Wednesday saw a sideways pattern develop on lighter volume as investors continued to review the outlook for a potential recession and inflation expectations. Fed Chair Powell spoke on Wednesday indicating that the Fed would do everything to bring inflation back to their target price. This didn’t seem to affect the trading.
The S&P lost 2 points and closed at 3,818.
The NASDAQ lost 3 points to close at 11,177.
Let’s review Wednesday’s closing technical indicators to see what to expect for Thursday. Thursday is an important day as investors get a number of inflation reports today.
Stock Market Outlook Chart Comments At The Close on Wed Jun 29 2022
On Wednesday the closing candlestick is bearish and signals a mixed outlook. The candlestick points to a potential attempt to rally perhaps to 3840 or 3850 but the close will still be lower on the day.
The Upper Bollinger Band is back falling and is ready to fall below the 200 day moving average. This is bearish and could signal the next move will be lower for the SPX.
All the moving averages are back falling.
The Lower Bollinger Band is still falling which is bearish.
The chart is more bearish for Thursday.
There are 4 down signals still in place and there have been no up signals since the start of April.
The chart is 90% bearish for Thursday. A close below 3800 is likely.
Stock Market Outlook review of Wed Jun 29 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising slightly and positive. It is no longer oversold.
- 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 June 27. On Wednesday the up signal was stronger The MACD histogram is positive for a third day.
- 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.
- 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 is falling.
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.
- 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.
- 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 light resistance 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 30 2022
For Thursday the technical indicators are more bearish than earlier in the week. While the closing candlestick still points to a possible bounce attempt yet again, it also indicates a lower day is ahead.
The Lower Bollinger Band falling rapidly and all major moving averages falling, signals that a move lower could be starting perhaps as soon as Wednesday. This is setting the index up to close below 3800 on Thursday especially as inflation readings on Thursday probably will not show a decline or that inflation has peaked, as many analysts have been advising.
Potential Market Moving Events
For the final week of June the biggest events are on Thursday when inflation reports are released. Any indication of even a slight slowing of inflation will see stocks rise. Any rise in inflation will send stocks lower.
Wednesday:
8:30 Gross domestic product revision came in at -1.6% which was near estimates of -1.5% and did not impact the market on Wednesday.
9:00 Fed Chair Powell speaks at ECB Conference. His speech did not impact the markets. Nothing new was said that investors are not already aware of.
Thursday:
8:30 PCE Inflation (monthly)
8:30 Core PCE Inflation (monthly)
8:30 PCE Inflation year-over-year
8:30 Core PCE Inflation year-over-year
8:30 Real disposable income
8:30 Real consumer spending
8:30 Weekly Initial Unemployment Insurance Claims
9:45 Chicago PMI
Friday:
10:00 ISM manufacturing index
10:00 Construction Spending
Stock Market Outlook Archives
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
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
