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Stock Market Outlook For Thu Jun 22 2023 – Weak But Another Bounce Attempt Probable

Jun 22, 2023 | Stock Market Outlook

Stock Market Outlook - Bounce Attempt 2

Day’s Summary

On Wednesday the day’s selling was exaggerated by Fed Chair Powell’s comments on two further interest rate hikes likely this year. That sent stocks lower and he continues his testimony on Thursday in the Senate. In particular the semi-conductors fell deeper than expected as selling pressure increased, the more those stocks fell.

By the close of the day the S&P was down 23 points to 4365, matching Tuesday’s losses.

The NASDAQ fell 165 points to end the day at 13,502. Losses were higher on the NASDAQ thanks to the semi-conductors being sold off.

Let’s review the SPX closing technical indicators from Wed Jun 21 2023 to see what to expect for Thu Jun 22 2023.


Stock Market Outlook: SPX Closing Chart For Wed Jun 21 2023

The index closed below the Upper Bollinger Band which is now bearish.

The closing candlestick is bearish for Thursday but also is often seen before the index spikes or bounces.

The 21, 50 an 100 day moving averages are continuing to climb which is bullish, but the 200 day is slipping lower while the the Lower Bollinger Band is rising. This is bearish.

The S&P chart is reasonably bullish but there are signs of weakness in the chart.

Stock Market Outlook review of Wed Jun 21 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 Friday May 26. The up signal lost a lot of strength on Wednesday. The MACD histogram also shows weakness building.

  • 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 no longer 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 weak down signal in place. It is signaling 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 falling and positive. It is no longer signaling 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 falling 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.

Stock Market Outlook: Support and Resistance Levels

4450 is resistance
4435 is resistance
4420 is resistance
4400 is strong resistance
4390 is resistance
4370 is resistance
4350 is resistance
4340 is resistance
4325 is resistance
4310 is resistance
4300 is resistance
4290 is resistance
4275 is support
4250 is support
4240 is support
4225 is support
4210 is support
4200 is good support
4190 is support
4180 is support


Stock Market Outlook for Thu Jun 22 2023 

For Thursday the technical indicators are continuing to fall and point to a lower day again on Thursday. The closing candlestick however is often seen before a bounce after a day of selling. The Fed Chair continues to testify to the Senate and will likely continue in a very hawkish stance. That won’t help the bulls.

Although there are no solid down signals, the chart at the close showed a number of weak spots in the rally. A bounce is needed soon, if the rally is to continue. At present almost all signals are still bullish but that can change quickly should selling continue.

Housing starts on Tuesday came in at 1.63 million, far ahead of expectations of 1.39 million.


Potential Economic and Political Market Moving Events

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are expected to be lower at 256,000.

8:30 Current account for first quarter is expected to come in at -217.1 billion

10:00 Existing home sales

10:00 Fed Chair Powell testifies to Senate panel (Wednesday was House Panel)

10:00 Leading economic indicators are expected to be slightly lower at -0.7%







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