Stock Market Outlook for Tue Aug 6 2024 – Bounce Expected and Higher Close

Prior Trading Day Summary:

Stocks opened the day on Monday with a huge drop thanks in large part to a plunge in Asian equities, particularly Japan where their stock market lost 12% and marked the worst day since 1987. The Dow Jones Index opened down over 1200 points but many analysts seemed to forget that the Dow Jones was trading at 39737 at Friday’s close. A 1200 point decline was 3%, not anywhere near the 1987 market crash. Still media outlets were calling Monday’s decline a market meltdown, a collapse, a stunning loss. Before trading hours the VIX had spiked to 65. There were also many analysts and investors who felt the Fed needed to intervene with an emergency rate cut. All of this combined with Friday’s lower than expected job’s numbers to send fear through investors, pros as well as retail and selling dominated.

The SPX closed down 3% with a loss of 160 points, ending the day at 5186. Volume was 5.4 billion up 200 million over Friday’s volume. There were 42 highs and 221 new lows. Down volume was 92% of all volume and 92% of all stocks on the SPX were falling by the close.

The NASDAQ fell 576 points for a loss of 3.4% and a close at 16200. Volume reached 7 billion, 100 million shares higher than Friday’s trading. New highs were 91 but new lows reached 595. Down volume was 79% of all shares traded and 84% of all stocks were falling.

Both indexes closed the day off their lows of the day but deeply oversold.

Let’s review the closing technical indicators from Mon Aug 5 2024 to see what the signals advise to expect on Tue Aug 6 2024.

Stock Market Outlook: SPX Closing Chart For Mon Aug 5 2024

The index broke through 100 day moving average on Monday and closed below it. This is bearish.

The closing candlestick has a long shadow which indicates a probable bounce on Tuesday as the index is deeply oversold. There is still a good chance the SPX may fall to the 200 day moving average this week.

The 21 day moving average is falling which is bearish.

The 50 day moving average is no longer climbing. This is bearish.

The 200 day moving average is slowing the uptrend. The 200 day is at 5070 which is still bullish. The 100 day is fell to 5303 which is bearish. Only the 200 day moving average is still rising.

The Lower Bollinger Band is below the 100 day moving average and falling which is bearish. The Upper Bollinger Band is turning higher which holds out some hope for a bounce back but a turn lower for the Upper Bollinger Band this week is likely.

The S&P chart is bearish with only the closing candlestick offering a chance for a bounce.

SPX Stock Market Outlook review of Mon Aug 5 2024

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Tue Aug 6 2024 

For Tuesday the technical indicators are all extremely oversold and pointing to a high probability of a bounce. A bounce of 40% to 50% would be suspect that it is a one or two-day bounce before more selling pressures the index lower. At present many stocks are oversold but not all. Tuesday should see a bounce and a probable higher close but the week could still see the SPX test support at the 200 day moving average.

Economic reports on Monday did not support the outlook of an impending recession.

Potential Economic and Political Market Moving Events

Monday:

9:45 Final services PMI came in at 55, down slightly from 55.9

10:00 ISM services rose to 51.4% from 50.9%

Tuesday:

8:30 Trade deficit for June is expected to be -72.5 billion.