekend. In my excitement I mixed up the weekends in Friday’s stock market outlook. My apologies.
I arrived home late Sunday.
Let’s review the closing SPX technical indicators from Friday to see what we should expect for Monday.
Stock Market Outlook Chart Comments At The Close on Fri Nov 18 2022
On Friday the S&P closing candlestick is below the Upper Bollinger Band and the 200 day moving average but above the 21, 50 and 100 day moving averages. The closing candlestick is bearish for Monday.
The Upper Bollinger Band crossed above the 200 day on Wednesday November 16 which is a bullish signal.
The Lower Bollinger Band is continuing to climb, which is bullish but we need to watch the Upper Bollinger Band to be sure it continues to rise and does not fall back to form a Bollinger Bands Squeeze. That will be bearish should it occur.
A new up signal was generated on Friday Nov 11 as the 21 day moving average is back above the 50 day. This is bullish.
The 50 day moving average is back moving lower which is bearish. The 100 day is turning sideways which is bullish.
The 200 day moving average is still falling. This is bearish.
There are 6 down signals in place since April and one up signal.
The chart is 60% bullish for Monday.
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 Thursday Oct 16. On Friday the up signal lost further strength but remains with a strong up signal. The histogram also has a positive signal.
- 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.
- 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 down signal in place with overbought readings.
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.
- 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 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:
4100 is resistance
4090 is resistance
4070 is resistance
4050 is resistance
4030 is resistance
4025 is resistance
4000 is resistance
3975 is resistance
3965 is resistance
3950 is resistance
3925 is light support
3900 is light support
3875 is light support
3850 is light support
3825 is light support
3800 is good support
Stock Market Outlook for Tomorrow – Mon Nov 21 2022
For Monday the technical indicators continue to be mixed with weakness evident in all the signals. Despite this, there are still bullish signs.
Last week the index had a number of negative reports and negative events handed to it and yet it closed down only slightly on the week. This is bullish and continues to suggest that investors expect the markets to rise into the end of the year.
Monday will see some weakness, probably at the start of the day but despite the weakness there is still a chance for a higher close.
Shortened Week
This week is shortened due to the Thanksgiving holiday. Since 1974 the week leading to Thanksgiving has ended with stocks higher 78% of the time. Markets close Thursday and are open half a day on Friday. Expect very low volume and not much movement on Friday.
Black Friday Membership Special
I have received emails wondering if there will be a Black Friday Membership Special again this year. There will be a special starting later this week.
Potential Economic and Political Market Moving Events
There are no economic reports on Monday or Tuesday of any significance but on Wednesday there are a number of reports including consumer sentiment, durable goods, Weekly Initial Unemployment Insurance Claims, 5 year inflation expectations and at 2:00 PM we get the FOMC minutes. Watch for Wednesday to be a choppy day of trading ahead of Thursday’s Thanksgiving holiday.
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