Stock Market Outlook for Wed Dec 28 2022 – Weakness But Bias Still Up

On Tue Dec 27 2022 markets faced low volume again and only tepid buying interest. The S&P and Dow were positive most of the day but as the afternoon wore on, buying interest dried up and the S&P and NASDAQ both ended the day lower.

The S&P fell 15 points closing at 3829 while the NASDAQ lost 144 points to close at 10353.

Let’s review the closing technical indicators from the SPX on Tue Dec 27 2022 to see what to expect for Wed Dec 28 2022.

Stock Market Outlook Chart Comments At The Close on Tue Dec 27 2022 

On Tue Dec 27 the S&P closed below all moving averages but once again above the Lower Bollinger Band. This is bearish.

The closing candlestick is however still bullish for Wednesday.

The Upper Bollinger Band is turning lower which is bearish. The Lower Bollinger Band is still moving lower which is bullish.

The 200, 21 and 100 day moving averages are falling. The 50 day is still climbing.

The 21 day moving average is falling rapidly and this week could fall below the 100 day which would be a new down signal.

There are now 4 down signals in place since April 24 and two up signals.

The chart is 65% bearish for Tuesday.

Stock Market Outlook review of Tue Dec 27 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 Tuesday Dec 6 2022. On Tuesday the down signal lost more strength. The histogram also lost strength.

• 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 and positive.

• 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 neutral signal in place and moving out of 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 negative.

• 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 negative.

• 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:

4050 is resistance

4030 is resistance

4025 is light support

4000 is light support

3975 is light support

3965 is light support

3950 is good support

3925 is light support

3900 is good support

3875 is light support

3850 is light support

3830 is light support

3810 is light support

3800 is good support

3775 is good support

3750 is good support

3730 is light support

3725 is light support

3715 is light support

3700 is good support

3685 is light support

 Stock Market Outlook for Tomorrow – Wed Dec 28 2022 

For Wednesday the technical indicators are showing further signs of weakness. Caution is advised but there are still a few signs of a potential bounce. The closing candlestick points to a potential bounce, at least to start Wednesday off. The Moving Average Convergence / Divergence continues to lose the down signal which is also bullish.

At present the outlook remains weak but with a slight bias to the upside.

Potential Economic and Political Market Moving Events

On Wednesday there are no reports that should swing markets.

Wednesday:

10:00 Pending home sales index

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