Stock Market Outlook for Thu Oct 26 2023 – Some Weakness But Another Bounce Attempt Likely

Prior Trading Day Summary

On Wed Oct 25 2023 indexes started the day lower and ended the day at the lows.

The SPX closed down 61 points for a drop of 1.43% to end the day at 4186. For the SPX it was the worse single day since Sep 26 when the index lost 63 points.

The NASDAQ fell 318 points to end the day at 12,821. It was the worse single day for the index this year.

While the day was very bearish and the futures early evening turned decidedly bearish, the technical indicators are signaling the selling may slow.

Let’s review the closing technical indicators from Wed Oct 25 2023 to see what to expect for Thu Oct 26 2023.

Stock Market Outlook: SPX Closing Chart For Wed Oct 25 2023

The index closed below all major moving averages which is bearish. The closing candlestick ended the day at the Lower Bollinger Band which is bearish.

However the closing candlestick also points to another bounce attempt likely on Thursday.

The 21, 50 and 100 day moving averages are all falling. This is bearish. The 21 day moving average is nearing the 200 day but note how it is still turning sideways.

The Lower Bollinger Band is turning lower which is bearish and could signal more downside to come. The Upper Bollinger Band turned back up which could be signaling an end to the Bollinger Bands Squeeze and possibly a chance for a bounce.

The S&P chart is quite bearish but there has been no attempt to retake the 200 day moving average that has had an conviction. We could see such an attempt on Thursday or Friday.

Stock Market Outlook review of Wed Oct 25 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Thu Oct 26 2023 

The technical indicators for Thursday are signaling that investors could see some weakness to start the day but then a rally or a bounce to follow.

Signs are still advising stay cautious and take profits when they present themselves and place less capital back into trades until there is a solid up signal in the index. Any bounce at present is not an up signal.

On Wednesday new home sales stunned analysts as they came in 83,000 higher at 759,000 a clear sign the economy is hanging on.

With stocks continuing lower on Wednesday a huge number of trading below their 200 day moving average. We should expect a bounce which according to the technical indicators should happen today.

Meanwhile Thursday has a large number of economic reports, a few of which could affect the market direction as outlined in the day’s notes for Thursday below. These could kill any rally attempt, especially if Treasury yields rise on stronger numbers than estimated.

Potential Economic and Political Market Moving Events

The most important reports this week are services PMI on Tuesday, durable goods orders on Thursday and PCE on Friday. Any of these could move markets.

Monday:

There are no economic reports

Tuesday:

9:45 S&P flash US services PMI s expected to be 49.9 but came in at 50.9

9:45 S&P flash US manufacturing PMI is expected to be 49.0 but came in at 50

Wednesday:

10:00 New home sales are estimated to have rise to 680,000 from 675,000 prior. Instead they rose to 759,000 defying analysts.

Thursday:

8:30 GDP – a number above 4.7% could send stocks lower

8:30 Weekly Initial Unemployment Insurance Claims are expected to rise to 207,000. A higher number will be negative for stocks.

8:30 Durable goods orders are expected to rise to 2%. A higher number will be negative for stocks.

8:30 Trade balance in goods

8:30 Advanced retail and wholesale inventories

10:00 Pending home sales are expected to rise to -1.5% from -7.1%.