Two factors primarily controlled the markets on Monday. The first was further comments from Fed President Bullard basically repeating his remarks on his belief the Fed needs to jump-start interest rate hikes to combat inflation and restore confidence in the Fed being on top of the rapidly rising inflation. That’s my summary of his lengthier statement on interest rates and inflation. Then word reached the markets that the US Embassy was being closed in Ukraine. That sent the SPX into a tailspin shortly after the lunch hour just as the index had recovered and turned positive.
The S&P fell straight through the 200 day moving average, falling all the way to 3723 from roughly 1:20 to 2:00 PM, in what was a straight line south. That though marked the bottom for the day and the index crept higher until it closed back at the 200 day moving average for a loss of 17 points on the day. A very dramatic day for stocks on the S&P.
Meanwhile the NASDAQ flirted with a move above 13900, a low down to 13664 and a final close at 13790 for a loss of just 0.24 on the day. Also a dramatic day for NASDAQ stocks.
Overall, Monday’s market action was somewhat encouraging.
Let’s review Monday’s closing numbers to learn what investors should expect for Tue Feb 15 2022.
Stock Market Outlook Chart Comments At The Close on Mon Feb 14 2022
The closing candlestick on Monday is bearish but it also often is followed by a bounce attempt. Normally though the bounce doesn’t work and the index slips back again.
The 21 day moving average is falling.
The Upper Bollinger Band is still falling sharply which is quite bearish but note how the Lower Bollinger Band is still rising but it is also turning sideways. This is advising that selling is not as strong as earlier in the correction. A bullish sign would be if the Upper Bollinger Band started to turn back up.
The 50 and 100 day moving averages are falling which is bearish however the 200 day moving average is rising which is bullish.
The chart has two down signals in place and the index could generate a third down signal later this week. The chart is very bearish and the Bollinger Bands Squeeze should it occur looks strong enough to send stocks to the 4200 level. That’s a guess which is not backed by a technical point.
Stock Market Outlook review of Mon Feb 14 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a confirmed up signal on Friday Feb 4. On Monday the up signal was pretty well gone. The MACD histogram is trending lower.
- 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 negative abut trending sideways which is often a signal the market is nearing some kind of bottom.
- 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 a down signal in place and plenty of room to fall. This is bearish.
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 for a third day. This is bearish.
- 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 which signals there could be more changes in prices on Tuesday.
- 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:
4800 is resistance
4725 is resistance
4700 is resistance
4670 is resistance
4655 is resistance
4600 is resistance
4550 is resistance
4525 is light support
4500 is good support
4490 is light support
4475 is light support
4450 is medium support
4400 is good support and the 200 day moving average
4370 is light support
4350 is light support
4300 is good support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
Stock Market Outlook for Tomorrow – Tue Feb 15 2022
For now everything hinges on the Russia-Ukraine crisis but Monday’s drop and then recovery is encouraging. It signals that buyers are willing to place capital in the market at a time of heightening security concerns. This is quite bullish for stocks.
Tuesday should see a bounce attempt which will turn the indexes positive. However any further talk of war between Russia and Ukraine will cut short any rally.
Tuesday still looks set to end negative but we could see another day with just slight losses as both sides in this “tug-of-war” between Russia and Ukraine continues.
In the end, if Russia invades Ukraine there are some technical reasons to believe that the market could fall to 4200 to 4150 over a period of a couple of days but it may try to bottom around that level. That is near the same level as the Jan 24 sell-off and reversal.
Stock Market Outlook Archives
Stock Market Outlook for Fri Apr 26 2024 – Higher and Positive Close
Morning Investing Strategy Notes for Thu Apr 25 2024
Stock Market Outlook for Thu Apr 25 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 24 2024
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible
Morning Investing Strategy Notes for Fri Apr 19 2024
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
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
