Stocks continued their push higher on Tuesday thanks to better than expected earnings from Goldman Sachs (GS) and to a lesser extend Lockheed Martin (LMT). Trading volume rose on Tuesday but the number of new highs barely budged. Still, 81% of all volume on the S&P was being traded to the upside and 72% of all volume on the NASDAQ was also rising. Trading though saw weakness with the index falling back to the 3700 valuation several times. The close at 3719 showed a lot of weakness.
The NASDAQ was up 96 points which was a low lower than the 354 point jump on Monday.
The S&P gains of 42 points was half of Tuesday’s advance.
The open on Wednesday could see a bounce as Netflix earnings were exceptional including more than 2.4 million new subscribers to its platform. The company announced they expect 4.5 million new subscribers for the next quarter. No analysts had called for that many subscribers but it should bounce the stock higher on Wednesday, at least the morning.
The afternoon investors get the Fed’s Beige Book and often stocks have dipped after its release.
Let’s review Tuesday’s closing technical indicators to see what to expect for Wed Oct 19 2022.
Stock Market Outlook Chart Comments At The Close on Tue Oct 18 2022
On Tuesday the S&P closing candlestick is bullish and closed above the 21 day moving average. This is the first close above the 21 day moving average since Sep 12. The candlestick though has long shadows which signals Wednesday will be very choppy. While it could end lower, the outlook is still higher at this time.
The Bollinger Bands are now into a squeeze starting Wednesday. That squeeze could see stocks move higher as the Lower Bollinger Band is rising. This is bullish at present.
The 21 day moving average continued its descent.
The Upper Bollinger Band continued falling and is below the 50 and 100 day moving averages. This is bearish.
All the moving averages are still falling which is bearish.
There are now 7 down signals in place since April and no up signals.
The chart is 80% bearish for Wednesday. The closing candlestick, the Upper Bollinger Band and Lower Bollinger Band are signaling a chance for another higher day on Wednesday.
Stock Market Outlook review of Tue Oct 18 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 an up signal on Thursday Oct 16. On Tuesday the up signal gained strength. The histogram also gained strength.
- 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. It is no longer showing 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 positive.
- 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 slightly but still 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:
3800 is resistance
3775 is light resistance
3750 is light resistance
3730 is light resistance
3700 is light resistance
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
3585 is light support
3550 is good support
3530 is light support
3515 is light support
3500 is good support and is a decline of 27%
Stock Market Outlook for Tomorrow – Wed Oct 19 2022
The technical indicators are continuing to support a higher move for the S&P on Wednesday. However if you look at the support and resistance levels in the chart above, you can see that stocks are back into resistance levels and that weighed on stocks on Tuesday.
With the rally cut in half on Tuesday from Monday’s spike, Wednesday looks more volatile. The morning could see a higher open, thanks in large part to Netflix earnings released on Tuesday after the close. However in the afternoon the Fed’s Beige Book is released and that could send stock back lower.
With technical indicators still supporting the index rallying higher, I am expecting a choppy day with larger dips pushing the SPX below 3700 intraday at times. A somewhat higher close though is anticipated.
Keep an eye on the dollar and the 10 year Treasury rates. If either climbs higher the rally will falter. If the 10 year moves above 4.25% the rally may end abruptly.
Potential Market Moving Events
This week on Wednesday investors get the Fed’s Beige Book at 2:00 PM. Often that moves markets. On Thursday we get the Weekly Initial Unemployment Insurance Claims and on Friday we get inflation expectations.
Tuesday:
9:15 Industrial production index was 0.4% which was well above estimates
9:15 capacity utilization rate was 80.3% in-line with estimates
10:00 NAHB home builders index was well below estimates coming in at 38. This helped boost investor sentiment that the Fed will have to stop raising rates “sooner” rather than “later”. This helped send stocks higher on Tuesday.
Wednesday:
8:30 Building Permits are expected to be unchanged at 1.54 million
8:30 Housing starts are expected to be lower at 1.47 million
2:00 Fed’s Beige Book
Stock Market Outlook Archives
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Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
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