Wednesday saw markets rebound from being deeply oversold. The bounce on Wednesday came within a few points of retaking 4300 but there were not enough buyers into the close to push the index higher. The SPX closed at 4277 up 107 points for a gain on 2.5%.
The NASDAQ jumped 460 points for a 3.6% gain, closing at 13255.
The Dow Jones rose 653 points closing at 33286.
It was an impressive day for the bulls although trading volume was lower than the prior two days of selling. This makes the jump on Monday questionable as to whether it is just a technical bounce from a very oversold market or another signal that the bottom is being built and investors have seen the worst of the sell-off. No one can say for sure but let’s review the closing technical indicators from Wednesday on the SPX to see what they show for Thursday’s trading.
Stock Market Outlook Chart Comments At The Close on Wed Mar 9 2022
On Wednesday there were no changes in the S&P chart.
The Upper Bollinger Band is moving sideways and the Lower Bollinger Band is falling sharply. This is bearish at present and indicates there is still more downside ahead for the index.
The closing candlestick on Wednesday indicates that we saw a technical bounce. That bounce is usually followed by further selling.
There are now 3 down signals in place which you can see in the chart below. The 50 day moving average is still falling and ready to move below the 100 day which will be a fourth down signal.
All the major moving averages are falling lower with the 200 day still holding the 4400 level.
The chart remains very negative as of Wednesday’s close.
Stock Market Outlook review of Wed Mar 9 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and turned positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Mar 7 2022 . The down signaled weakened on Wednesday. The MACD histogram shows the impact of the rally but it remains 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 negative and rising.
- 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 still has a down signal in place.
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.
- 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.
- 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:
4500 is resistance
4490 is light resistance
4475 is light resistance
4450 is light resistance
4400 is good support and the 200 day moving average
4370 is light support
4350 is light support
4300 is good support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4150 is good support
4000 is good support
Stock Market Outlook for Tomorrow – Thu Mar 10 2022
At present the technical indicators are advising that Wednesday was a bounce but not the start of a recovery. It will take a couple more days of moving higher before the indicators will change enough to signal that this was a pivotal point in the correction.
Instead, as of Wednesday’s close the indicators are mixed but largely unchanged and now moving sideways but staying with a down or negative bias.
We should know more as Thursday’s trading progresses. For now the outlook is cautiously bullish.
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