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Stock Market Outlook for Thu Sep 26 2024 – Choppy – Dip Possible But Still Up

Sep 25, 2024 | Stock Market Outlook

Choppy Dips But Higher stock market outlook

Prior Trading Day Summary:

On Wednesday stocks opened higher, set a new 52 week high of 5741 and then ran into selling.

The dip was not as deep as anticipated but still saw the SPX fall to 5712 before closing at 5722. It was a choppy day but the 5700 valuation on the SPX was not tested as it was on Tuesday. This is good news for the bulls as they wait for the market to make another move higher.

The SPX traded just 3.7 billion shares to close down 10 points at 5722.

The NASDAQ traded 5.0 billion shares a decrease of 500 million shares, to close up 7 points to 18,082.

After hours Micron Technology Stocks (MU rose over 11% after reporting better than estimated earnings and revenue. As well margins were higher which is always a good sign. This should help the morning open but overall we may not see big moves until we get the non-farm payroll for September, next Friday and then into the next round of earnings in October.

Let’s review the closing technical indicators from Wed Sep 25 2024 to see what to expect on Thu Sep 26 2024.


Stock Market Outlook: SPX Closing Chart For Wed Sep 25 2024

The index closed above the 21 day moving average and at the Upper Bollinger Band which is bullish.

The closing candlestick has two shadows (head and tail) which are short indicating an overbought market and a chance for a dip.

The 21 day moving average is higher at 5601. This is bullish.

The 50 day moving average is higher at 5523. This is bullish.

The 100 day moving average is rising and closed at 5438 which is bullish.

The 200 day moving average is in an uptrend and closed at 5214 which is bullish.

The Lower Bollinger Band is below the 100 day moving average which is bullish.

The Upper Bollinger Band is turning higher which is bullish.

The S&P chart is more bullish than bearish for Thursday with just one warning of a small dip.

SPX Stock Market Outlook review of Wed Sep 25 2024


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 Fri Sep 13 2024. The up signal was weaker on Wednesday.

  • 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 rising and positive.

  • 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 and is at overbought levels.

  • 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 positive. It is at overbought levels.

  • 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 which advises Thursday will end higher.

  • 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

5740 is resistance
5715 is resistance
5700 is resistance
5650 is resistance
5625 is resistance
5615 is resistance
5600 is resistance
5575 is resistance
5550 is light support
5525 is support
5500 is support
5470 is support
5450 is support
5425 is support
5400 is support


Stock Market Outlook for Thu Sep 26 2024 

For Thursday the technical indicators are showing a bit more weakness but still nothing to be concerned about. A small dip today should be expected and indeed the index could fall to 5700 but investors have shown an interest in buying every dip. I would expect the same to occur today.

On Wednesday home sales came in higher than forecast at 716,000 but below 751,000 prior. The housing market is slowing and that concerns investors.

The momentum and MACD technical indicators are showing signs of losing strength but are nowhere near negative readings which basically advises the sideways action of the index over the past several days is wearing down momentum. This will assist in reducing the overbought environment stocks are in and will help them move higher in the next push.

With Micron earnings released that were far better than estimated, the index could open higher and attempt to build some momentum to the upside.

Also for Thursday watch the Weekly Initial Unemployment Insurance Claims which are out at 8:30. They could affect market action, certainly first thing in the morning.

Overall the outlook for the SPX is for a choppy day with a dip possible but a higher close.


Potential Economic and Political Market Moving Events

Monday:

9:45 S&P flash services PMI came in as expected at 55.4

9:45 S&P flash manufacturing PMI was lower than expected at 47

Tuesday:

9:00 Case-Shiller home price index came in lower than expected at 5.9%

10:00 Consumer confidence was a lot lower than expected coming in at 98.7

Wednesday:

10:00 New homes sales rose to 716,000 which was above estimated of 700,000

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are estimated to rise to 223,000

8:30 Durable goods orders are expected to drop to -3.0%

8:30 GDP (second revision) is estimated at 3.0% for the quarter

10:00 Pending home sales are expected to rise 1.0%

7 Fed officials are speaking at various times and locations throughout the day continuing to push the declining interest rate narrative. This should be bullish for stocks.

 





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