Tuesday saw investors return to worry about inflation, dipping consumer sentiment and threats of a recession.
The S&P lost 78 points and closed at 3,821.
The NASDAQ lost 343 points to close at 11,181.
The day was spent with the index slipping after an initial opening jump.
Let’s review Tuesday’s closing technical indicators to see what to expect for Wednesday.
Stock Market Outlook Chart Comments At The Close on Tue Jun 28 2022
On Tuesday the closing candlestick is bearish for Wednesday. The candlestick points to a potential bounce intraday for Wednesday but a lower close.
The Upper Bollinger Band is back falling. The 200 day is still falling and the 100, 50 and 21 day moving averages are falling.
The Lower Bollinger Band is still falling which is bearish.
The chart is turning bearish again after Monday and Tuesday’s inability to jump start the rally from last week.
There are 4 down signals still in place and there have been no up signals since the start of April.
The chart is 85% bearish for Wednesday. A close below 3800 is likely.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and neutral. It is no longer oversold.
- 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 was confirmed. The MACD histogram is positive for a second day.
- 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.
- 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 is rising.
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.
- 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.
- 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 support
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 Jun 29 2022
The drop in consumer confidence index below the anticipated 100 is what ended the rally on Tuesday. The drop to 98.7 while modest was seen by many investors as another sign of coming recession.
For Wednesday there is a good chance for a bounce attempt, especially after the MACD up signal was confirmed on Tuesday despite the sell-off. However any bounce won’t last on Wednesday and the index is set to close lower. A close at or below 3800 is likely and is bearish.
Potential Market Moving Events
For the final week of June the biggest events are on Thursday when inflation reports are released. Any indication of even a slight slowing of inflation will see stocks rise. Any rise in inflation will send stocks lower.
9:00 S&P Case-Shiller home price index (year-over-year) was 20.4% down just slightly from 20.6%
10:00 Consumer Confidence Index was 98.7 down from 103.2
8:30 Gross domestic product revision
9:00 Fed Chair Powell speaks at ECB Conference
8:30 PCE Inflation (monthly)
8:30 Core PCE Inflation (monthly)
8:30 PCE Inflation year-over-year
8:30 Core PCE Inflation year-over-year
8:30 Real disposable income
8:30 Real consumer spending
8:30 Weekly Initial Unemployment Insurance Claims
9:45 Chicago PMI
10:00 ISM manufacturing index
10:00 Construction Spending