Prior Trading Day Summary:
Futures for Wednesday pointed higher before the open as investors were cheered by news of trade talks with China. Meanwhile the Peoples Bank of China announced key rates would be lowered to help boost the economy. With the Fed meeting today, some analysts and investors wondered if the Fed would follow and reduce rates, even a quarter of a point. I don’t think the Fed will do that.
On Tuesday the SPX lost 43 points to close below the 200 day moving average. We have been discussing the 200 day and the possibility of a close below it, over the past couple of trading days. This could be the expected test and today the index may close above it. The NASDAQ lost 154 points, closing at 17,689.
Let’s review the technical indicators from the close on Tue May 6 2025 to see what we should expect for Wed May 7 2025.
Stock Market Outlook: SPX Closing Chart For Tue May 6 2025
The index closed above the 50 day, 21 day but below the 200 day moving average. This is bearish.
The closing candlestick is bearish with long shadows which signals a choppy day which could see some large swings.
The 21 day moving average is rising and closed at 5406. The 21 day moving average fell below the 50 day on Friday Mar 7. It fell below the 100 day on Thursday Mar 13 for a second down signal and on Friday Mar 28 it fell below the 200 day for a third down signal.
The 50 day moving average is falling and closed at 5567 which is bearish. The 50 day moving average fell below the 100 day on Tue April 15. which issued a 4th down signal on the SPX. The 50 day on Friday fell below the 200 day for a 5th down signal.
The 100 day moving average is falling and closed at 5675 which is bearish.
The 200 day moving average is falling and closed at 5637 which is bearish.
Only one moving average is climbing as of Tuesday’s close. The other three moving averages are falling which is bearish.
The Lower Bollinger Band is rising sharply which is bearish. The Upper Bollinger Band is rising which is bullish.
For Wednesday the SPX chart is moving back toward the bearish side.
SPX Stock Market Outlook review of Tue May 6 2025
Stock Market Outlook: Technical Indicators Review
Momentum: Momentum is falling but positive.
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MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tue Apr 22 2025. On Tue May 6 2025 the up signal lost some strength.
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Ultimate Oscillator: The Ultimate Oscillator is falling and positive.
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Slow Stochastic: The Slow Stochastic is overbought and has a down signal at the close on Tuesday.
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Relative Strength Index: The RSI signal is falling and not overbought.
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| Rate of Change: The rate of change signal is rising sharply indicating a larger move is likely, either up or down. 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. |
Stock Market Outlook: Support and Resistance Levels |
| 5700 is resistance |
| 5650 is resistance |
| 5630 is resistance |
| 5600 is resistance |
| 5550 is resistance |
| 5500 is resistance |
| 5450 is resistance |
| 5400 is support |
| 5350 is support |
| 5300 is support |
| 5230 is support |
| 5000 is support |
| 4770 is support |
| 4680 is support |
| 4500 is support |
| 4365 is support |
| 4150 is support |
| 4000 is support |
Stock Market Outlook for Wed May 7 2025
For Wednesday the SPX chart is turning back toward the bears after two days of weakness in the markets. The technical indicators are also losing their bullish stance. The close below the 200 day moving average today is bearish but it is also expected. We now need to see the index close back above the 200 day. Otherwise the rally will end. On Wednesday I think we will see a choppy day but the close should be higher.
The main economic event today is the latest FOMC meeting. As long as Powell does not sound too hawkish, stocks should hold their ground but if his tone is hawkish, stocks will move lower and probably close lower.
Potential Economic and Political Market Moving Events
Monday:
9:45 S&P final services PMI dipped to 50.8 which was lower than estimated
10:00 ISM services rose to 51.6% which was higher than estimated and the prior reading
Tuesday:
8:30 Trade Deficit was lower than estimated, coming in at -$140.5 billion
Wednesday
2:00 FOMC meeting
2:30 Fed Chair Powell news conference
3:00 Consumer credit is expected to come in at $9.0 billion.