On Tuesday stocks like United Parcel Service Stock (UPS) reported disappointing earnings which brought in selling but the real story was the continued collapse of First Republic Bank Stock (FRC) which lost s staggering 49% to close at $8.12. The chance that the bank will survive is slim and that brought the banking crisis back to the forefront for investors. The day was spent with the index slipping all day with only small spikes to break up the general decline. The end of the dy saw the SPX down 65 points to 4071 for a loss of 1.58% on the day. The NASDAQ closed down 238 points for a 2% loss on the day. The NASDAQ closed at 11,799.
Let’s review the closing technical indicators from Tuesday to see what we should expect for Wed Apr 26 2023.
Stock Market Outlook Chart Comments At The Close on Tue Apr 25 2023
The index closed with a bearish candlestick for Wednesday. At the same time, the candlestick is often seen before a bounce back attempt which could be as early as Wednesday.
The Upper Bollinger Band and Lower Bollinger Band are forming into a Bollinger Bands Squeeze. At present this is bearish and is signaling the next move will be lower for the SPX.
Also of significance is the 100 day moving average which rose last week but has still not crossed above the 200 day. Once it crosses above the 200 day it will end the down signal from April 24 2022 and place the SPX back within the bullish stance of the 21 day leading the market, the 50, then 100 and finally 200 day following along.
The S&P chart is more bearish than bullish as of Tuesday’s close.
There are 6 up signal since January and just 1 down signal left and as explained, that final down signal should end this week.
Stock Market Outlook review of Tue Apr 25 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) up signal from Mar 21 ended on Tuesday and a new down signal was generated for Wednesday. This down signal is not yet confirmed.
- 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 turning 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 sharp down signal in place with a bearish bias.
- 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 sharply and turned negative. It is 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 but still 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.
Support and Resistance Levels To Be Aware Of:
4250 is resistance
4240 is resistance
4225 is resistance
4210 is resistance
4200 is resistance
4190 is resistance
4180 is resistance
4175 is resistance
4150 is resistance
4135 is resistance
4125 is support
4100 is support
4090 is support
4075 is support
4050 is support
4030 is light support
4025 is light support
4000 is support
Stock Market Outlook for Wed Apr 26 2023
For Wednesday the SPX is facing a new MACD down signal. That signal is not confirmed but the remaining technical indicators have all turned lower.
After hours on Tuesday Microsoft Stock (MSFT) and Alphabet Stock (GOOGL) surprised investors with better than estimated earnings. Their stocks rose after hours which will help the index on Wednesday. Concerns about banks still weigh on investors however and many were stunned at the state of First Republic Bank (FRC) when they released their latest earnings. Investors fled the bank on Tuesday leading to the stock losing half of its value. The chance the bank can survive is in question.
For Wednesday, stocks will try a bounce, probably at the open, but there will have to be significant buying pressure if the SPX is to rise and close positive. The outlook remains negative for Wednesday.
Potential Economic and Political Market Moving Events
For Wednesday a number of the reports may impact the stocks.
Wednesday:
8:30 Durable goods orders
8:30 Trade balance on goods
8:30 Advanced retail inventories
8:30 Advanced wholesale inventories.
10:00 Consumer confidence