On Tuesday, stocks fell lower in a broad sell-off as investors moved back to the side of no soft landing for the economy and no accommodative Fed.
The S&P closed down 2% losing 82 points and ending the day at 3997. The NASDAQ lost 2.5% as it dropped 295 points and ended the day at 11,492.
The S&P opened lower and spent the day falling. The end of the day saw the S&P at the low of the day.
The NASDAQ tried to bounce at the open but when that failed, within the first 15 minutes of the day, stocks on the NASDAQ spent the day moving lower. The close saw the NASDAQ at its lows of the day.
Let’s review the closing technical indicators from Tue Feb 21 to see if there is a chance of a bounce on Tue Feb 21.Wed Feb 22.
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Stock Market Outlook Chart Comments At The Close on Tue Feb 21 2023
On Tuesday the index closed at major support and just below the 200 day moving average. The closing candlestick is just above the Lower Bollinger Band. A bounce should be expected but the chance of its reversing the trend lower at this stage is extremely slim.
The closing candlestick is bearish for Wednesday but also points to a bounce to move back above the 200 day moving average.
The Upper Bollinger Band is turned lower while the Lower Bollinger Band turned sharply higher and is above the 100 and 50 day moving average which is bearish. A Bollinger Bands Squeeze seems likely this week which at present looks set to send stocks lower.
The 200 day moving average is rising which is bullish. The 21 day moving average is turning sideways while the 50 and 100 day moving averages are still rising.
At present there are 2 down signals in place since April 24 and 4 up signals since Jan 13.
The chart is only 75% bearish for Wednesday.
Stock Market Outlook review of Tue Feb 21 2023
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) down signal gained strength on Tuesday. The MACD histogram also gained negative 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 falling and negative.
- 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 nearing oversold levels.
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 sharply and negative. It is now into oversold levels.
- 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 only slightly positive.
- 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:
4250 is resistance
4220 is resistance
4200 is resistance
4180 is resistance
4150 is resistance
4125 is resistance
4100 is resistance
4090 is resistance
4075 is light support
4050 is support
4030 is light support
4025 is light support
4000 is light support
3975 is light support
3965 is light support
3950 is good support
3930 is light support
3900 is good support
Stock Market Outlook for Tomorrow – Wed Feb 22 2023
Tuesday’s sell-off turned all the technical indicators negative and pushed a number into oversold readings. With the S&P index closing just below the 200 day moving average, it would be rare for stocks not to attempt a bounce on Wednesday. However with the latest FOMC minutes out on Wednesday at 2:00 PM, we may find the index tries to bounce as 2:00 PM arrives and then sell lower and into a negative close after the content of the minutes are known. Investors and analysts are expecting negative, hawkish sentiment in the minutes.
The S&P Bollinger Bands should be watched as there are signs we could see a push lower this week for equities. For Wednesday then, expect some selling in the morning but a bounce attempt either early in the day as the index was so heavily oversold on Tuesday, or heading into the lunch hour and the 2:00 PM release of the Fed minutes. Then after the FOMC minutes watch for stocks to falter and move back lower.
Potential Economic and Political Market Moving Events
On Wednesday the FOMC minutes of the Feb 1 Fed meeting is the prime catalyst.
Wednesday:
2:00 FOMC minutes of Feb 1 meeting
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