Stock Market Outlook for Thu Sep 21 2023 – Still Bearish – Bounce Attempt Likely

Sep 20, 2023 | Stock Market Outlook

Bearish bounce likely

Prior Trading Day Summary

On Wednesday the Fed news conference sunk the market as Fed Chair Powell made it clear in his press conference at 2:30, the chance of a further rate hike was very high heading into the fall. Investors were also surprised by comments suggesting it could be late 2024 before the market sees any interest rate decrease. A lot of investors did not like what they heard and they voted by selling out of positions and taking profits out of the markets.

The losses by the close were not minor on either index.

The SPX fell 41 points on low volume of 3.3 billion shares. It closed at 4402.

The NASDAQ lost 209 points by the close. The index closed at 13,469 on 4.9 billion shares traded.

Let’s review the closing technical indicators from Wed Sep 20 2023 to see what to expect for Thu Sep 21 2023.

Stock Market Outlook: SPX Closing Chart For Wed Sep 20 2023

The index closed below the 50 and 21 day moving averages which is bearish. The closing candlestick is bearish but also signals a bounce is likely if not Wednesday then by Thursday.

The 50, 100 and 200 day moving averages are continuing to climb which is bullish. The 21 day moving average is turning lower is bearish.

The Lower Bollinger Band is back rising which is bearish. It moved above the 100 period moving average a few trading days ago.

The Upper Bollinger Band is moving lower which is bearish. The Bollinger Bands Squeeze on Wednesday continues to suggest stocks will move lower out of this squeeze.

Stock Market Outlook review of Wed Sep 20 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) issued a down signal on Mon Sep 18. On Wednesday the down signal is much stronger.

  • 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 entering oversold readings.

  • 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 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 falling and ready to turn 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.

Stock Market Outlook: Support and Resistance Levels

4600 is resistance
4575 is resistance
4550 is resistance
4525 is resistance
4500 is resistance
4485 is resistance
4470 is resistance
4450 is support
4435 is support
4420 is support
4400 is support
4390 is support
4370 is support
4350 is support

Stock Market Outlook for Thu Sep 21 2023 

The Fed news conference have been dominated by selling late in the afternoon. Today we saw the same occurrence. The selling turned a lot of the technical indicators bearish. For Thursday watch for a potential bounce but be aware that this is an oversold bounce and unless it can retake 4450 and close above it, the index looks set to challenge 4400 for support. Friday will end lower despite being very oversold.

Potential Economic and Political Market Moving Events

This week the Fed’s interest rate decision and news conference on Wednesday were the main events to be watching.


8:30 Weekly Initial Unemployment Insurance Claims

8:30 Philadelphia Fed manufacturing survey which is expected to have declined.

10:00 US Leading economic indicators

10:00 Existing home sales are estimated to have risen 300,000 to to 4.1 million.


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