On Wednesday Fed Chair Powell announced a quarter point rate hike but it was comments from Treasury Secretary Janet Yellen concerning not expanding deposit insurance which sank stocks late in the day. By the end of the day markets were down roughly 1.6%.
By the close the S&P fell 66 points to end the day at 3936. The NASDAQ was down 190 points to end the day at 11,669.96.
The close saw Tuesday’s unconfirmed up signal still intact, but not confirmed by Wednesday’s acation.
Let’s review the closing technical indicators from Wed Mar 22 2023 to see what we should expect for Thu Mar 23 2023.
Stock Market Outlook Chart Comments At The Close on Wed Mar 22 2023
The index closed with a bearish candlestick for Thursday but also a potential bounce.
The Upper Bollinger Band is turning down which is a bearish signal. The Lower Bollinger Band is turning lower which is bearish and is entering into a Bollinger Bands Squeeze. As of Wednesday’s close the outlook is bearish for the squeeze but my personal opinion is the index will bounce.
The 200 day moving average is falling which is bearish. The 21 day is continuing to descend after generating a down signal on Friday. It is below all major moving averages again.
Meanwhile the 50 day is moving further above the 200 day moving average which is bullish.
At present there are 4 down signals in place since April 24 and 3 up signals since Jan 13.
The chart is bearish but the candlestick still points to a potential bounce.
Stock Market Outlook review of Wed Mar 22 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) continued with an unconfirmed up signal at the close today. The histogram is also slightly positive.
- 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.
- 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 still climbing indicating Thursday should be higher.
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 sharply and back negative.
- 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 and nearing positive readings.
- 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:
4100 is resistance
4090 is resistance
4075 is resistance
4050 is resistance
4030 is resistance
4025 is resistance
4000 is resistance
3975 is light support
3965 is light support
3950 is good support
3930 is light support
3900 is good support
3870 is light support
3850 is good support
3825 is light support
3810 is light support
3800 is good support
3775 is good support
Stock Market Outlook for Thu Mar 23 2023
For Thursday the technical indicators are more mixed with warnings of a possible bearish move. However much of the selling on Wednesday was caused by comments from Janet Yellen and not the interest rate hike of just a quarter point. That means on Thursday there is still a chance for the index to rebound from Wednesday’s sell-off.
Potential Economic and Political Market Moving Events
The big event for the week was the Fed’s quarter point rate hike on Wednesday.
Thursday:
8:30 US current amount
8:30 Weekly Initial Unemployment Insurance Claims which are expected to be 198,000
8:30 Continuing jobless claims
10:00 New home sales are expected to come in lower by 20,000 to 650,000
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