Stock Market Outlook for Mon Sep 18 2023

Sep 18, 2023 | Stock Market Outlook

Prior Trading Day Summary

On Friday stocks fell on little news but investors took profits in many tech stocks as volume jumped due to quarterly options expiration. Overall investors gave back all the week’s gains to end the week down 7 points at 4450. Volume was huge at 7.3 billion shares traded on the S&P. It was the highest volume since March 17 when over 10 billion shares were traded.

The NASDAQ fell 217 points and ended the week down 53 points at 112 points, ending the day at 13,708. Volume soared to 8.5 billion shares traded. It was the highest volume day this year for the NASDAQ.

Let’s review the SPX technical indicators from Friday Sep 15 2023 to see what to expect for Mon Sep 18 2023.

Stock Market Outlook: SPX Closing Chart For Fri Sep 15 2023

The index closed back below the 50 day moving average and at the 21 day moving average. Often this will see a bounce but considering Thursday we saw a bounce above the 50 day, the chance of another bounce so soon after is usually fairly slim. The problem though is deciding how much of the selling on Friday was options-expiry related. In the end the 4450 level on the SPX still held up which might be a bullish signal for the index.

The closing candlestick on Friday is bearish but also bounce to a potential bounce.

The 50, 100 and 200 day moving averages are continuing to climb which is bullish. The 21 day moving average is turning higher which, while still bearish, is a good sign the rally might return.

The Lower Bollinger Band is back rising which is bearish. The Upper Bollinger Band is is rising which is bullish. The Bollinger Bands Squeeze on Thursday has appeared to point to a move higher for the index. We may see that change at the start of the week.

Stock Market Outlook review of Fri Sep 15 2023

Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is falling and negative.

Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tue Aug 29 2023. On Fri Sep 15 2023 the up signal was once again almost gone.

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 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 a down 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 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 faling 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.

Stock Market Outlook: Support and Resistance Levels

4600 is resistance

4575 is resistance

4550 is resistance

4525 is resistance

4500 is resistance

4485 is resistance

4470 is resistance

4450 is support

4435 is support

4420 is support

4400 is support

4390 is support

4370 is support

4350 is support

For Monday the technical indicators are far more mixed. While many are bullish and others bearish, the bias of the technical indicators is still bullish.

The chance for another bounce is unlikely so soon after last week’s bounces but you can never be sure with investors. On Wednesday we get the Fed’s decision on interest rates which most believe will see no rate increase. We also get the latest Fed Chair Powell news conference which has often brought in more swings to the market than any rate increase has.

For Monday I am expecting a sideways day with an attempt at some bullishness but overall a flat to lower close. Tuesday though could see the market try to stage a bit more rally ahead of Wednesday’s anticipated non-rate increase from the Fed.

Potential Economic and Political Market Moving Events

This week the Fed’s interest rate decision and news conference on Wednesday is the main event to be watching.

Monday:

10:00 Home Builders confidence index which is expected to be 49., down only slightly from the prior 50.