More bad news from chip makers dominated markets on Tuesday but investors still held above the 4100 level in the SPX. The day ended with the SPX down 17 points at 4122 and 150 on the NASDAQ, closing at 12493.
Wednesday will be all about the inflation numbers but the technical indicators will still have an impact.
Let’s review the closing technical indicators from Tuesday to see what to expect for Wed Aug 10 2022.
Stock Market Outlook Chart Comments At The Close on Tue Aug 9 2022
The closing candlestick is bearish for Wednesday. It still closed above the 100 day moving average.
The 21 day moving average is still rising and is above the 50 day for a sixth day. The 50 day moving average is also turning higher. Both are bullish.
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 Upper Bollinger Band is rising and continued to move above the 200 day moving average which is bullish. It is however starting to turn sideways.
The Lower Bollinger Band is starting to climb higher again, which is bullish.
The 200 and 100 day moving average are still falling which is bearish.
There are 3 down signals still in place and one new up signal.
The chart is 75% bullish for Wednesday.
Stock Market Outlook review of Tue Aug 9 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Monday June 27. On Tuesday the up signal weakened again. The histogram also weakened. Both are still bullish but the strength of the signals is starting to wane.
- 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.
- 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 and is 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.
- 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.
- 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:
4200 is light resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light support
4000 is light support
3975 is light support and is a decline of 17.5%
3900 is light support and is a decline of 19%
3850 is light support and is a decline of 20%
3825 is light resistance.
3800 is good support.
3775 is light support
3750 is light support
3730 is light support
3700 is good support
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Wed Aug 10 2022
For Wednesday the S&P chart is 75% bullish. The technical indicators are mixed. The SPX has held above 4100 for 7 trading days which is often bullish despite the weakness we are seeing.
On Wednesday stocks will be waiting for the inflation reports due out early morning. They will determine the direction of stocks, at least at the start of the day. If the numbers show that inflation is easing, stocks will bounce higher quickly. If however the reports showing rising inflation, stocks will fall below 4100 which will be bearish. Wednesday then is all about the inflation reports.
Potential Market Moving Events
This week we get some inflation numbers on Monday, Wednesday and Friday. Those could cause some market gyrations.
Wednesday:
8:30 Consumer Price Index
8:30 Core CPI if hoped to come in at half a percent.
8:30 CPI year-over-year is hoped to come in at 8.7% or lower.
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