As expected, Fed Chair Powell crushed investors expectations for a softening of the Fed’s stance on continuing to raise interest rates. The outlook was shifted to a real possibility of interest hikes continuing into 2023 as the Fed Chair indicated he would prefer to err on the side of too high interest rates. His comments were negative enough to wipe out the recent rally and set the index back up for further downside.
The plunge late afternoon on Wednesday ploughed through the 3800 valuation and ended the day at 3760 for a loss of 96 points or 2.5%. This completely wiped out Friday’s big gain of 94 points.
The NASDAQ tumbled 366 points also wiping out Friday’s gain of 306 points. The index closed at 10524, down 3.36% and setting up the NASDAQ to break below 10,000 shortly.
It was another case of a rally built on investor hopes or expectations of some softening of the Fed’s stance being wiped out in a matter of a few minutes at a Fed news conference. The day ended ugly.
Let’s review the closing technical indicators from Wed Nov 2 2022 to see what to expect for Thu Nov 3 2022.
Stock Market Outlook Chart Comments At The Close on Wed Nov 2 2022
On Wednesday the S&P closing candlestick was back below the 50 day moving average and nearing the 21 day. The candlestick is bearish for Thursday. There is a typical signal of a potential bounce to start the day, but it will be met by selling.
The Upper Bollinger Band has turned back up and is above the 50 day and 100 day moving average which is bullish.
The Lower Bollinger Band is turning higher which is bullish.
The 21 day moving average is dipping lower which is bearish.
The 50 and 100 day moving averages are still falling but the 200 day is turning sideways. This is bearish.
There are 7 down signals in place since April and no up signals. The chart has switched back to bearish.
The chart is 85% bearish for Thursday. There will be no up signal this week.
Stock Market Outlook review of Wed Nov 2 2022
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 Thursday Oct 16. On Wednesday the up signal lost more strength. The histogram also lost more strength.
- 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 negative.
- 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 down signal in place and is falling from being 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 just above oversold readings. There is plenty of room to fall further.
- 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 turning negative.
- 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:
4000 is resistance
3975 is resistance
3965 is resistance
3950 is resistance
3925 is resistance
3900 is resistance
3875 is resistance
3850 is resistance
3825 is resistance
3800 is resistance
3775 is light resistance
3750 is light resistance
3730 is light support
3700 is light support
3675 is light support
3650 is light support
Stock Market Outlook for Tomorrow – Thu Nov 3 2022
For Thursday signals have switched back to bearish. Some have moved back into negative readings. The MACD up signal lost a lot of its strength on Wednesday. It is still positive, but the signal will change shortly to negative.
The S&P chart is back to being strongly bearish. The closing candlestick often points to a bounce at the open, but it is just a bounce which will find ready sellers.
With the non-farm payroll numbers for October due out on Friday, the market is positioned to fall still further.
The Fed continues to make it clear that until there are clear signs of a slow down, which is more likely to first be seen in a rising of unemployment numbers, the outlook is for still higher interest rates. While the Fed Chair indicated they had many “tools” at their disposal to deal with inflation, at present it would seem raising interest rates is the hammer of choice.
For Thursday watch for an early bounce attempt, possibly to retake 3800 but then a drop back lower. The day will end still lower.
Potential Market Moving Events
Friday we get the October non-farm payroll numbers. They are expected to be strong which will be negative for stocks.
Wednesday:
8:15 ADP employment report has a forecast of 195,000. The number came in at 239,000 which is bearish for stocks.
10:00 Rental vacancies rose to 6%
2:00 FOMC announcement was to raise interest rates to 3.75 to 4% to highest level since 2008.
2:30 Fed Chair Powell news conference sunk stocks.
Thursday:
8:30 Weekly Initial Unemployment Insurance Claims have been revised up to 220,000
8:30 continuing jobless claims
8:30 Foreign trade deficit
8:30 Productivity
9:45 S&P US services PMI
10:00 Factory orders
Stock Market Outlook Archives
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Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
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Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
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