Prior Trading Day Summary:
Wednesday saw a bounce attempt at the open which managed to reach 5078 before selling once again pushed stocks lower. By 12:45 stocks looks almost ready to break below 5000 but managed to find buyers who pushed the index from 5007 to 5050 for a second impressive rally attempt. That though failed and the index ended the day down 29 points to 5022.
The NASDAQ lost 182 points to close at 15683.
Wednesday was a fifth straight trading day of declines and that has left the indexes deeply oversold. In the afternoon the Fed’s Beige Book seemed to have little influence as more analysts are beginning to believe there will be no interest rate cuts this year. That would be unusual in an election year.
Sectors under pressure included energy, semiconductors and some industrials. Many semiconductor stocks have been brutally sold lower. At some point a recovery rally has to be expected.
Let’s review the closing technical indicators on Tue Apr 16 2024 to see if another bounce can be expected for Thu Apr 18 2024.
Stock Market Outlook: SPX Closing Chart For Wed Apr 17 2024
The index closed below the 50 day moving average and the Lower Bollinger Band. This usually results in a bounce attempt.
The closing candlestick is signaling deeply oversold and due to bounce. It is bearish.
The 21 day moving average is falling which is bearish.
The 50 day moving average is starting to turn sideways. It is at 5117 up just 1 point from yesterday. This is bearish.
The 100 and 200 day moving averages are climbing which is bullish. The 200 day is at 4726 on the SPX which is bullish.
The Lower Bollinger Band is falling and below the 50 day. This is bearish. The Upper Bollinger Band is rising which is presently bearish.
The S&P chart is bearish and signaling that another bounce attempt from deeply oversold might occur on Thursday. The SPX is down 4.6% from its March 28 high. The pullback remains a typical bear market correction and could reach 5% before a better bounce occurs.
SPX Stock Market Outlook review of Wed Apr 17 2024 – chart courtesy TradingView
Stock Market Outlook: Technical Indicators Review
Momentum: Momentum is falling and negative. It is deeply oversold. Normally we should expect a bounce.
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MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Tue Apr 2. On Wed Apr 17 2024 the down signal gained strength. The MACD histogram is strongly negative. Usually a bounce can be expected at this negative a level.
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Ultimate Oscillator: The Ultimate Oscillator is falling and oversold. Normally a bounce should be expected.
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Slow Stochastic: The Slow Stochastic has a down signal in place. It is deeply oversold and almost always signals this low result in a bounce.
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Relative Strength Index: The RSI signal is falling and deeply oversold. Almost always a bounce should be expected.
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Rate of Change: The rate of change signal is falling and oversold. It is signaling to investors that a move higher should be expected for Thursday or Friday.
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Stock Market Outlook: Support and Resistance Levels |
| 5275 is resistance |
| 5250 is resistance |
| 5225 is resistance |
| 5200 is resistance |
| 5190 is resistance |
| 5175 is resistance |
| 5150 is resistance |
| 5125 is resistance |
| 5115 is resistance |
| 5100 is support |
| 5075 is support |
| 5050 is support |
| 5025 is support |
| 5000 is light support |
| 4990 is light support |
| 4975 is light support |
| 4950 is support |
Stock Market Outlook for Thu Apr 18 2024
The technical indicators are continuing to point to stocks as being deeply oversold and due to bounce. Comments from Fed Chair Powell on Tuesday weighed on stocks on Wednesday and kept selling pressure on many stocks, particularly those that have seen a high run-up such as NVIDIA Stock (NVDA), Advanced Micro Devices Stock (AMD), ARM Stock (ARM), Caterpillar Stock (CAT) and many more. These high momentum stocks are continuing to pullback. As they fall lower, more investors are selling their shares as well, afraid that the rally in many stocks that lead the rally are now going to lead stock indexes a lot lower. Whether right or wrong, it is typical of investors, especially those who may have bought in late March which at present looks to be the high for the indexes.
On Thursday investors should still anticipate another bounce attempt but watch for sellers who will want to get out of stocks in any bounce. Meanwhile the SPX is down 4.6% which is still typical of a bull market. A 5% correction is common and we could see the index slip further before any meaningful bounce is attempted. At the same time, a correction of 7% is still typical but not as common in a bull market.
The Fed’s Beige Book seemed to be a non-event for investors when it was released on Wednesday afternoon. For Thursday watch for the SPX to possibly test the 5000 level and then attempt a bounce. If 5000 breaks, the index could slip to 4985 before any bounce is attempted.
Potential Economic and Political Market Moving Events
There are major events this week on every day except Friday. Wednesday we get the Fed’s Beige Book.
Monday:
8:30 Empire State manufacturing survey was expected to rise to -10.0 but instead rose to -14.3, weaker than expected.
8:30 Retails sales were expected to drop to 0.3% but rose to 0.7%
10:00 Business inventories were expected to rise to 0.4% but rose to 1.1%
10:00 Home builder confidence index came in as expected at 51, unchanged.
Tuesday:
8:30 Housing starts were expected to dip to 1.48 million but instead fell to 1.32 million.
8:30 Building permits were expected to dip to 1.51 million but dipped to 1.46 million.
9:15 Industrial production for March came in as expected at 0.4%
9:15 Capacity Utilization was estimated to rise slightly to 78.5% but rose to 78.4% instead.
Wednesday:
2:00 Fed Beige Book
Thursday:
8:30 Weekly Initial Unemployment Insurance Claims are expected to rise to 215,000
8:30 Philadelphia Fed manufacturing survey is expected to dip to 2.5
10:00 March Existing home sales are expected to decline to 4.17 million
10:00 March Leading economic indicators are expected to slip to -0.1%