Stock Market Outlook for Tue Oct 31 2023 – Bounce Likely But Highly Suspect

Prior Trading Day Summary

On Monday stocks finally got the bounce they have needed. The S&P rose 49 points to end the day at 4166, just above the important 4150 support level.

The NASDAQ bounced 146 points, closing at 12,789.

Trading volumes were good with 4 billion shares traded on the S&P, 69% of which was to the upside. 64% of all stocks were moving higher.

The NASDAQ saw 4.2 billion shares traded with 62% of the volume to the upside and 57% of all stocks advancing.

The question now is whether the bounce can continue for another day as we head into Wednesday’s interest rate announcement.

Let’s review the closing technical indicators from Mon Oct 30 2023 to see what to expect for Tue Oct 31 2023.

Stock Market Outlook: SPX Closing Chart For Mon Oct 30 2023

The index closed below all major moving averages which is bearish. The closing candlestick ended the day above the Lower Bollinger Band which indicates a bounce is underway that could last into Tuesday.

The closing candlestick shows the index as oversold with a bullish bounce underway but highly suspect with two shadows, top and bottom.

The 21, 50, 100 and 200 day moving averages are all falling which is bearish. The 21 day moving average is falling to the 200 day and may fall below it on Tuesday or Wednesday.

The Lower Bollinger Band is turning lower which is bearish and could signal more downside to come. The Upper Bollinger Band is turning sideways which often indicates another move may be coming soon.

The S&P chart is quite bearish but now shows the bounce as finally started. It should last longer than one day.

Stock Market Outlook review of Mon Oct 30 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Tue Oct 31 2023 

On Monday investors finally got the oversold bounce that has been in the works for several days. Part of the reason for the bounce is Treasury yields remained largely stable on Monday. Since they were not rising further, investors stepped back into stocks picking through those that are deeply oversold but generally staying clear of financial stocks. As well utility stocks rose only slightly. Another factor for Monday is the lack of any economic reports. This has been a factor over the past several weeks for stocks moving higher on Mondays.

At present the bounce could stretch into Tuesday although there could be some weakness at the open but closing higher ahead of the Fed’s interest rate announcement and news conference on Wednesday.

Of concern is the 21 day falling to the 200 day and ready to move below it which is another down signal. As well the Upper Bollinger Band is turning sideways which often indicates another directional move is coming soon.  Whether it is up or down is unknown at present but we will get some signals shortly which will provide a clearer signal.

For Tuesday, stocks should end the day higher but we could see some dips especially in the morning. At present the bounce is highly suspect that this is just a very oversold bounce. As such it can often last longer than one day. Signals still advise to stay cautious and do not trust the bounce.

Potential Economic and Political Market Moving Events

This week investors get the latest consumer confidence numbers on Tuesday, Fed decision on interest rates and Fed Chair Powell’s news conference on Wednesday and on Friday the October non-farm payroll numbers. This will be a busy and volatile week.

Monday:

There are no economic reports

Tuesday:

9:00 S&P Case-Shiller home price index is expected at 0.8% up from 0.1%

9:45 Chicago Business Barometer is expected at 45.3 up from 44.1

10:00 Consumer confidence is expected at 100.0 versus 103.0