The weakness expected for Monday was well contained. By the end of the day the S&P was still above 4100 with a loss of 11 points to close at 4118.
The NASDAQ dipped just 21 points to close at 12,368..
Let’s review the closing technical indicators from Monday to see what to expect for Tue Aug 2 2022.
Stock Market Outlook Chart Comments At The Close on Mon Aug 1 2022
The closing candlestick is neutral for Tuesday. This is a cautionary signal. The index closed above the 100 day moving average and above 4100 for the second time since early June This is bullish.
The 21 day moving average is rising and is now at the 50 day moving average. It should move above it on Tuesday which would be the first up signal since the start of April. This will be bullish.
The Upper Bollinger Band is rising and is above the 100 day moving average which is bullish.
The Lower Bollinger Band is turning back up which is neutral at present but may turn bearish.
The 21 day moving average is still rising and the 50 day is starting to turn up as well.
The 200 and 100 day moving average are still falling which is bearish.
There are 4 down signals still in place and there have been no up signals since the start of April.
The chart is 70% bullish for Tuesday.
Stock Market Outlook review of Mon Aug 1 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is unchanged 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 was still strong. The histogram is also strong. Both are bullish signals.
- 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 unchanged and signaling overbought.
- 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 falling 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 rising.
- 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:
4200 is light resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light support
4000 is light support
3975 is light support and is a decline of 17.5%
3900 is light support and is a decline of 19%
3850 is light support and is a decline of 20%
3825 is light resistance.
3800 is good support.
3775 is light support
3750 is light support
3730 is light support
3700 is good support
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Tue Aug 2 2022
For Tuesday there are two changes in the support levels in the SPX. The 4000 and 4025 valuations have turned to light support from resistance.
The SPX chart is 70% bullish as it continues to cling to the 4100 valuation while the 21 day moving average is ready to signal up probably by Tuesday’s close.
The closing candlestick on Monday however is cautionary indicating the index may close lower on Tuesday. This will not end the rally however as the index remains bullish.
The technical indicators are now mixed with a slight edge to a lower close on Tuesday. As long as the MACD indicator does not lose strength over the next several trading days, the bulls have a good chance to quickly recover losses from Monday and probably Tuesday.
For Tuesday stocks are still overbought which means dips are likely and there is a strong case for a lower close.
Potential Market Moving Events
The biggest market moving event this week is on Friday morning at 8:30 when we get the July unemployment numbers. I will be putting together a SPY ETF trade ahead of those numbers being released.
Monday:
9:45 US Manufacturing PMI – came in at 52.2 down just slightly from 52.3 previously.
10:00 Construction spending – came in as expected at 0.4% which is better than the most recent reading.
Tuesday:
10:00 Job openings and quits
11:00 Real household debt
Motor vehicles sales are released at various times on Tuesday
Stock Market Outlook Archives
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
Morning Investing Strategy Notes for Tue Apr 16 2024
Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold
Morning Investing Strategy Notes for Mon Apr 15 2024
Stock Market Outlook for Mon Apr 15 2024 – Expect A Bounce
Morning Investing Strategy Notes for Fri Apr 12 2024
Stock Market Outlook for Fri Apr 12 2024 – All About Bank Earnings
Morning Investing Strategy Notes for Thu Apr 11 2024
Stock Market Outlook for Thu Apr 11 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 10 2024
Stock Market Outlook for Wed Apr 10 2024 – All About The CPI Numbers
Morning Investing Strategy Notes for Tue Apr 9 2024
Stock Market Outlook for Tue Apr 9 2024 – Morning Weakness Possible But Higher Close
