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Stock Market Outlook for Thu Sep 28 2023 – Bounce Likely

Sep 28, 2023 | Stock Market Outlook

Stock Market Outlook - Bounce Likely

Prior Trading Day Summary

On Wednesday stocks slipped lower intraday and broke through a number of key support levels including the 200 period moving average.

With the SPX down at 4238, buyers finally returned and pushed the index back to Tuesday’s close.

The NASDAQ also closed higher up 29 points to 13092.

Volume rose on both New York and the NASDAQ. The NASDAQ reached just shy of 5 billion shares traded, the 4th highest volume day in September. Often this type of activity supports the start of a bounce.

Let’s review the closing technical indicators from Wed Sep 27 2023 to see what to expect for Thu Sep 28 2023.


Stock Market Outlook: SPX Closing Chart For Wed Sep 27 2023

The index closed below the 50, 21 and 100 period moving averages for a fifth day which is bearish. Intraday the index broke below the 200 day and bounced which is bullish.

The closing candlestick is also bullish as it signals extremely overbought and ready to bounce higher.

The closing candlestick closed at the Lower Bollinger Band which is bullish for a bounce.

The 50 period and 21 period moving averages are falling which is bearish. The 200 period moving average is continuing to climb which is bullish. The 100 period moving average is trending sideways which is neutral at present.

The Lower Bollinger Band is falling which is bearish. The Upper Bollinger Band is rising which is bullish. Overall the SPX chart is still signaling that this is a correction and nothing more. We will get a better picture on Thursday whether the market is ready to rally.

Stock Market Outlook review of Wed Sep 27 2023


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is falling sharply and negative. It is signaling extremely oversold.

  • 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 was stronger again.

  • 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 negative. It is leaving oversold.

  • 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 in place for a third day and is extremely oversold.

  • 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 unchanged and negative. It is oversold.

  • 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 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 resistance
4435 is resistance
4420 is resistance
4400 is support
4390 is support
4370 is support
4350 is support
4330 is support
4325 is support
4300 is good support
4375 is support
4350 is good support


Stock Market Outlook for Thu Sep 28 2023 

For Thursday stocks appear set to bounce higher as long as oil does not continue to climb as well as Treasury yields. Any dip in either and stocks will rally strongly.

All the technical indicators are still advising caution but if a rally can get enough strength it will move higher on the back of those bears who shorted over the past several days and will rush to buy back positions to control losses.

On Thursday the Weekly Initial Unemployment Insurance Claims will be an important number to watch. A weak number could support those investors who believe the Fed is done or near finished raising interest rates. That will boost stocks. Just remember, watch the price of oil.


Potential Economic and Political Market Moving Events

This week the reports are lighter which could assist the bulls. The most telling report is the PCE Index on Friday.

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims

8:30 GDP revision

10:00 Pending home sales

4:00 PM Fed Chair Powell speaks






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