Stock Market Outlook for Thu Aug 8 2024 – Weakness – Dips Likely

Prior Trading Day Summary:

Wednesday’s bounce ended as expected, lower. Some of the selling was the result of a poor bond auction that was sluggish with some reluctant buyers. That weighed on the stock market but overall after a poor bounce on Tuesday, Wednesday’s opening bounce looked doomed to fail from the start. Normally after Tuesday’s bounce it is better to see the index open lower, sell still further and then rally to close positive. That’s a better signal for the bulls. Instead the day started with a bounce and the indexes continued to move higher. Many analysts and investors were busy commenting on how Monday’s sell-off was a “mistake”. But then as weakness crept back in, investors returned to selling.

The SPX fell 40 points basically wiping out Tuesday’s rally of 53 points. The SPX closed at 5199. Volume was heavy at 4.7 billion shares traded but only 56% of all stocks were falling by the close.

The NASDAQ had 6.1 billion shares trade and it closed down 171 points, wiping out Tuesday’s rebound of 166 points. The NASDAQ closed at 16,195, 5 points below Monday’s close. 65% of al stocks on Wednesday were falling by the close. This is more negative than we saw on the SPX.

Let’s review the closing technical indicators from Wed Aug 7 2024 to see what the signals advise to expect on Thu Aug 8 2024.

Stock Market Outlook: SPX Closing Chart For Wed Aug 7 2024

The index managed an early rebound to just above the 100 day moving average. The close though was back at the same level as Tuesday’s open. This is bearish.

The closing candlestick has a short shadow which indicates the index may open lower, fall still lower and then attempt a bounce on Thursday.

The 21 day moving average is falling which is bearish.

The 50 day moving average is falling. This is bearish.

The 200 day moving average is slowing the uptrend. The 200 day is at 5073 which is still bullish. The 100 day fell to 5300 which is bearish. Only the 200 day moving average is still rising.

The Lower Bollinger Band is below the 100 day moving average and falling to the close on Wednesday. This is bearish. The Upper Bollinger Band however is back rising which is bullish. neutral.

The S&P chart is bearish with only the Upper Bollinger Band and 200 day moving average remaining bullish. All the other technical indicators are pointing lower.

SPX Stock Market Outlook review of Wed Aug 7 2024

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Thu Aug 8 2024 

For Thursday the technical indicators are still oversold and signaling a lower move is likely. Meanwhile the Slow Stochastic has the first up signal in a while and that could be an early harbinger of a move late this week or into next. It will depend what the signal is for the Slow Stochastic on Thursday at the close.

We could see the index open lower, fall and then some buying occur but for now the technical indicators are bearish and are signaling a move down to the 200 day could occur on the SPX.

On Thursday before the open we get the Weekly Initial Unemployment Insurance Claims. If they come in lower than 240,000 we will see a higher opening and possibly a bounce attempt. A higher number will see renewed selling.

Potential Economic and Political Market Moving Events

Monday:

9:45 Final services PMI came in at 55, down slightly from 55.9

10:00 ISM services rose to 51.4% from 50.9%

Tuesday:

8:30 Trade deficit for June was expected to be -72.5 billion but came in at -$73.1 billion

Wednesday:

3:00 Consumer Credit was expected to fall to $9.7 billion from $11.3 billion prior. Instead it fell to $8.9 billion.

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are expected to come in at 240,000

10:00 Wholesale inventories are estimated to fall to 0.2% from 0.6% prior