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Stock Market Outlook for Wed Jun 12 2024 – All About The Fed

Jun 12, 2024 | Stock Market Outlook

All About The Fed

Prior Trading Day Summary:

On Tuesday stocks were split with many stocks moving lower but the indexes still climbing. The S&P closed up 14 points at a new closing high of 5375. On the NASDAQ the index closed up 151 points to close at a new high of 17343.

However on the S&P 65% of all volume was to the downside and 56% of all stocks were falling. The NASDAQ did a bit better with 46% of all volume to the downside and 50% of all stocks falling.

It was stocks like Apple which closed at a new high of 207 and Microsoft which closed at 432 that help propel the indexes higher despite so many stocks moving lower.

Most of this won’t matter for Wednesday as the market direction will be determined by the Fed decision on interest rates due out at 2:00. Whatever the Fed announces will impact stocks.

Let review the closing technical signals from Tue Jun 11 2024 to see what to expect for Wed Jun 12 2024.


Stock Market Outlook: SPX Closing Chart For Tue Jun 11 2024

The index closed above the 21 day moving average and at the Upper Bollinger Band. This is bullish.

The closing candlestick is bullish although the long shadow indicates a good chance for selling on Wednesday.

The 21 day moving average is still climbing continuing the latest up signal.

The 50 day moving average is climbing which is bullish.

The 200 day moving average is still climbing. The 200 day is at 4881 which is bullish and the 100 day is also climbing to 5097.

The Lower Bollinger Band is above the 50 day moving average. The Upper Bollinger Band is turned higher as the SPX is in a Bollinger Bands Squeeze.

The S&P chart is bullish and the Bollinger Bands Squeeze looks like stocks will move higher out of the squeeze.

SPX Stock Market Outlook review of Tue Jun 11 2024 – chart courtesy TradingView


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 Thu Jun 6 2024. On Tue Jun 11 2024 the up signal was stronger. The MACD histogram gained 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 an up signal in place and is 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 rising and positive.

  • 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 signaling that Wednesday will be higher.

  • 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

5400 is resistance
5375 is resistance
5350 is resistance
5325 is resistance
5310 is resistance
5300 is resistance
5275 is resistance
5250 is light support
5225 is light support
5200 is good support
5190 is light support
5175 is light support
5150 is support
5125 is support
5115 is support
5100 is support


Stock Market Outlook for Wed Jun 12 2024 

Before the open investors get the latest CPI numbers. If they are weaker than estimated stocks will open higher. Otherwise we should see some selling initially.

A move higher for the early afternoon ahead of the 2:00 PM Fed announcement is likely. It’s anyone’s guess what the Fed will announce, although the majority of analysts believe there will be no rate reduction. If however the Fed surprises with a rate reduction of even as little as a quarter point, stocks will soar.

If however the majority of analysts are correct and the Fed continues to take a wait-and-see approach for another month, the index may dip initially but then close higher after the Fed’s news conference which starts at 2:30 is ended.


Potential Economic and Political Market Moving Events

This is a big week for economic numbers.

Monday:

No reports

Tuesday:

No reports

Wednesday:

8:30 Consumer Price Index is expected to rise just 0.1%

8:30 CPI year-over-year is estimated unchanged at 3.4%

8:30 Core CPI is estimated unchanged at 0.3%

8:30 Core CPI year-over-year is estimated to drop to 3.5%

2:00 FOMC interest rate decision announcement

2:00 Monthly federal deficit is expected to drop to -262.5 billion

2:30 Fed Chair Powell news conference

 






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