Wednesday’s dip to start the day found ready buyers which is bullish for the potential of a bounce continuing. The index had trouble all day breaking through 3780 to retake 3800. The close saw late day selling with a close down 4.9 to close at 3759.
The NASDAQ closed down just 16.22 to close at 11,053.
While in general the day ended with very little change in the closing numbers, there were some significant changes in the technical indicators.
Let’s review Wednesday’s closing technical indicators to see if Thursday can restart the bounce from Tuesday.
Stock Market Outlook Chart Comments At The Close on Wed Jun 22 2022
On Wednesday the closing candlestick is bearish and is only slightly supportive of a bounce continuing. Note how the candlestick ended with a long shadow (head). Often this is followed with another attempt to move higher on the following day.
The Upper Bollinger Band is no longer climbing. The 200 day is still falling but note how the 100, 50 and 21 day moving average averages are starting to turn sideways.
The Lower Bollinger Band is falling which is bearish but also points to a high probability of a bounce.
The chart looks weaker than it did on Tuesday’s close.
There are 4 down signals still in place and there have been no up signals since the start of April.
The chart is 85% bearish for Thursday and investors should expect more selling.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative. It is signaling oversold.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Monday June 13. On Wednesday the down signal weakened slightly. The MACD histogram is also slightly less negative.
- 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 unchanged and no longer oversold.
- 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 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 unchanged and no longer oversold.
- 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 unchanged.
- 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:
4200 is light resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light resistance
4000 is strong resistance
3975 is light resistance and is a decline of 17.5%
3900 is light resistance and is a decline of 19%
3850 is good support and is a decline of 20%
3825 is light support
3800 is good support.
3775 is light support
3750 is light support
3730 is light support
3700 is good support
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Thu Jun 23 2022
For Thursday the technical indicators are weaker, especially for the start of the day. There is a chance the rally will once again try to bounce higher but at present the index is weaker and the technical indicators are advising Thursday could be a pivotal day for the rally. Normally we would expect to see the index climbing but instead it is struggling to gain any traction to break through 3800.
For Thursday morning the open should be lower but there is a chance for a rally attempt to ignite again. The close though looks negative on the day.
Potential Market Moving Events
Fed Chair Powell testifies Wednesday and Thursday this week. It is not expected for anything new to be released.
8:30 Weekly Initial Unemployment Insurance Claims
10:00 Fed Chair Powell testifies at House Financial Services Committee
10:00 University of Michigan consumer index
10:00 5 year inflation expectations
10:00 New Home Sales