Stock Market Outlook for Wed Sep 27 2023 – Possible Bounce Attempt But More Selling Ahead

Sep 27, 2023 | Stock Market Outlook

Stock Market Outlook - More Selling Likely

Prior Trading Day Summary

On Tuesday new home sales came in at 20,000 less than expected. Consumer confidence also came in lighter than expected at 103, down from 108.7 prior. Still, 103 is a strong consumer number but with bond yields continuing to rise and concerns over a possible government shutdown weighing on investors, more selling erupted. Comments from JP Morgan CEO Jamie Dimon, that interest rates could rise higher than most expect, also weighed heavily on stocks. Lastly news of the FTC suing Amazon.com also added more woes. It was too much on Tuesday for investors to handle. The S&P fell 64 points to close at 4273.The NASDAQ fell 207 points, closing at 13,063.

On the NASDAQ new lows eased slightly to 399 while on New York they rose to 287.

Let’s review the closing technical indicators from Tue Sep 26 2023 to see what to expect for Wed Sep 27 2023.

Stock Market Outlook: SPX Closing Chart For Tue Sep 26 2023

The index closed below the 50, 21 and 100 period moving averages for a fourth day which is bearish. Intraday the index touched the 200 day and closed just above it.

The closing candlestick is also bearish and once again it is signaling a potential for a larger bounce on Wednesday, however the infighting over a potential government shutdown mixed with rising interest rates will continue to derail any meaningful bounce.

The closing candlestick closed below the Lower Bollinger Band which is bearish but is also often a point where a bounce occurs in a downtrend.

The 50 period and 21 period moving averages are falling which is bearish. The 200 period moving average is continuing to climb which is bullish. The 100 period moving average is starting to turn sideways which is neutral at present.

The Lower Bollinger Band is falling which is bearish. The Upper Bollinger Band is rising which is bullish. Overall the SPX chart is still signaling that this is a correction and nothing more. We will soon see if that prediction is true as the index is now down at the 200 period moving average. A break below it often signals further selling to come.

Stock Market Outlook review of Tue Sep 26 2023

Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is falling sharply and negative. It is signaling extremely oversold.

  • Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Mon Sep 18. On Tuesday the down signal was stronger again.

  • 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 falling and negative. It is oversold.

  • 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 for a second day and is extremely 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 falling and negative. It is 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 falling sharply and 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.

Stock Market Outlook: Support and Resistance Levels

4600 is resistance
4575 is resistance
4550 is resistance
4525 is resistance
4500 is resistance
4485 is resistance
4470 is resistance
4450 is resistance
4435 is resistance
4420 is resistance
4400 is support
4390 is support
4370 is support
4350 is support
4330 is support
4325 is support
4300 is good support
4375 is support
4350 is good support

Stock Market Outlook for Wed Sep 27 2023 

For Wednesday the technical indicators are signaling extremely oversold but a meaningful bounce will need a dip in oil prices and in Treasury yields. With the SPX at the 200 period moving average it would be rare if there was not a bounce of some kind.

Before the open investors get durable goods order and that could add to investor concerns depending on how poor the number ends up being.

For Wednesday there is a chance for a bounce but more selling still lies ahead.

Potential Economic and Political Market Moving Events

This week the reports are lighter which could assist the bulls. The most telling report is the PCE Index on Friday.


8:30 Durable goods orders is expected to be -0.5% up from -5.2% prior.


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