The bounce on Thursday should have seen some dips on Friday but then a higher close. Instead the close was strongly negative but on low volume, once again. This leaves the drop on Friday suspect that it was another overreaction by investors with rising Treasury yields. Meanwhile earnings from the first banks to report were mixed but better than estimated except from Morgan Stanley. Investors punished Morgan Stanley Stock (MS) selling it lower by 4.8% to close at $75.52, just 4.5% above its 52 week low of $72.05. The other major banks that reported earnings on Friday fared better, even in the afternoon selling. Only Wells Fargo Stock (WFC) reported higher earnings than the same quarter last year while JP Morgan and Citigroup beat estimates but came in below what they had earned for the same quarter last year.
Wells Fargo Stock (WFC) had a strong day but pulled back as selling intensified in the afternoon. Still, the stock closed up 2.3% at $43.37 after reaching $44.92 earlier in the day.
JP Morgan Chase Stock (JPM) closed higher at $111.61 for a 2.2% gain but was up at $115 earlier in the day.
Citigroup Stock (C) closed up just 35 cents at 43.30 although it too was higher on the day at $44.24.
All of these will probably move lower on Monday as the outlook remains bearish.
When markets reverse as we saw on Thursday and then again on Friday, you know that much of the action is caused by uncertainty, fear and automated trading. Short-sellers were hammered in Thursday’s strong bounce but on Friday many found they could have held off covering positions. It was a roller coaster two-day ride for investors.
Friday saw the S&P give back 86 points to close at 3583. The NASDAQ dropped 327 points, losing 3% to end the day at 10321.
Let’s review Friday’s closing technical indicators to see what to expect for Monday Oct 17.
Stock Market Outlook Chart Comments At The Close on Fri Oct 14 2022
On Friday the S&P closing candlestick is bearish to start the week and signals there could be a bounce attempt in the morning but it won’t hold. The SPX is positioned to move lower.
The Bollinger Bands are moving into a squeeze by perhaps as early as Tuesday. That squeeze now looks set to see stocks move lower.
The 21 day moving average continued its descent and a new down signal was generated as the 50 day moving average fell below the 100 day.
The Upper Bollinger Band continued falling and is below the 50 and 100 day moving averages. This is bearish.
All the moving averages are still falling which is bearish.
There are now 7 down signals in place since April and no up signals.
The chart is 95% bearish for Friday. Only the closing candlestick gives a small amount of hope for a bounce.
Stock Market Outlook review of Fri Oct 14 2022
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 a down signal on Tuesday Oct 11 2022 . On Friday, Thursday’s unconfirmed up signal was almost gone. The histogram is slightly positive. If Monday is lower, as expected, the sell signal from Oct 11 will remain in place.
- 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 and turned negative..
- 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. It is still showing oversold 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 falling, negative and moving back toward oversold.
- 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 still 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:
3800 is resistance
3775 is light resistance
3750 is light resistance
3730 is light resistance
3700 is light resistance
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
3585 is light support
3550 is good support
3530 is light support
3515 is light support
3500 is good support and is a decline of 27%
Stock Market Outlook for Tomorrow – Mon Oct 17 2022
Friday’s large decline, fresh on the heels of Thursday’s stunning reversal has turned most of the technical indicators bearish. MACD failed to confirm Thursday’s up signal and now looks set to continue to signal lower for the S&P.
For Monday we could see a failed bounce attempt or even a pike to try to regain 3600 but the outlook is back to bearish and the stunning jump from Thursday will be forgotten as this week unfolds. This week more companies are reporting earnings but even if those earnings are better than expected, analysts have already written them off as they look to the next quarterly results as being still lower. That means earnings this quarter will have to be much higher than expected. That likelihood is low. It also means any company that fails to meet earnings estimates will see its stock punished.
Potential Market Moving Events
This week on Wednesday investors get the Fed’s Beige Book at 2:00 PM. Often the moves markets. On Thursday we get the Weekly Initial Unemployment Insurance Claims and on Friday we get inflation expectations.
Monday:
8:30 Empire State Manufacturing Index is estimated to come in at minus 5.0
Stock Market Outlook Archives
Stock Market Outlook For Wed May 6 2026 – Choppy But Higher Still
Morning Investing Strategy Notes for Tue May 5 2026
Stock Market Outlook For Tue May 5 2026 – Overbought and Lower
Morning Investing Strategy Notes for Mon May 4 2026
Stock Market Outlook For Mon May 4 2026 – Dips Likely With Possible Lower Close
Morning Investing Strategy Notes for Fri May 1 2026
Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
