Tuesday saw a small opening bounce and then more selling as the SPX index swiftly fell below4000 by 10:30. Volumes picked up and down volume swamped up volume for both indexes.
By the close the S&P was down 44 points and ended the day at 3986. The NASDAQ lost 134 points and ended the day at 11883.
The continued strength to the sell-off which started last Friday saw further technical changes on Tuesday which are covered below.
Let’s review the closing technical indicators from Tuesday to see what they advise investors should prepare for the final trading day of August.
Stock Market Outlook Chart Comments At The Close on Tue Aug 30 2022
The closing candlestick is unchanged at point to a good chance for a bounce but still bearish, advising that the index will move lower.
The candlestick closed below the 50 day moving average on Tuesday. It is now back below all major moving averages. This is bearish but often witnesses a bounce attempt.
The Upper Bollinger Band and Lower Bollinger Band are into a Bollinger Bands Squeeze. This is bearish and signals stocks are headed lower.
The 21 day moving average is falling 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 Tuesday.
There are now 2 down signals still in place and two up signals.
The chart is 95% bearish for Wednesday and often a signal this bearish is followed with a bounce attempt.
Stock Market Outlook review of Tue Aug 30 2022
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) issued a down signal on Monday Aug 22. On Tuesday 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 unchanged and near 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 a down 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:
4350 is strong resistance
4325 is strong resistance
4300 is strong resistance
4290 is light resistance
4275 is light resistance
4265 is light resistance
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 support
4000 is light support
3975 is light support and is a decline of 17.5%
3950 is light support
3925 is light support
3900 is strong support
Stock Market Outlook for Tomorrow – Wed Aug 31 2022
This is the third day when the SPX technical indicators are pointing to a potential bounce. For Wednesday though, the oversold signals are a lot stronger. We could see the index slip early in the day, perhaps to 3950 and then bounce. It would be rare for the index to not attempt to retake a major level like 4000. Overall though the index still appears set to test 3900, perhaps as early as this week.
The technical indicators have turned very bearish and many are oversold. This should bring a bounce but at the same time, many investors are concerned about the Fed and the chance of a recession. That fear is continuing to pressure investors to sell out which is driving stocks lower. Any bounce at present will be welcomed, but it is not changing market direction. Direction is still lower.
Potential Market Moving Events
The big events this week are on Tuesday when we get consumer confidence and Friday when we get August non-farm payroll numbers. Both of these will affect market action.
On Tuesday you can see below that the various economic numbers were strong which is part of the reason for the selling on Tuesday.
Tuesday:
9:00 S&P Case-Shiller U.S. home price index (year-over-year) was 18%, down from 19.9%
10:00 Consumer Confidence Index is expected to rise to 97.4 but instead it came in at 103.2 which is very strong. This high a reading was seen by investors as supporting the Fed continuing to raise interest rates which was behind much of the selling on Tuesday.
10:00 Job openings were well above estimates of 10.3 million, coming in at 11.2 million.
Wednesday:
8:15 ADP employment report which is expected to be 300,000
9:45 Chicago manufacturing PMI which is expected to come in at 52.0
Stock Market Outlook Archives
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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
