Stock Market Outlook for Thu Oct 5 2023 – Another Bounce Attempt But Staying Cautious and Bearish

Prior Trading Day Summary

On Wednesday the relentless climb of treasury yields finally stalled and oil prices dipped back. Both of these were all that investors needed to bounce stocks. The question though is whether this is just a bounce before more selling returns or the start of a longer rally.

The SPX rose 34 points to end the day at 4263.

The NASDAQ rose 176 points ending at 13236.

Let’s review the closing technical indicators from Wed Oct 4 2023 to see what to expect for Thu Oct 5 2023.

Stock Market Outlook: SPX Closing Chart For Wed Oct 4 2023

The index closed below the 50, 21, 100 and 200 period moving averages which is bearish. The index closed just below the 200 day moving average after running into sellers when trying to push above it.

The closing candlestick is bearish and indicates Wednesday was an oversold bounce.

The closing candlestick closed above the Lower Bollinger Band which is bearish

The 21 and 50 period moving averages are now falling quickly and sharply. The 21 period will fall to the 100 this week which will be a major down signal when that happens.

The 200 period moving average is continuing to climb which is bullish. The 100 period moving average is falling which is bearish.

The Lower Bollinger Band is falling which is bearish. The Upper Bollinger Band is falling which is also bearish. The S&P chart is very bearish but still shows signs of being oversold. This means there is a chance the rally could attempt a second day.

Stock Market Outlook review of Wed Oct 4 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Thu Oct 5 2023 

For Wednesday stocks bounced after being extremely oversold for a number of days. They also rose as treasury yields stalled in their rally.

For Thursday as long as treasury yields do not climb, stocks will try to build on Wednesday’s rally.

Friday we get the September non-farm payroll numbers. Today’s ADP numbers were far lower than expected but in general, the ADP numbers have not been accurate. Despite this, stocks have a good chance to continue the rally, especially in the afternoon on Thursday as investors position themselves for Friday’s jobs numbers.

Potential Economic and Political Market Moving Events

The most important report this week is Friday’s non-farm payroll number. If the number is a bit softer than expected, stocks will rally. If it is stronger than estimated, stocks will dip lower again.

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are estimated to be 210,000

8:30 Trade deficit is expected to be -$59.5 billion

Wednesday:

8:15 ADP employment came in at 98,000 which well was below estimates

9:45 Final US Services PMI came in at 50.1 which was in-line with estimates

10:00 Factory orders shot to 1.2% well above estimates.

10:00 ISM services dipped to 53.6% from 54.5%.

Tuesday:

10:00 Job Openings rose to 9.6 million from 8.8 million which some analysts expect show weakness in job growth

Monday:

9:45 Final manufacturing PMI was 49.8 which was higher than expected

10:00 ISM manufacturing was 49%, also higher than expected

10:00 Construction spending was 0.5% slightly less than expected