Tuesday was a wild day again but we saw a clue about how investors are looking at this market late morning. A rumor circulated that the Ukraine government had decided they would not join NATO which immediately saw large volumes of buying and a rally of 110 points on the S&P and 396 points on the NASDAQ turning both indexes positive. The rally lasted until 2:00 when there was no confirmation of the rumor and indeed many speculated that this was an old story from the previous weeks. That sent stocks back lower but the strength of the rally is telling us that any positive news and the markets will soar on heavy volume. So while many analysts are calling this a bear market, it could end sharply on “good” news or a ceasefire. With Putin in charge there might be limited chance of an early end to the fighting, but the sharp rally on just a rumor tells us what investors are aware of and what they are waiting for.
On Tuesday the S&P closed down 30 points at 4170 and the NASDAQ closed down 35 points at 12795.
Let’s review the closing technical indicators from Tuesday on the SPX and see what to expect for Wednesday’s trading action.
Stock Market Outlook Chart Comments At The Close on Tue Mar 8 2022
On Tuesday there were some further signals to be aware of.
The Upper Bollinger Band is continuing to rise and the Lower Bollinger Band is falling sharply. This is bearish at present and indicates there is still more downside ahead for the index.
The closing candlestick on Tuesday is normally seen before a bounce. That bounce is usually followed by further selling. Therefore a bounce is possible for Wednesday. I will be using any bounce on Wednesday to buy SPY put options, as I did on Tuesday. Then when the index tumbles back lower, I will sell of of the put options.
There are now 3 down signals in place which you can see in the chart below. The 50 day moving average is still falling and ready to move below the 100 day which will be a fourth down signal.
All the major moving averages are falling lower with the 200 day still holding the 4400 level.
The chart remains very negative as of Tuesday’s close.
Stock Market Outlook review of Tue Mar 8 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is negative and falling but there is plenty of room to tumble lower.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Mar 7 2022 . The down signal was confirmed today. The MACD histogram is particularly negative pointing to further downside to come.
- 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 negative and falling for a fourth straight day. There are no signals of a bounce from the Ultimate Oscillator but it is nearing overbought status shortly..
- 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.
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 and entering oversold readings.
- 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 lower but not as sharply which often signals that the next day or two may not see dramatic large drops such as we saw on Monday.
- 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:
4500 is resistance
4490 is light resistance
4475 is light resistance
4450 is light resistance
4400 is good support and the 200 day moving average
4370 is light support
4350 is light support
4300 is good support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4150 is good support
4000 is good support
Stock Market Outlook for Tomorrow – Wed Mar 9 2022
For Wednesday the likelihood of a bounce is high. The index may open lower, fall a bit and then stage a rally. The rally won’t hold but it may last longer than the rally we saw on Tuesday. It should give investors time to check their existing positions and close profitable trades to raise cash levels. Then on the next dip investors can profit from setting up trades again.
Daily volumes remain well above average so stay cautious but the downside to the correction could end up being nearer than we think.
Stock Market Outlook Archives
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Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
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