Tuesday saw a rather see-saw day with two drops, one in the morning and a second in the afternoon. Investors used both dips to buy more stocks.
The close saw the S&P up 80 points for the third best day for the index. The close saw the S&P at 4088 and within easy reach of 4100 on Wednesday.
The NASDAQ rose 321 points to end the day at 11,941 and ready to move back above 12,000.
Let’s review the closing technical indicators from Tuesday to see if stocks will move higher on Wednesday.
Stock Market Outlook Chart Comments At The Close on Tue May 17 2022
Tuesday saw only two bullish signals in the SPX chart. The first was the closing candlestick which is signaling a potential dip in the morning but a higher close for Wednesday.
The second is the Lower Bollinger Band which is turning sideways and may signal a move higher.
The Upper Bollinger Band is still falling.
All moving averages are still bearish and there was a new sell signal on Monday as the 100 day moving average fell below the 200 day. That means the 200 day moving average is now leading the market. This is bearish and usually signals more selling to come shortly.
All the major moving averages are falling including the 200 day. The 21 day is still falling rapidly.
The chart is 90% bearish for Wednesday. There is a chance the index could close above 4100.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal Friday April 8. On Tuesday the down signal was slashed and has lost much of the bearish strength. The MACD histogram could turn positive on Wednesday or Thursday..
- 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 no longer oversold.
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 no longer oversold.
- 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.
- 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:
4400 is resistance
4370 is light support
4350 is light resistance
4300 is light resistance
4290 is light resistance
4270 is light resistance
4250 is resistance
4225 is light resistance
4200 is light resistance
4150 is light resistance
4100 is light support
4050 is light support
4025 is light support
4000 is good support
3975 is light support and is a decline of 17.5%
3900 is light support and is a decline of 19%
3850 is good support and is a decline of 20%
3600 is good support at is a decline of 25%
Stock Market Outlook for Tomorrow – Wed May 18 2022
The technical indicators at the close on Tuesday are looking more bullish. MACD has almost lost its down signal. The other indicators are all rising.
For Wednesday there will be some weakness intraday but the day will end higher. The SPX should be above 4100 by the close.
On Tuesday retails sales came in at 0.9% just slightly below expectations of 1%. Industrial production jumped to 1.1% double what was expected and capacity utilization was higher at 79%.
Potential Market Moving Events
These are the potential market moving events for the third week of May. Tuesday has the most important reports this week as far as market moving events are concerned.
8:30 Housing Starts – 1.79 million prior
8:30 Building Permits – 1.87 million prior
8:30 Weekly Initial Unemployment Insurance Claims
10:00 Existing Home Sales – 5.77 million prior. A higher number will show the economy is expanding.
No market moving reports