On Wednesday investors continued their selling as First Republic Bank Stock (FRC) collapsed another 30% over fears the banking crisis will expand still further. Selling though was not as brisk as Tuesday.
The S&P ended the day down 15 points to 4055 and the NASDAQ rose 55 points to close at 11,854.
Let’s review the closing technical indicators from Wednesday to see what we should expect for Thu Apr 27 2023.
Stock Market Outlook Chart Comments At The Close on Wed Apr 26 2023
The index closed with a bearish candlestick for Thursday. At the same time, the candlestick is often seen before a bounce back attempt which could be as early as Thursday.
The Upper Bollinger Band and Lower Bollinger Band are forming into a Bollinger Bands Squeeze. At present this is bearish and is signaling the next move will be lower for the SPX.
Also of significance is the 100 day moving average which rose last week but has still not crossed above the 200 day. Once it crosses above the 200 day it will end the down signal from April 24 2022 and place the SPX back within the bullish stance of the 21 day leading the market, the 50, then 100 and finally 200 day following along.
The S&P chart is more bearish than bullish as of Wednesday ‘s close as the closing candlestick is nearing the 50 day moving average. You can see on Wednesday the S&P closed off the low of the day. This is often a precursor to a bounce coming on the following day.
There are 6 up signal since January and just 1 down signal left and as explained, that final down signal should end this week.
Stock Market Outlook review of Wed Apr 26 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) confirmed the down signal from Tue Apr 25 2023. This MACD histogram is decidedly negative.
- 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 sharp down signal in place with a strong bearish reading.
- 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. It is 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 but still positive which often indicates a bounce is coming.
- 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:
4250 is resistance
4240 is resistance
4225 is resistance
4210 is resistance
4200 is resistance
4190 is resistance
4180 is resistance
4175 is resistance
4150 is resistance
4135 is resistance
4125 is support
4100 is support
4090 is support
4075 is support
4050 is support
4030 is light support
4025 is light support
4000 is support
Stock Market Outlook for Thu Apr 27 2023
For Thursday the MACD down signal was confirmed. At the same time all the indicators are pointing lower. Often this occurs just before a bounce back.
After hours on Wednesday earnings from META were far better than expected and could help spike stocks higher to start the day on Wednesday.
On Wednesday the various economic reports were far better than anticipated, especially durable goods orders which rose to 3.2%, certainly not the type of signal seen heading into a recession.
Potential Economic and Political Market Moving Events
For Thursday investors get the latest GDP report along with the Weekly Initial Unemployment Insurance Claims.
Thursday:
8:30 GDP is expected to come in at 2%
8:30 Weekly Initial Unemployment Insurance Claims are anticipated to come in at 249,000