Better earnings from Bank Of America Stock (BAC) and a dropping dollar helped inspire confidence in investors on Monday to rekindle the rally that had been tried on Thursday last week.
By the end of the day the indexes had made huge gains with the NASDAQ having its best day in 4 months.
Monday saw the S&P add on 95 points to close at 3677 and the NASDAQ climbed 354 points to end the day at 10675.
It was a strong day with good volume and wide spread participation among stocks. This should assist for a second day of rallying.
Let’s review Monday’s closing technical indicators to see what to expect for Tue Oct 18 2022.
Stock Market Outlook Chart Comments At The Close on Mon Oct 17 2022
On Monday the S&P closing candlestick is bullish and reached the 21 day moving average before dipping back slightly into the close.
The Bollinger Bands are moving into a squeeze by perhaps as early as Thursday. That squeeze and its direction for stocks is now questionable after the strong showing on Monday.
The 21 day moving average continued its descent and a new down signal was generated as the 50 day moving average fell below the 100 day on Oct 14.
The Upper Bollinger Band continued falling and is below the 50 and 100 day moving averages. This is bearish. The Lower Bollinger Band is starting to rise which may prove bullish.
All the moving averages are still falling which is bearish.
There are now 7 down signals in place since April and no up signals.
The chart is 85% bearish for Tuesday. The closing candlestick, the 21 day moving average and the Lower Bollinger Band are suggesting there is more upside to the rally.
Stock Market Outlook review of Mon Oct 17 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is unchanged and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thursday Oct 16. On Monday the up signal was confirmed. The histogram turned positive.
- 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 rising and back positive.
- 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. It is no longer showing 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 rising and back positive.
- 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 but still negative.
- 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:
3800 is resistance
3775 is light resistance
3750 is light resistance
3730 is light resistance
3700 is light resistance
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
3585 is light support
3550 is good support
3530 is light support
3515 is light support
3500 is good support and is a decline of 27%
Stock Market Outlook for Tomorrow – Tue Oct 18 2022
Monday’s large rally has the S&P slightly higher than the close on Thursday but volume was strongly positive. Market breadth was wider and 93% of all volume being traded was to the upside. The MACD technical indicator confirmed last Thursday’s up signal. That signal fell back on Friday but on Monday it rose dramatically which signals more upside to the rally.
All the technical indicators have improved and are pointing to more upside on Tuesday. For a second day the rally should add to Monday’s gains.
Keep an eye on the dollar and the 10 year Treasury rates. If either climbs higher the rally will falter. If the 10 year moves above 4.25% the rally may end abruptly.
Potential Market Moving Events
This week on Wednesday investors get the Fed’s Beige Book at 2:00 PM. Often that moves markets. On Thursday we get the Weekly Initial Unemployment Insurance Claims and on Friday we get inflation expectations.
Monday:
8:30 Empire State Manufacturing Index came in at -9.1, well below estimates of -5.0. This helped Monday’s rally as investors saw it as a sign the economy is slowing. Many investors believe a slowing of the economy will force the Fed to stop raising interest rates.
Tuesday:
9:15 Industrial production index
9:15 capacity utilization rate
10:00 NAHB home builders index
Stock Market Outlook Archives
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Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
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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
