Tuesday was all about the bulls. The index opened higher and climbed for the entire day. By the end of the day the S&P had climbed 105 points to close at 3936. This is the highest close since June 10 when the index began its decline below 3900.
The close on Tuesday marks a gain of 300 points since the low on June 17 of 3636. This is a rally of 8.2%. 10% to even 15% rallies are not uncommon in bear markets.
The NASDAQ closed up 353 points to end the day at 11,713.
Let’s review the closing technical indicators from Tuesday to see what to expect for Wed Jul 20 2022.
Stock Market Outlook Chart Comments At The Close on Tue Jul 19 2022
The closing candlestick is still bullish for Wednesday and closed above the 50 day moving average.
The 21 day moving average is continuing climbing which is bullish.
The Upper Bollinger Band is turning up and is above the 50 day moving average which is bullish.
The Lower Bollinger Band is turning higher which is also bullish. The Bollinger Bands Squeeze appears to be pushing for higher stock prices, which is bullish.
All the moving averages are falling except the 21 day.
There are 4 down signals still in place and there have been no up signals since the start of April.
The chart is 55% bullish for Wednesday which is one of the strongest showings since mid-June when the index pulled back.
The next goal for the index is to retake 3950 and then 3975. The ultimate goal of any rally at present is closing and holding above 4100 but that may be beyond this rally. We will soon know, but for Wednesday the chart is biased toward the bulls.
Stock Market Outlook review of Tue Jul 19 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Monday June 27. On Tuesday the up signal gained strength and the histogram continued improving.
- 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. It is nearing overbought.
- 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 an up signal in place for Wednesday.
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 rising and positive. It is nearing overbought.
- 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 rising and 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:
4200 is light resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light resistance
4000 is strong resistance
3975 is light resistance and is a decline of 17.5%
3900 is light resistance and is a decline of 19%
3850 is light resistance and is a decline of 20%
3825 is light resistance.
3800 is good support.
3775 is light support
3750 is light support
3730 is light support
3700 is good support
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Wed Jul 20 2022
The technical indicators have changed to favor the bulls. There are no bearish signals from the technical indicators. Often that means we could see some selling as the index starts to enter overbought and Tuesday’s rally was very strong.
Netflix earnings after hours on Tuesday might be enough to help stocks push still higher although there were a number of troubling sectors including continuing loss of subscribers in the most lucrative USA and Canadian markets. At some point that could turn Netflix back lower over the next few days. For Wednesday though the stock may help continue the rally.
There is still room to the upside before more technical indicators show very overbought. For Wednesday a higher close is expected.
Potential Market Moving Events
This is a quieter week so the main focus will be on earnings.
Wednesday:
10:00 Existing Home Sales for June are expected to show a decline to 5.36 million, down from 5.41 million as housing continues to slide. A higher number will support stocks while a much lower number could see stocks dip after 10:00 AM for a short period.
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Stock Market Outlook for Thu Apr 25 2024 – Weakness and Lower
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