On Monday investors continued Friday’s sell-off with the heaviest down volume so far in the correction. On the S&P 97% of all volume was to the downside and only 5% of stocks moved higher.
On the NASDAQ 85% of all volume was to the downside. There were 1152 new 52 week lows. That’s the largest number of new lows since Feb 24.
By the end of the day the S&P was down 151 points to 3749 just slightly off the day’s low of 3734. The NASDAQ was down 530 points to close below 11,000 at 10809.
This left the S&P in a declared bear market and deeply oversold. A bounce should be expected for Tuesday ahead of the Fed’s decision on interest rates, due out on Wednesday. Many analysts believe the Fed will increase interest rates three-quarters of a percent following Friday’s stunning inflation number of 8.6%.
The futures on Tuesday, early morning show a bounce may try to recapture 30% of Monday’s loss at the open. There is though a new sell signal which is covered in the technical review below.
Let’s review Monday’s closing technical indicators to see what we should expect for Tuesday.
Stock Market Outlook Chart Comments At The Close on Mon Jun 13 2022
On Monday the closing candlestick is bearish but also points to a probable bounce. As well, the closing was below the 21 day moving average for a third straight day. I have been writing for the past couple of weeks that a close back below the 21 day moving average would be a signal for a move back to the downside.
The Upper Bollinger Band is climbing higher and the Lower Bollinger Band is falling. Usually this indicates a bounce should be expected.
Any bounce though has to recover above 4100. That is unlikely which is why the outlook remains lower after the bounce ends.
The 200, 100 and 50 day moving averages are all falling lower and the 200 day is leading the market lower. This is bearish.
There are 4 down signals still in place and there have been no up signals since the start of April. The markets need a catalyst to move higher. At present all the catalysts are continuing to pressure stock valuations lower. The last rally is over as is obvious from the chart and the index made a new correction low of 3734. Many analysts are now calling for the S&P to eventually fall to 3500 before reaching a bottom to the correction.
The chart is 90% bearish for Tuesday but there should be a bounce attempt.
Stock Market Outlook review of Mon Jun 13 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and back negative. It is oversold.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Wed May 25 2022. On Monday MACD issued a new unconfirmed but very strong down signal. The MACD histogram is negative.
- 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 falling and negative. It is oversold.
- 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 is reaching oversold.
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 oversold.
- 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:
4200 is light resistance
4150 is light support
4100 is light support
4050 is light support
4025 is light support
4000 is good support
3975 is light support and is a decline of 17.5%
3900 is good support and is a decline of 19%
3850 is good support and is a decline of 20%
3825 is light support
3800 is good support.
3775 is light support
3750 is light support
3730 is light support
3700 is good support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Tue Jun 14 2022
For Tuesday the Fed commences their two-day meeting. On Wednesday we get the interest rate decision. Many investors are now expecting a three-quarter point rate increase.
The technical indicators are pointing to the market bouncing probably around 30% or slightly more, recovering some of Monday’s losses. It is a bounce unless there is an actual rally. At present that is unlikely. A new down signal was issued by MACD which is a strong negative reading. I will be using any bounce on Tuesday to close positions and lock in profits, even small ones. I will be buying SPY ETF put options in the rally using July 15 at the $385 or $380 put strike.
The technical indicators are all losing strength and the outlook is cautious and lower even if there is a bounce on Tuesday morning.
Potential Market Moving Events
This week the primary events that could see markets shift are Fed related on Wednesday.
Monday:
11:00 AM: NY Fed 1 and 3 year inflation expectations came in at 6.6% and 3.9% respectively. Both are well above the Fed’s goal of a 2% rate of inflation.
Tuesday:
9:30 Producer price index final demand
Wednesday:
8:30 Retail sales
8:30 Empire State manufacturing index
10:00 NAHB home builder index
10:00 Business Inventories
2:00 FOMC statement – half point rate hike is expected
2:00 Fed Chair Powell news conference
Thursday:
8:30 Weekly Initial Unemployment Insurance Claims
8:30 Housing Starts
8:30 Philadelphia Fed manufacturing index
Friday:
10:00 Leading economic indicators
Stock Market Outlook Archives
Stock Market Outlook For Wed May 6 2026 – Choppy But Higher Still
Morning Investing Strategy Notes for Tue May 5 2026
Stock Market Outlook For Tue May 5 2026 – Overbought and Lower
Morning Investing Strategy Notes for Mon May 4 2026
Stock Market Outlook For Mon May 4 2026 – Dips Likely With Possible Lower Close
Morning Investing Strategy Notes for Fri May 1 2026
Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
