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Stock Market Outlook for Thu Jun 13 2024 – Overbought – Dips Likely

Jun 13, 2024 | Stock Market Outlook

Stock Market Outlook Dips Likely

Prior Trading Day Summary:

On Wednesday the morning started with news that the CPI numbers were lower than any estimates which sent stocks higher. In the afternoon the Fed left interest rates unchanged and indicated one reduction was probable in 2024 but that the Fed’s inflation target was still not within reach. A late day rally attempt took the SPX to 5447 but sellers closed the index at 5421. It was a new all-time high and the first close above 5400 of the SPX. Many stocks were overbought by the close.

On the NASDAQ the index closed up 265 points to close at a new high of 17608 another new closing high.

Let review the closing technical signals from Wed Jun 12 2024 to see what to expect for Thu Jun 13 2024.


Stock Market Outlook: SPX Closing Chart For Wed Jun 12 2024

The index closed above the 21 day moving average and above the Upper Bollinger Band. This is bullish and signals overbought.

The closing candlestick is bullish but also indicates a dip is likely today with a potential lower close.

The 21 day moving average is still climbing continuing the latest up signal.

The 50 day moving average is climbing which is bullish.

The 200 day moving average is still climbing. The 200 day is at 4886 which is bullish and the 100 day is also climbing to 5103.

The Lower Bollinger Band is above the 50 day moving average but starting to turn sideways. The Upper Bollinger Band is turned higher as the SPX is in a Bollinger Bands Squeeze but may soon move out of it.

The S&P chart is bullish and the Bollinger Bands Squeeze looks like stocks will move higher out of the squeeze.

SPX Stock Market Outlook review of Wed Jun 12 2024 – chart courtesy TradingView


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is rising 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 Thu Jun 6 2024. On Wed Jun 12 2024 the up signal was stronger. The MACD histogram 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 positive.

  • 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 an up signal in place and is 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 rising and overbought.

  • 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 signaling that Thursday will end higher.

  • 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.

Stock Market Outlook: Support and Resistance Levels

5450 is resistance
5425 is resistance
5400 is resistance
5375 is resistance
5350 is resistance
5325 is resistance
5310 is resistance
5300 is resistance
5275 is resistance
5250 is light support
5225 is light support
5200 is good support
5190 is light support
5175 is light support
5150 is support
5125 is support
5115 is support
5100 is support


Stock Market Outlook for Thu Jun 13 2024 

With the i index above 5400 many stocks are overbought. The chance of a dip is high for Thursday with a possible lower close.

On Thursday investors get the latest PPI numbers before the open. We could see the index open flat although earnings from Broadcom were better than expected and the news of a 10 to 1 split is sure to get investors interest. The index may open higher and then dip.


Potential Economic and Political Market Moving Events

This is a big week for economic numbers.

Monday:

No reports

Tuesday:

No reports

Wednesday:

8:30 Consumer Price Index was expected to rise just 0.1% but did not rise at all.

8:30 CPI year-over-year was estimated unchanged at 3.4% but came in at 3.3%

8:30 Core CPI was estimated unchanged at 0.3% but came in at 0.2%

8:30 Core CPI year-over-year is estimated to drop to 3.5%

2:00 FOMC interest rate decision announcement

2:00 Monthly federal deficit was expected to drop to -262.5 billion

2:30 Fed Chair Powell news conference

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are estimated at 225,000

8:30 Producer Price Index is expected to rise 0.1%

8:30 Core PPI is expected at 0.2%

 






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