Markets were primarily positive on Tuesday but most stocks were in limbo while investors wait for the Fed’s decision on interest rates due out on Wednesday afternoon at 2 PM. That is followed on Friday by the April unemployment numbers. All in all, a tough week for stocks.
On Tuesday the SPX closed up 20 points at 4175 while the NASDAQ was higher by 27 points to close at 12,563.
Let’s review Tuesday’s closing numbers to see what to expect for Wednesday, the Fed decision day.
Stock Market Outlook Chart Comments At The Close on Tue May 3 2022
On Tuesday the closing candlestick is neutral ahead of the Fed’s interest rate decision. Many investors are worried the Fed will announce a three-quarter rate hike. I find that unlikely as Fed Presidents have been talking about a half point rate hike enough to warn investors, that’s what’s coming on Wednesday.
There are no changes in the S&P chart except the Upper Bollinger Band is now falling, which is bearish.
There are no up signals in the SPX at present. The moving averages are all bearish.
The Upper Bollinger Band is trending sideways while the Lower Bollinger Band is continuing to fall. This is bearish.
With all the moving averages falling, the chart is pretty well 100% bearish. That could be enough to bounce the index higher once the Fed announces the interest rate hike.
Stock Market Outlook review of Tue May 3 2022
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 Friday April 8. On Tuesday the down signal was still very strong. The histogram also is very bearish.
- 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.
- 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 weak down signal in place and is signaling 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 unchanged by the close.
- 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:
4550 is light resistance
4525 is light resistance
4500 is resistance
4490 is light resistance
4475 is light resistance
4450 is light resistance
4400 is resistance
4370 is light support
4350 is light resistance
4300 is light resistance
4290 is light resistance
4270 is light resistance
4250 was good support
4225 was light support
4200 is good support
4150 is good support
4100 is light support
4050 is light support
4025 is light support
4000 is good support
Stock Market Outlook for Tomorrow – Wed May 4 2022
For Wednesday the market direction is all about the Fed. The chance of a three-quarter rate hike I think is less than 1%. The Fed has prepared investors for a half point rate hike. Anything higher and they know stocks will tumble.
I am expecting a higher move into the Fed announcement at 2:00 PM. I then expect a sharp dip and then a rally higher into the close on Wednesday. Thursday I expect to be higher ahead of the April unemployment report due out at 8:30 on Friday morning.
Potential Market Moving Events
Wednesday:
8:15: ADP employment report
2:00 FOMC statement
2:30 Fed Chair news conference
Thursday:
8:30 Initial jobless claims and continuing jobless claims
8:30 Productivity and Unit Labor Costs (should give further evidence on inflation’s impact)
Friday:
8:30 April nonfarm payrolls and unemployment rate
8:30 Average hourly earnings (another inflation indicator)
8:30 Labor force participation rate
Stock Market Outlook Archives
Stock Market Outlook for Fri Apr 26 2024 – Higher and Positive Close
Morning Investing Strategy Notes for Thu Apr 25 2024
Stock Market Outlook for Thu Apr 25 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 24 2024
Stock Market Outlook for Wed Apr 24 2024 – Some Weakness But Higher Close
Morning Investing Strategy Notes for Tue Apr 23 2024
Stock Market Outlook for Tue Apr 23 2024 – Bounce But Lower
Morning Investing Strategy Notes for Mon Apr 22 2024
Stock Market Outlook for Mon Apr 22 2024 – No Change – Deeply Oversold Bounce Possible
Morning Investing Strategy Notes for Fri Apr 19 2024
Stock Market Outlook for Fri Apr 19 2024 – Deeply Oversold – Bounce Likely – Higher Close
Morning Investing Strategy Notes for Thu Apr 18 2024
Stock Market Outlook for Thu Apr 18 2024 – Deeply Oversold – Bounce Attempt Expected
Morning Investing Strategy Notes for Wed Apr 17 2024
Stock Market Outlook for Wed Apr 17 2024 – Another Bounce Attempt
