On Tuesday stocks changed course when Job Openings took a large tumble, falling to 9.9 million, down from the expected 10.5 million. The lower number fed into theories the Fed was pushing the economy into a recession and investors bailed on stocks.
The close though was or as bad as many analysts had earlier feared with the S&P down just 24 points to 4100 and the NASDAQ down 63 points to 12126. Both indexes were lower intraday.
Let’s review the closing technical indicators from Tue Apr 4 2023 to see what we should expect for Wed Apr 5 2023.
Stock Market Outlook Chart Comments At The Close on Tue Apr 4 2023
The index closed with a bearish candlestick for Wednesday but still above all the major moving averages. The closing candlestick is signaling the market still overbought and will dip lower again on Wednesday.
The Upper Bollinger Band is turning up and the Lower Bollinger Band is turning down. Both are bullish signals.
The 200 day moving average is at 4000. The 21 day is turning back up and could move above the 100 day this week for another up signal.
The 50 day continues above the 200 day which is bullish. The 100 day is moving sideways above the 21 day which is the only bearish signal from the moving averages.
If you look at the list of down and up signals, there are 3 solid down signals still in play with the most important being the April 24 down signal. That signal is now almost a year old and is a prime reason many analysts still believe this is a bear market.
There are 3 up signals since January.
The chart is bearish for Wednesday and we may see investors decide to take further profits today. A negative close is likely.
Stock Market Outlook review of Tue Apr 4 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) up signal from Mar 21 lost a bit of strength. The histogram is also slightly lower.
- 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 fallingand positive. It is signaling overbought.
- 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 down signal in place. It is also signaling overbought.
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 positive. It is also overbought.
- 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 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:
4100 is resistance
4090 is resistance
4075 is resistance
4050 is resistance
4030 is resistance
4025 is resistance
4000 is support
3975 is light support
3965 is light support
3950 is good support
3930 is light support
3900 is good support
3870 is light support
3850 is good support
3825 is light support
3810 is light support
3800 is good support
3775 is good support
Stock Market Outlook for Wed Apr 5 2023
There is still plenty of strength to the rally so we may see one more day of weakness before a further rally attempt. However the job openings jolted a lot of investors. That means on further signals pointing to a slowing economy we will find further selling. That may happen next week after we get the jobs number on Friday. As well bank earnings start next week which could weigh on markets.
TOn Friday, the March non-farm payroll numbers are still being released although it is a holiday. The effect of those number won’t be known until next week.
For Wednesday watch for dips and a lower close.
Potential Economic and Political Market Moving Events
The biggest market moving event is the March non-farm payroll numbers due out Friday.
Wednesday:
8:15 ADP employment is expected to be 210,000
8:30 Trade Balance is expected to be -69.1 Billion
9:45 Final US Services PMI
10:00 ISM services