The rally on Wednesday recovered much of the losses from Tuesday. I had expected a bounce but then selling in the afternoon and a lower close. Instead the rally held and the S&P closed pretty well at 2800. Once again the problem remains that above 2800 most stocks are overvalued, and earnings are not enough to move stocks higher. That means a trading range is far more likely to develop in coming weeks of somewhere between 2600 to 2800 over a period that may last into or even through the summer. Almost everything depends on how the economy is opened back up, what unemployment numbers are like and if there are further infections of Covid-19. The collapse of oil prices is also in that mix but for most investors, it remains a smaller concern as oil makes up only about 2% of the S&P and most investors believe oil prices will climb back when the economy picks up. In Europe businesses are opening back up. News of Daimler reopening will be positive for both oil prices and for stock prices as the perception will be the economies are on a road to what will eventually be a recovery. Investors love hope and news of businesses starting back up fits that pattern of hope.
Stock Market Outlook Chart Comments At The Close on Wed Apr 22 2020
The SPX chart continues to be bearish with 6 sell signals in the chart. On Wednesday the index closed almost at 2800.
The 200 day moving average is now leading the market, which is typical in a bear market. It is followed by the 100 day and the 50 day. The 50 day is falling quickly. The 21 day is turning back up which if it could continue to climb would be good for the bulls, but for now, this looks like a bounce in that moving average.
The closing candlestick on Wednesday is bearish for Thursday. At present the Upper Bollinger Band is starting to fall back toward the Lower Bollinger Band which could set the index up for another Bollinger Bands Squeeze. This one might see stocks move lower. We should know more toward the end of the week.
Stock Market Outlook review of Wed Apr 22 2020
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and still 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 March 26. The up signal is growing weaker again today.
- 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 signal is rising and back positive.
- 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 for a second day and is signaling overbought.
- 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 also rising, pointing to higher prices ahead.
- 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:
2900 is resistance
2860 is resistance
2840 is resistance
2800 is resistance
2700 is light support and marked a drop of 20.4%.
2675 is light resistant
2650 is light support
2625 is light support
2600 is support
2550 is light support
2500 was good support and marked a correction of 26.3%
2344 is the next level of support and marks a 30.9% correction.
2100 is light support
2000 is good support and marks a drop of 1393 points for a 41% correction. More analysts are jumping onto this level as where the correction is heading.
Stock Market Outlook for Tomorrow – Thu Apr 23 2020
For Thursday news of business opening in Europe is a good sign for investors. Oil prices are also set to try to climb. News of vaccine testing possibly being speeded up through volunteer subjects also will help boost stocks.
Technically the chart is bearish but the indicators are biased to another attempt to move higher.
Stocks though are moving into overbought levels and overvalued priced and that may make any rally higher, more difficult.
The only other piece of “news” that may impact stocks could be the Weekly Initial Unemployment Insurance Claims that are released Thursday before stocks begin trading. A number higher than expected could start the day off lower but unless they are truly horrific numbers, the market should recover by mid-morning and climb above 2800 by lunch hour.
Thursday should see the index close higher but it may be a volatile session of dips around the 2800 level.
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
