August unemployment numbers were in-line with estimates and the markets moved higher initially. By noon the S&P was holding above 4000 but then word of Nord Stream 1 being shut down to Europe reverted the buying into selling. By the end of the day the S&P was down 42 points but it had fallen from 4018 at the noon hour down to 3906 by 3:30 for a plunge of 112 points. The index closed at 3924 and capped off another week of selling losing 133 points for the final week of August. The S&P is now down 18.5% from its 52 week high.
The NASDAQ dropped 154 points and lost 510 points on the week almost matching the prior week’s loss of 563 points. The index closed at 11630, now down 28.2% from its 52 week high of 16212 made on Nov 22, 2021.
But there are some signs the indexes could still try once again for another bounce to start the first week of September trading.
Let’s review the closing technical indicators from Friday to see what we should expect on Tuesday.
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Stock Market Outlook Chart Comments At The Close on Fri Sep 2 2022
The closing candlestick is bearish but did not break below Thursday’s low. Instead it showed some resilience at holding at or above the 3900 and trying for a bounce off the Lower Bollinger Band.
The candlestick closed below the 50 day moving average on Friday and is now back below all major moving averages. This is bearish but also indicates extremely oversold raising the potential for a bounce.
The Upper Bollinger Band and Lower Bollinger Band are out of the Bollinger Bands Squeeze. The Upper Bollinger Band is pointing to stocks rising while the Lower Bollinger Band is still pointing to stocks falling.
The 21 day moving average is falling further away from the 200 day. This is bearish.
The 200 day and 100 day moving averages are also falling which is bearish.
The first up signal since April was released Tuesday Aug 2 when the 21 day moving average crossed above the 50 day moving average.
The 21 day moving average moved above the 100 day moving average on Wed Aug 16 for a second major up signal.
The 50 day has been rising and continued its push higher on Friday. The index touched the 50 day in the morning after the rally following August’s unemployment report. This is bullish.
There are now 2 down signals still in place and two up signals.
The chart is 80% bearish for Monday but there are signs a potential bounce is still quite possible.
Stock Market Outlook Review of Fri Sep 2 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 a down signal on Monday Aug 22. On Friday the down signal gained strength. The histogram also gained strength. Both are bearish signals.
- 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 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 an up signal in place and is deeply 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 and returning to negative readings. It has not been negative since mid-July.
- 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:
4250 is stronger resistance
4220 is light resistance
4200 is light resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light resistance
4000 is light resistance
3975 is light support and is a decline of 17.5%
3950 is light support
3925 is light support
3900 is strong support
3875 is light support
3850 is good support
3825 is light support
3810 is good support
Stock Market Outlook for Tomorrow – Tue Sep 6 2022
For Tuesday the technical indicators and the S&P chart pattern are continuing their bearish stance but there are a number of signals pointing to the index as trying to hold above 3900. A bounce still is a possibility as the technical indicators show the index as very oversold.
September has a poor history for stocks primarily because when summer holidays end, many fund managers tend to adjust and reposition portfolios. This year may see a chance as many stocks are very oversold and at attractive levels.
For Tuesday there is a strong chance of a bounce attempt but if it fails, the index could retest 3900. With the Fed’s Beige Book due out tomorrow (Wednesday) afternoon at 2:00 PM we could see investors try to push stocks higher in anticipation of a bit of “less hawkish” tone among the Fed notes.
Potential Market Moving Events
There are a number of major events this week including on Wednesday when we get the Fed’s Beige Book notes.
Tuesday:
9:45 S&P services PMI which previously was 44.1
10:00 ISM services index which is expected to be 55.5%, down slightly from July’s 56.7%
Wednesday:
2:00 Fed’s Beige Book
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
