Friday saw the heaviest of selling pressure for the week. 1106 stocks were at 52 week lows on the S&P and 1241 stock on the NASDAQ. These are more lows than we saw on June 16. Only in May did the NASDAQ see more lows.
The S&P lost 64 points to close at 3693 after bouncing in the final hour. The NASDAQ also bounced in the final hour and closed down 198 points to end the day at 10,868.
By Friday the market is screaming oversold but will that mean a bounce is imminent? Looking at the put to call ratio, investors are betting there is more downside.
Let ‘s review Friday’s close to see what to expect for Monday.
Stock Market Outlook Chart Comments At The Close on Fri Sep 23 2022
At the close of trading the S&P closing candlestick is bearish for Monday but if you look at the candlestick you can clearly see a long shadow (tail) which often signals a bounce should be expected. The problem is investor sentiment has changed to very bearish which means any bounce will find ready buyers.
The 21 day moving average continued its descent.
The Upper Bollinger Band is slowing its descent while the Lower Bollinger Band is still falling. This signals lower prices ahead for the index.
All the moving averages are still falling which is bearish.
The 200 day continues to decline. The 100 day moving average is falling and may cross below the 50 day early this week.
There are now 4 down signals in place since April and no up signals.
The chart is 95% bearish for Friday with just the closing candlestick offering a little hope a bounce could be take shape.
Stock Market Outlook review of Fri Sep 23 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling sharply and negative. It is signaling a bounce could happen at any time.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Monday Aug 22. On Friday the down signal gained strength. The histogram also gained strength. Both signals are gaining strength to the downside.
- 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 back negative. It is heading toward oversold signals.
- 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 and is oversold.
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 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 at the same low readings we saw on June 16 before the index bounced.
- 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:
4000 is light resistance
3975 is light resistance and is a decline of 17.5%
3950 is light resistance
3925 is light resistance
3900 is light resistance
3875 is light resistance
3850 is light resistance
3825 is light resistance
3810 is light resistance
3800 is light resistance
3775 is light resistance
3750 is light resistance
3730 is light support
3700 is good support
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Mon Sep 26 2022
For Monday the technical indicators are pointing to a potential for a bounce but very negative sentiment and signals. The chance of further selling is high. A bounce may occur but could find ready sellers. The index is at the June lows which many analysts predicted the market would retest. The odds of the index still moving lower are probably 50/50 at this point even with the current extreme oversold signals. Stay cautious on bounces and take profits. Wait to see if sell volumes rise on any bounce on Monday. That will be a signal to stay suspect on any bounce on Monday.
Potential Market Moving Events
The biggest market moving event for the week is on Friday when we get more inflation numbers.
Monday:
Four Fed Presidents speak throughout the day on various subjects.
Stock Market Outlook Archives
Stock Market Outlook for Wed May 1 2024 – Bounce But Lower – Fed Interest Rate Decision
Morning Investing Strategy Notes for Tue Apr 30 2024
Stock Market Outlook for Tue Apr 30 2024 – Dips Likely – Flat To Higher Close
Morning Investing Strategy Notes for Mon Apr 29 2024
Stock Market Outlook for Mon Apr 29 2024 – Some Weakness But Higher
Morning Investing Strategy Notes for Fri Apr 26 2024
Stock Market Outlook for Fri Apr 26 2024 – Higher and Positive Close
Morning Investing Strategy Notes for Thu Apr 25 2024
Stock Market Outlook for Thu Apr 25 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 24 2024
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible