Stock Market Outlook for Wed Nov 8 2023 – Overbought – Slowing – Possible Negative Close

Prior Trading Day Summary:

On Tue Nov 7 2023 stocks continued to consolidate recent gains but the market breadth is starting to deteriorate again. That is commond with a market after a huge rally as it tries to digest the rally and return to buying. Treasury yields continued to support stocks but not rising. Oil tumbled lower which should also support no interest rate increases at present as lowering oil prices reduces inflation.

The S&P rose 12 points to close at 4378 while the NASDAQ rose 121 points, closing at 13639.

Both indexes opened slightly lower but then moved back higher to close below the late afternoon highs.

Let’s review the closing technical indicators from Tue Nov 7 2023 to see what to expect for Wed Nov 8 2023.

Stock Market Outlook: SPX Closing Chart For Tue Nov 7 2023

The index closed above all major moving averages on Tuesday for a third day.

The closing candlestick ended the day above 4350 with long shadows which once again signals overbought and a potential day of weakness for stocks for Wednesday.

The 21 day moving average bounced off the 200 day on Thursday and moved higher on again on Tuesday. This is bullish.

The 50, 100 and 200 day moving averages are all falling which is bearish. These though are lagging indicators and we should begin to see them turn higher, if the rally can continue. Note though the 50 day is falling toward the 100 day. If it breaks below it, it may signal the rally is over.

The Lower Bollinger Band is turning lower which is bullish. The Upper Bollinger Band is turning higher. This too is bullish.

The S&P chart is bearish but indicates the bounce has further to run this week.

Stock Market Outlook review of Tue Nov 7 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Wed Nov 8 2023 

For Wednesday stocks are still overbought. On Tuesday we saw the morning dip quickly snapped up but volume was not overly bullish.

The SPX must hold above 4300 to keep the rally alive. The 50 day moving average dropping lower is a concern and should be watched.

All the technical indicators are losing strength except for the Relative Strength Index (RSI) which is still climbing. That could be the signal to the upside that we need to follow at present but while the outlook is still bullish, we need to see further capital flow into stocks to push them higher. Instead we are seeing a handful of stocks, like Microsoft, making new highs while the majority of the market is drifting. The outlook is still bullish but the rally is slowing considerably and there is a chance the index could close lower on Wednesday. Fed Chair Powell delivers opening remarks on Wednesday at 9:15. The chance of anything new is slim, but it is always worthwhile being aware of what is said.

Potential Economic and Political Market Moving Events

This week bond markets are closed on Friday which often assists the bulls on Friday. HIstorically this is a strong week for stocks. There are few economic reports this week that would disrupt the bulls. A number of Fed officials speak but nothing new is expected. Fed Chair Powell speaks on Wed and Thursday at IMF.

Monday:

There are no economic reports

Tuesday:

8:30 Trade Deficit is expected at -$59.8 billion but came in at -$61.5 billion.

3:00 Consumer credit os expected to be $9.5 billion

Wednesday:

9:15 Powell delivers opening remarks

10:00 Wholesale inventories are expected to be flat at 0.0%