Day’s Summary
On Monday stocks finally bounced after 4 days of selling. The problem with the bounce however was very low volume and not broadly based. Only 3.5 billion shares traded on New York. The S&P gained 40 points to close at 4518. This recovered 38% of the losses from last week.
On the NASDAQ volume was better at 5 billion shares traded bat there were only 74 new 52 week highs but 177 new 52 week lows. The index gained 85 points recovering 20% of the losses from last week.
Let’s review the technical indicators from the close on Monday to see what to expect for Tuesday’s trading.
Stock Market Outlook: SPX Closing Chart For Mon Aug 7 2023
The index closed below the 21 day moving average for a third day.
The closing candlestick on Monday points to the day as experiencing a bearish bounce.
The 21 day moving average is turning sideways while the 50, 100 and 200 day moving averages are continuing to climb which is bullish.
The Lower Bollinger Band rose further above the 50 day moving average which is bearish. The Upper Bollinger Band is turning lower which is also bearish. A new Bollinger Bands Squeeze is started.
Overall the index is still bullish but shows signs that the bounce on Monday is temporary before more selling takes the index lower.
Stock Market Outlook review of Mon Aug 7 2023
Stock Market Outlook: Technical Indicators Review
Momentum: Momentum is rising and negative.
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MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday Jul 27. On Mon Aug 7 2023 the down signal lost only a small amount of its down signal despite the large rally.
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Ultimate Oscillator: The Ultimate Oscillator is rising, negative and trying to bounce from oversold.
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Slow Stochastic: The Slow Stochastic has a down signal in place. It is oversold but also signaling there is a chance for a second bounce attempt coming.
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Relative Strength Index: The RSI signal is rising and negative.
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Rate of Change: The rate of change signal is rising again.
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Stock Market Outlook: Support and Resistance Levels |
| 4600 is resistance |
| 4575 is resistance |
| 4550 is resistance |
| 4525 is resistance |
| 4500 is support |
| 4485 is support |
| 4470 is support |
| 4450 is support |
| 4435 is support |
| 4420 is support |
| 4400 is support |
| 4390 is support |
| 4370 is support |
| 4350 is support |
| 4340 is support |
| 4325 is support |
| 4310 is support |
| 4300 is support |
| 4290 is support |
| 4275 is support |
| 4250 is support |
| 4240 is support |
| 4225 is support |
| 4210 is support |
| 4200 is good support |
Stock Market Outlook for Tue Aug 8 2023
For Tuesday the technical indicators are showing the market having experienced a bounce but still showing signals of bearishness.
Aside from weak technical indicators volumes on the S&P were very poor which often signals that the rally was a bounce which will be followed by further selling.
For Tuesday I am expecting a lower open followed by another attempt to move higher which will fail and the index will close negative on the day.
Wednesday could see a better day for stocks as investors position their portfolios for the latest CPI (Consumer price index) reports due out on Thursday.
Potential Economic and Political Market Moving Events
The big event this week is on Thursday with CPI numbers
Tuesday:
6:00 NFIB optimism index
8:30 trade balance
10:00 Wholesale inventories