Day’s Summary
Tuesday saw a tepid start to the day on low volume but as the day progressed investors became more convinced the CPI reports due out on Wednesday would show inflation declining and that would continue the rally to new highs. Volume improved slightly for both indexes, especially as the afternoon stretched on. By the close the S&P 500 was up almost 30 points to 4439. The NASDAQ rose 75 points, closing at 13760.
The afternoon rise in volume shows many investors who have sat on the sidelines waiting for Wednesday’s inflation report were drawn into some buying in fear they were missing out in the rally.
Let’s review the technical indicators from the close on Tuesday to see what we should expect for Wednesday’s market.
Stock Market Outlook: SPX Closing Chart For Tue Jul 11 2023
The index closed below the Upper Bollinger Band but above the 21 day. The candlestick is bullish for Wednesday although a higher than expected inflation number on Wednesday, will send stocks lower, at least initially.
The closing candlestick on Tuesday points to a higher day on Wednesday.
The 21, 50, 100 and 200 day moving averages are continuing to climb which is bullish. The Lower Bollinger Band is rising and pushing still higher above the 50 day moving average which is bearish. The Upper Bollinger Band is falling which is bearish. The SPX has entered a new Bollinger Bands Squeeze. At present the squeeze looks like it is signaling a lower move is coming although it is early in the squeeze to be certain of either direction.
Stock Market Outlook: Technical Indicators Review
Momentum: Momentum is rising and positive.
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MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday Jul 6. On Tue Jul 11 2023 the down signal lost a small amount of strength but continues to signal down for the SPX.
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Ultimate Oscillator: The Ultimate Oscillator is rising and positive.
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Slow Stochastic: The Slow Stochastic has a weak up signal in place.
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Relative Strength Index: The RSI signal is rising sharply and near overbought readings.
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Rate of Change: The rate of change signal is unchanged.
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Stock Market Outlook: Support and Resistance Levels |
| 4450 is resistance |
| 4435 is resistance |
| 4420 is resistance |
| 4400 is strong resistance |
| 4390 is resistance |
| 4370 is resistance |
| 4350 is resistance |
| 4340 is resistance |
| 4325 is resistance |
| 4310 is resistance |
| 4300 is support |
| 4290 is support |
| 4275 is support |
| 4250 is support |
| 4240 is support |
| 4225 is support |
| 4210 is support |
| 4200 is good support |
| 4190 is support |
| 4180 is support |
Stock Market Outlook for Wed Jul 12 2023
Today will be all about the CPI reports due out before trading resumes. Any signal that inflation is rising will see stocks fall. Any sign inflation is falling will see stocks rise.
There are two new support levels in the SPX, 4290 and 4300.
While today the CPI reports will control market direction, certainly at the open and into the morning, the technical indicators are signaling that the bulls are in charge and stocks are going to continue to move higher even if Wednesday is a negative day. If CPI comes in as projected, stocks will open higher and move higher. If they open lower and fall, the afternoon has the Fed’s Beige Book released at 2:00 PM. That could assist stocks in not falling very far.
Potential Economic and Political Market Moving Events
Wednesday
8:30 Consumer Price Index is expected to be 0.3%
8:30 Core CPI is expected to dip to 0.3% from 0.4%
8:30 Core CPI year over year is expected to come in at 3.1%, down from 4%. This might be too optimistic by investors.
8:30 Core CPI year-over-year is expected to come in at 5%, down from 5.3%
2:00 Fed Beige Book