Stock Market Outlook for Tue Sep 19 2023

Sep 19, 2023 | Stock Market Outlook

Prior Trading Day Summary

On Monday stocks tested the 4450 level intraday and managed to hold it and close above it. This continue to keep the rally alive.

The S&P closed up 3 points at 4453 while the NASDAQ closed up 1.90 to end the day at 13,710.

Let’s review the SPX technical indicators from Mon Sep 18 2023 to see what to expect for Tue Sep 19 2023.

Stock Market Outlook: SPX Closing Chart For Mon Sep 18 2023

The index closed back below the 50 and 21 day moving average which is bearish. The closing candlestick looks steady and could issue a bounce signal. However there is a long shadow (head) in the candlestick and often this shadow signals another day of the index moving lower.

The 50, 100 and 200 day moving averages are continuing to climb which is bullish. The 21 day moving average is turning higher which, while still bearish, is a good sign the rally might return.

The Lower Bollinger Band is back rising which is bearish. It looks set to move above the 50 period moving average. The Upper Bollinger Band is moving sideways which is bearish. The Bollinger Bands Squeeze on Monday continues to suggest stocks will move lower out of this squeeze.

Stock Market Outlook review of Mon Sep 18 2023

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 an up signal on Tue Aug 29 2023. On Mon Sep 18 2023 the MACD indicator issued a weak down signal.

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.

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.

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 negative.

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 and positive.

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.

Stock Market Outlook: Support and Resistance Levels

4600 is resistance

4575 is resistance

4550 is resistance

4525 is resistance

4500 is resistance

4485 is resistance

4470 is resistance

4450 is support

4435 is support

4420 is support

4400 is support

4390 is support

4370 is support

4350 is support

For Tuesday the technical indicators are suggesting there is a chance for the index to try to move higher. There are though, just as many reasons why the index will move lower to get out of the Bollinger Bands Squeeze.

For Tuesday expect some flatness due to the Fed meeting tomorrow and then a rally tomorrow as the Fed prepares to release the latest decision on interest rates. Very few investors and analysts believe there will be an interest rate hike.

Potential Economic and Political Market Moving Events

This week the Fed’s interest rate decision and news conference on Wednesday is the main event to be watching.

Tuesday:

8:30 Housing starts are expected to be lower at 1,43 billion

8:30 Building permits are released which are expected to be 1.45 million, up slightly from 1.44 million.