Stock Market Outlook for Wed Aug 7 2024 – Second Bounce Attempt But Lower Close Likely

Prior Trading Day Summary:

Tuesday saw stocks continually attempt to rebound but every spike found sellers which continually pressured the SPX back to the 5250 to 5240 valuation. The best push higher was late in the day heading into 3:00 PM when the SPX broke through 5300 to reach 5312 before sellers returned and pushed the SPX down 72 points to close once again at 5240. The close saw the SPX up 53 points to close at 5240. Just prior to 3:00 PM the SPX was up 125 points.

The NASDAQ also staged a rebound which at one point has the index at 16,620 but the close saw sellers pummel stocks again and the index lost 254 points to close up 166 points at 16366.

Volumes were lower than yesterday but still bullish with 74% of the SPX and 63% of the NASDAQ stocks higher than they ended the day on Monday. The question now is whether Tuesday was simply a technical oversold bounce on the way to lower prices or if the bounce was the start of a recovery.

Let’s review the closing technical indicators from Mon Aug 5 2024 to see what the signals advise to expect on Wed Aug 7 2024.

Stock Market Outlook: SPX Closing Chart For Tue Aug 6 2024

The index almost reached the 100 day moving average in the rebound attempt but closed well below it at 5240. This is bearish.

The closing candlestick has a long shadow which indicates a probable second bounce attempt on Wednesday as the oversold condition remains but the close looks negative to flat for Wednesday.

The 21 day moving average is falling which is bearish.

The 50 day moving average is falling. This is bearish.

The 200 day moving average is slowing the uptrend. The 200 day is at 5072 which is still bullish. The 100 day fell to 5302 which is bearish. Only the 200 day moving average is still rising.

The Lower Bollinger Band is below the 100 day moving average and falling to the close on Tuesday. This is bearish. The Upper Bollinger Band is starting to turn sideways which could signal a move lower later this week. At present the signal is neutral.

The S&P chart is bearish with only the closing candlestick offering a chance for a bounce. All the other technical indicators are pointing lower.

SPX Stock Market Outlook review of Tue Aug 6 2024

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Wed Aug 7 2024 

For Wednesday the technical indicators are once again pointing to a strong possibility of a bounce. However if this bounce cannot hold 5300 or higher, there is a strong chance for a lower to flat close.

Some earnings after hours on Tuesday were disappointing but Supermicro Stock (SMCI) originally headed higher but by 8 PM the stock was shown down 82 points for a 13% decline. If that holds to start the day on Tuesday we may not see a second bounce attempt until either mid to late morning, or not at all. The company reported contracting gross margins which fell to 11.2% from 17%. This is a major concern for investors. Perhaps to combat this the company announced a 10 to 1 stock split but exactly how that will assist declining margins is definitely not known.

AIRBNB Stock (ABNB) fell 14% after hours on their earnings release. Reddit Stock (RDDT) fell 4.5% after hours on their earnings release. Even Amgen Stock (AMGN) which reported strong earnings fell 2.1% after hours on their earnings release. On Wednesday morning we get earnings from Disney, Shopify, Global Payments and Ralph Lauren among others. These 4 stocks though will give a strong outlook on the strength of the consumer.

Potential Economic and Political Market Moving Events

Monday:

9:45 Final services PMI came in at 55, down slightly from 55.9

10:00 ISM services rose to 51.4% from 50.9%

Tuesday:

8:30 Trade deficit for June was expected to be -72.5 billion but came in at -$73.1 billion

Wednesday:

3:00 Consumer Credit is expected to fall to $9.7 billion from $11.3 billion prior