Tuesday saw wider swings in the SPX. The morning saw a dip to 4079 and a rally to 4140 over the lunch hour. The final close saw the index at 4091, below 4100 for the first time in three days. The SPX fell 27 points.
The NASDAQ dipped just 20 points to close at 12,348.
Let’s review the closing technical indicators from Tuesday to see what to expect for Wed Aug 3 2022.
Stock Market Outlook Chart Comments At The Close on Tue Aug 2 2022
The closing candlestick indicates the chance for a bounce is high. The index closed below the Upper Bollinger Band but managed to hold above the 100 day moving average.
The 21 day moving average is rising and is above the 50 day giving the SPX in order to see first up signal since April.
The Upper Bollinger Band is rising and is above the 100 day moving average which is bullish.
The Lower Bollinger Band is turning back up which is neutral at present but may turn bearish.
The 50 day is starting to turn up as well.
The 200 and 100 day moving average are still falling which is bearish.
There are 4 down signals still in place and one new up signal.
The chart is 70% bullish for Wednesday.
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) issued an up signal on Monday June 27. On Tuesday the up signal lost some strength. The histogram is also lost some strength. The signals though are still bullish.
- 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.
- 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 and no longer 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.
- 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 3 2022
For Wednesday there are some signal changes. The 21 day moving average now has an up signal in place. This is the first up signal since April. The closing candlestick is also signaling a potential bounce for Wednesday.
Meanwhile the technical indicators have switched and are now signaling lower for stocks for Wednesday.
Overall the outlook is mixed but a bounce is possible for Wednesday and there is a good chance for a higher close.
Potential Market Moving Events
The biggest market moving event this week is on Friday morning at 8:30 when we get the July unemployment numbers. I will be putting together a SPY ETF trade ahead of those numbers being released.
Tuesday:
10:00 Job openings and quits – openings fell to 10.7 million which is still quite strong but below the previous reading of 11.3 million. Quits were unchanged at 4.3 million.
11:00 Real household debt rose slightly to 0..3% from 0.0%.
Motor vehicles sales are released at various times on Tuesday – they rose to 13.5 million, up from 13.2 million indicating consumers are still spending.
Wednesday:
10:00 Factory orders – expected to slip to 1.2%