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Stock Market Outlook for Wed Feb 21 2024 – Confirmed Down Signal

Feb 20, 2024 | Stock Market Outlook

MACD Down Signal confirmed

Prior Trading Day Summary:

On Tuesday investors faced selling pressure as investors prepare for what could be a tumultuous week. On Wednesday the FOMC January minutes are released at 2:00 PM. After hours investors get NVIDIA’s earnings (NVDA). These could be the largest market mover for the next couple of days. NVIDIA Stock (NVDA) is such a large part of the index now that any large swings in the stock will impact the market as a whole. It also means if NVIDIA Stock (NVDA) falls after hours on Wednesday and carries through to Thursday, most stocks will also be falling.

The SPX lost 30 points to close at 4975. The NASDAQ lost 144 points to close at 15,630.

Let’s review Tuesday’s closing technical indicators to see what we should expect for Wed Feb 21 2024.


Stock Market Outlook: SPX Closing Chart For Tue Feb 20 2024

The index fell again on Tuesday brushing against the 21 day moving average before bouncing into the close.

The closing candlestick is bearish for Wednesday although it is signaling there is a chance for a bounce, but it won’t hold just yet.

The 21 day moving average is moving higher which is bullish. It is above 4925 on the SPX.

The 50 day moving average is rising and at 4800 which is bullish.

The 100 and 200 day moving averages are climbing which is bullish. The 200 day is at 4500 on the SPX which is bullish.

The Bollinger Bands are bearish to start the week. The Upper Bollinger Band is dipping back and the Lower Bollinger Band moved above the 50 day moving average again. A Bollinger Bands Squeeze is likely this week as the two Bollinger Bands move closer together.

The S&P chart is still more bullish than bearish for Wednesday but again there are signals to be aware of.

Stock Market Outlook review of Tue Feb 20 2024


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 a down signal on Fri Feb 16 2024. On Tue Feb 20 2024 the down signal was confirmed.

  • 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 trending sideways, unchanged from Friday’s close. It is 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 is not 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 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. It is signaling a lower day should be expected for Wednesday.

  • 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.

Stock Market Outlook: Support and Resistance Levels

5075 is resistance
5050 is resistance
5025 is resistance
5010 is resistance
5000 is resistance
4990 is resistance
4975 is resistance
4950 is resistance
4925 is resistance
4915 is resistance
4900 is resistance
4875 is support
4850 is support
4825 is support
4815 is support
4800 is support
4780 is support
4750 is support
4720 is support
4700 is support


Stock Market Outlook for Wed Feb 21 2024 

At the close on Tuesday the down signal from the MACD technical indicator was confirmed. This has been one of the more reliable indicators for market direction for the past four years. Investors should anticipate stocks closing lower on Wednesday. Overall there are no technical indicators pointing higher or up. They are either pointing lower or neutral. Often when this occurs we can expect a bounce to occur within a day or two as sort of a contrarian movement is often seen. The chance that any bounce holds at present is fairly good unless some unknown catalyst to the downside appears. The Bollinger Bands Squeeze being entered this week could be a somewhat ominous signal that more downside should be expected before stocks bounce again.

For Wednesday investors get the January FOMC minutes at 2:00 PM. I am expecting a spike shortly before 2:00 PM and then some selling after as I do not expect any concrete signs the Fed plans to cut interest rates in March or even April. Also on Wednesday after the close, NVIDIA (NVDA) releases their latest quarterly earnings. Most analysts expect strong earnings and a revenue beat for the quarter. However an earnings miss or weaker than expected earnings will send stocks lower. Therefore for Wednesday the outlook is poor for a move higher. Instead the outlook is for stocks to end the day lower.


Potential Economic and Political Market Moving Events

The January FOMC minutes are out Wednesday afternoon at 2:00. On Thursday we get manufacturing PMI and existing home sales. These could move markets this week.

Monday:

Presidents Day Holiday

Tuesday:

10:00 Leading economic indicators came in as expected with a dip to -0.3% from -0.1% prior.

Wednesday:

2:00 Minutes of Fed’s January FOMC meeting are released






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