Wednesday was a cautious day for investors. The morning opened lower and stayed lower until Fed minutes were released at 2:00 PM.
The Fed minutes showed a “stay-the-course” approach was still in place and little could be found of an overly aggressive outlook by the Fed for raising interest rates despite Fed President Bullard’s comments. The Fed minutes were enough to spark a rally after their release at 2:00 PM.
The S&P rose 4 points to 4475 and the NASDAQ lost 15 points to close at 14124.
Markets remain nervous as the Ukraine-Russia crisis shows no signs of ending.
Let’s review Wednesday’s closing numbers to learn what investors should expect for Thu Feb 17 2022.
Stock Market Outlook Chart Comments At The Close on Wed Feb 16 2022
The closing candlestick on Wednesday is bullish but stopped at the 21 day moving average for a second day. Normally this will signal a drop once again to start the following day.
Aside from the closing candlestick there are a few changes but the chart remains bearish.
The 21 day moving average is turning sideways and looks like it might try to turn back up. This could be bullish but it’s too early to judge.
The Upper Bollinger Band is near the 50 day moving average and if it falls below it this will be a third down signal.
The Lower Bollinger Band is still rising and the likelihood of a Bollinger Bands Squeeze this week is still high.
The 50 and 100 day moving averages are falling which is bearish however the 200 day moving average is rising which is bullish.
The chart has two down signals in place and the index could generate a third down signal later this week. The chart is very bearish and the Bollinger Bands Squeeze should it occur looks strong enough to send stocks to the 4200 level. That’s a guess which is not backed by a technical point.
Stock Market Outlook review of Wed Feb 16 2022
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) issued a confirmed up signal on Friday Feb 4. On Wednesday the up signal gained a bit of strength but the MACD histogram is indicating the up signal has no strength. If the index turns lower on Thursday and closes down, we will see a sell signal from MACD.
- 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 negative and falling.
- 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 weak up signal in place.
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 unchanged which is bearish.
- 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 which signals the market will make some wide swings on Thursday.
- 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:
4800 is resistance
4725 is resistance
4700 is resistance
4670 is resistance
4655 is resistance
4600 is resistance
4550 is resistance
4525 is resistance
4500 is good support
4490 is light support
4475 is light support
4450 is medium support
4400 is good support and the 200 day moving average
4370 is light support
4350 is light support
4300 is good support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
Stock Market Outlook for Tomorrow – Thu Feb 17 2022
For Thursday the index remains bearish but does have a few bullish signals that might be enough to move it to another positive close. However with so many technical signals bearish and the S&P chart bearish, the outlook remains lower for the index overall.
Any negative news on the Ukraine-Russia crisis will see stocks move lower. An invasion by Russia will see stocks tumble probably to 4200 or 4150 within a couple of days of an invasion.
Stay cautious again on Thursday as the outlook is more bearish than bullish. A choppy day is expected with dips as the outlook is lower for the SPX.
On any bounce on Thursday I will add in more SPY put options to my SPY Market Direction Portfolio trade from Wednesday.
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Thu May 2 2024
Stock Market Outlook for Thu May 2 2024 – Potential Bounce But Lower
Morning Investing Strategy Notes for Wed May 1 2024
Stock Market Outlook for Wed May 1 2024 – Bounce But Lower – Fed Interest Rate Decision
Morning Investing Strategy Notes for Tue Apr 30 2024
Stock Market Outlook for Tue Apr 30 2024 – Dips Likely – Flat To Higher Close
Morning Investing Strategy Notes for Mon Apr 29 2024
Stock Market Outlook for Mon Apr 29 2024 – Some Weakness But Higher
Morning Investing Strategy Notes for Fri Apr 26 2024
Stock Market Outlook for Fri Apr 26 2024 – Higher and Positive Close
Morning Investing Strategy Notes for Thu Apr 25 2024
Stock Market Outlook for Thu Apr 25 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 24 2024
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
