On Wednesday stocks staged a strong rebound from an early morning opening sell-off. By the end of the day the S&P was pretty well unchanged and the NASDAQ was down just 21 points.
With little changed in the markets by the close, Thursday investors get more earnings to digest which could make for a choppy day.
Let’s review the closing technical indicators from the SPX on Wed Jan 25 to see what to expect for Thu Jan 26.
Stock Market Outlook Chart Comments At The Close on Wed Jan 25 2023
On Wed Jan 25 2023 the S&P fell below the 200 day moving average but climbed back and ended the day above it.
The closing candlestick is bullish for Thursday although it again does signal there will be dips.
The Upper Bollinger Band is continuing to rise which is bullish. The Lower Bollinger Band back rising which is bullish.
The 200 day moving average is falling which is bearish but all the remaining moving averages are rising. This includes the 21, 50 and 100 day moving averages. This is bullish. The 21 day is rising rapidly and may cross above the 100 and the 50 day shortly. That would be a major up signal.
At present there are are 5 down signals in place since April 24 and one up signal.
The chart is 60% bearish for Thursday which is unchanged from Wednesday.
Stock Market Outlook review of Wed Jan 25 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and 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 Monday Jan 9. The up signal lost a bit of strength on Wednesday as did the histogram.
- 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 rising and overbought.
- 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 strong up signal in place and is also 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 unchanged and positive.
- 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 and positive.
- 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 resistance
4000 is resistance
3975 is resistance
3965 is light support
3950 is light support
3930 is light support
3900 is light support
3875 is light support
3850 is good support
3830 is good 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 Jan 26 2023
The technical signals are more mixed by the close on Wednesday and three are signaling overbought. The chart is 60% bearish for Thursday and indicates dips back below the 4000 valuation are expected.
More earnings were released on Wednesday at the close including from Tesla and IBM which were slightly better than estimated and may be enough to help the market move higher by the close on Thursday.
On Thursday investors get the Weekly Initial Unemployment Insurance Claims and more important, the GDP, Durable Goods Orders and New Home Sales. These could move the market or keep it under selling pressure.
New 52 week highs are still outpacing new lows which is a good sign for the bulls.
For Thursday there will be dips once again with choppy trading action but the close will be higher.
Potential Economic and Political Market Moving Events
There are a number of events today that could swing markets.
Thursday:
8:30 Weekly Initial Unemployment Insurance Claims was expected to rise to 205,000
8:30 Real GDP which is expected to be 2.8%
8:30 Trade in goods
8:30 Durable Goods Orders are expected to be 2.4%
8:30 Core capital goods orders
10:00 New Home Sales are expected to be 615,000 from December
Stock Market Outlook Archives
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible
Morning Investing Strategy Notes for Fri Apr 19 2024
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
Morning Investing Strategy Notes for Tue Apr 16 2024
Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold
Morning Investing Strategy Notes for Mon Apr 15 2024
Stock Market Outlook for Mon Apr 15 2024 – Expect A Bounce
