On Tuesday investor concerns returned to regional banks sending the indexes lower. By the end of the day investors had pushed the indexes well off their lows but concerns remain. On Wednesday investors get the latest on the Fed’s decision for interest rates.
On Tuesday the S&P closed down 48 points to 4119 but intraday the index broke below 4100 to reach 4089 before rebounding.
The NASDAQ fared better, losing 132 points or slightly more than 1% to end the day at 12080.
Let’s review the close on Tuesday to see what to expect for Wed May 3 2023.
Stock Market Outlook Chart Comments At The Close on Tue May 2 2023
The index closed with a bearish candlestick for Wednesday. The SPX fell below the 21 day moving average on Tuesday but managed to close back at it. The Bollinger Bands Squeeze is in full swing and now looks set to move the S&P higher.
On Friday the 100 day moving average finally moved above the 200 day which sets the index back into a bullish stance and wipes out the last remaining down signal which stretched all the way back to April 24 2022.
All major moving averages are climbing which is bullish.
The S&P chart is bullish for Wednesday although there are signals the index may dip again on Wednesday.
There are 7 up signal since January and no down signal in the chart.
Stock Market Outlook review of Tue May 2 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling 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 on Tue Apr 25 2023. That down signal was almost gone on Tuesday.
- 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 but there are signs the up signal may be gone on 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 falling and negative for markets..
- 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 and ready to turn negative.
- 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:
4250 is resistance
4240 is resistance
4225 is resistance
4210 is resistance
4200 is resistance
4190 is resistance
4180 is resistance
4175 is resistance
4150 is resistance
4135 is resistance
4125 is support
4100 is support
4090 is support
4075 is support
4050 is support
4030 is light support
4025 is light support
4000 is support
Stock Market Outlook for Wed May 3 2023
For Wednesday the technical indicators have switched back to negative signals and readings, a quick reversal from Monday’s positive outlook.
The Fed on Wednesday is expected to stay the course and raise rates another quarter of a percent. This could send stocks lower.
For Wednesday, stocks will see a choppy day as all eyes are on the Fed and the interest rate announcement due out at 2:00 PM.
Potential Economic and Political Market Moving Events
For this week the Fed’s interest rate decision on Wednesday followed by Friday’s April non-farm payroll numbers are the two key economic events that will move markets.
Wednesday:
8:15 ADP employment
9:45 S&P services PMI
10:00 ISM services
2:00 Federal Reserve interest rate statement
2:30 Fed news conference