Stock Market Outlook for Thu Dec 29 2022 – Weakness and Lower

On Wed Dec 28 2022 markets markets started the day trying to rally and broke above 3845. But buying volume was low again for a second day and once 3850 was not reached, sellers moved in again. By the end of the day the SPX was below 3800 closing at 3783. The NASDAQ fell 140 points, almost matching Tuesday’s decline. It closed at 10,213.

Let’s review the closing technical indicators from the SPX on Wed Dec 28 2022 to see what to expect for Thu Dec 29 2022.

Stock Market Outlook Chart Comments At The Close on Wed Dec 28 2022 

On Wed Dec 28 2022 the S&P closed below all moving averages but still managed to stay above the Lower Bollinger Band. This is bearish.

The closing candlestick is bearish for Thursday although a bounce at the outset should be expected.

The Upper Bollinger Band is turning lower which is bearish. The Lower Bollinger Band is still moving lower which is bullish.

The 200, 21 and 100 day moving averages are falling. The 50 day is starting to turn sideways.

The 21 day moving average is falling rapidly and has almost reached the 100 day. A drop below it would be a major down signal.

There are now 4 down signals in place since April 24 and two up signals.

The chart is 75% bearish for Thursday.

Stock Market Outlook review of Wed Dec 28 2022

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling and negative. It is nearing oversold levels where a bounce could be expected.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal Tuesday Dec 6 2022. On Wednesday the down signal gained more strength. The histogram also gained strength.

• 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.

• 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 moving back into 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 negative.

• 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 rising but negative.

• 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:

4050 is resistance

4030 is resistance

4025 is light support

4000 is light support

3975 is light support

3965 is light support

3950 is good support

3925 is light support

3900 is good support

3875 is light support

3850 is light support

3830 is light support

3810 is light support

3800 is good support

3775 is good support

3750 is good support

3730 is light support

3725 is light support

3715 is light support

3700 is good support

3685 is light support

 Stock Market Outlook for Tomorrow – Thu Dec 29 2022 

For Thursday the technical indicators are more bearish and some are moving into oversold signals. A bounce to retake 3800 is likely but unless volume can pick up on Thursday, any up move probably won’t hold. Weakness is continuing to strengthen.

Low volume remains a problem and Thursday could still see lower volume.

The outlook is for investors to try to retake 3800 but for weakness to continue and the day to end lower.

Potential Economic and Political Market Moving Events

On Thursday investors get the Weekly Initial Unemployment Insurance Claims.

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are estimated to rise to 223,000.

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