On Monday the morning open was weak but the dip was shallow and by 11:30 buyers were pushing sellers aside and snapping up stocks yet again. The close was near the day’s high and marked the fourth day the S&P ended the day above the 200 day moving average. The Dow Jones Index closed back above its 200 day moving average for the first time since April.
The SPX rose 17 points closing at 4297. The NASDAQ rose 80 points to close at 13128 and marked a second day above its 200 day moving average.
Tuesday we get earnings from a number of stocks but the primary interest will be Walmart and Home Depot.
Let’s review the closing technical indicators from Monday to see what to expect for Tue Aug 16 2022.
Stock Market Outlook Chart Comments At The Close on Mon Aug 15 2022
The closing candlestick is bullish for Tuesday but again points to a potential dip in the morning as it indicates the index is overbought. The candlestick is above the 200 day moving average for a fourth day.
The 21 day moving average is still rising and should move above 100 day today or tomorrow for a second up signal. The 50 day moving average is also turning higher. Both are bullish.
The first up signal since April was released Tuesday Aug 2 when the 21 day moving average crossed above the 50 day moving average.
The Upper Bollinger Band is rising and continued to move above the 200 day moving average which is bullish.
The Lower Bollinger Band is climbing higher again which is bullish.
The 200 and 100 day moving average are still falling which is bearish.
There are 3 down signals still in place and one new up signal.
The chart is 85% bullish for Tuesday.
Stock Market Outlook review of Mon Aug 15 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising 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 Monday June 27. On Monday the up signal gained strength. The histogram also improved. Both are bullish.
- 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.
- 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 and is overbought.
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 rising and overbought.
- 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.
- 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.
Support and Resistance Levels To Be Aware Of:
4325 is strong resistance
4300 is strong resistance
4290 is light resistance
4275 is light resistance
4265 is light resistance
4250 is stronger resistance
4220 is light support
4200 is light support
4150 is light support
4100 is light support
4050 is light support
4025 is light support
4000 is light support
3975 is light support and is a decline of 17.5%
Stock Market Outlook for Tomorrow – Tue Aug 16 2022
For Tuesday the S&P chart is 85% bullish. Any dips are still opportunities to setup trades. On Tuesday before the open Walmart and Home Depot release earnings. Earnings will have to be terrible to stop the rally at this point. Even earnings that miss slightly will be seen as positive by investors.
For Tuesday the technical indicators are still pointing higher aside from the Rate Of Change. Despite this, the index will close higher on Tuesday.
Potential Market Moving Events
There are a number of potential market moving events this week but the primary focus will be on retail earnings. None of the economic reports on Tuesday should move the markets.
Tuesday
8:30 Building permits and Housing starts
9:15 Industrial production index
9:15 Capacity utilization rate
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