Tuesday saw another attempt at the start of the day for a bounce. Once again sellers took advantage of the bounce and unloaded positions. As selling intensified into the lunch hour the S&P made a new bear market intraday low. By the close the index was at a new closing low of 3647 but the loss was just 7 points on the day. The NASDAQ saw enough buying to end the day with a slight gain, rising 26 points to end the day at 10829.
By the end of the day there were more signals pointing to a better bounce for Wednesday. Let’s review the close on Tuesday to see what the technical indicators can tell us to expect for Wednesday.
Stock Market Outlook Chart Comments At The Close on Tue Sep 27 2022
At the close of trading the S&P closing candlestick is bearish for Wednesday but again is also signaling a strong chance of a bounce. The candlestick closed at the Lower Bollinger Band which often signals a bounce is in the works.
The 21 day moving average continued its descent.
The Upper Bollinger Band is back falling and may end up below the 200 day moving average which is bearish. The Lower Bollinger Band is still falling indicating stocks have not yet bottomed.
All the moving averages are still falling which is bearish.
The 200 day continues to decline. The 100 day moving average is reached the 50 day moving average. It will move lower on Wednesday which will be another down signal.
There are now 4 down signals in place since April and no up signals.
The chart is 95% bearish for Wednesday with just the closing candlestick still offering hope a bounce could be take shape.
Stock Market Outlook review of Tue Sep 27 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising sharply and negative. It is signaling a bounce could happen at any time.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Monday Aug 22. On Tuesday the down signal gained strength. The histogram also gained strength. Both signals are gaining strength to the downside. The reading of -28.02 is almost as low as the June 16 reading of -30.79. These are extreme signals that almost always see a bounce.
- 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 back negative. It is oversold but looks set to trend sideways which often occurs before a bounce.
- 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 for a second day Signals are back to what we saw in mid-June before the market bounced.
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 oversold. The signal at 11.26 is lower than any reading done in mid-June. It is at an extreme reading reflecting the intense selling. It is ready to bounce.
- 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 at the lowest reading since the pandemic collapse in March and April. It is beyond the negative signals from June’s plunge. It turned up on Tuesday indicating a bounce could happen at any time.
- 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:
4000 is light resistance
3975 is light resistance and is a decline of 17.5%
3950 is light resistance
3925 is light resistance
3900 is light resistance
3875 is light resistance
3850 is light resistance
3825 is light resistance
3810 is light resistance
3800 is light resistance
3775 is light resistance
3750 is light resistance
3730 is light support
3700 is good support
3675 is light support
3650 is light support
3625 is light support
3600 is good support and is a decline of 25%
Stock Market Outlook for Tomorrow – Wed Sep 28 2022
While the bounce on Tuesday ran into a wall of sellers, the sellers did not break down the technical indicators that are pointing to a potential bounce. Despite negative news about Apple shelving plans to boost iPhone production which hit the media after hours on Tuesday, the market looks set to open lower but then attempt a bounce.
Potential Market Moving Events
The biggest market moving event for the week is on Friday when we get more inflation numbers. On Tuesday though we could see markets react a bit to the home price index and especially consumer confidence index.
Tuesday:
Five Fed Presidents speak or are interviewed throughout the day on various subjects. Fed Chair Powell speaks at 7:30 AM on digital finance.
8:30 durable goods orders and capital goods orders were both better than expected.
9:00 Case Shiller US home price index dropped to -2.9% which was lower than expected.
10:00 Consumer confidence index was much stronger than expected at 108.
10:00 New home sales surprised with a rise to 685,000 above the previous month’s 532,000
Wednesday:
10:00 Pending Home Sales Index
3 Fed Presidents speak at various events throughout the day.
2 Fed Governors speak at various events throughout the day.
Stock Market Outlook Archives
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
Morning Investing Strategy Notes for Tue Apr 16 2024
Stock Market Outlook for Tue Apr 16 2024 – Deeply Oversold
Morning Investing Strategy Notes for Mon Apr 15 2024
Stock Market Outlook for Mon Apr 15 2024 – Expect A Bounce
Morning Investing Strategy Notes for Fri Apr 12 2024
Stock Market Outlook for Fri Apr 12 2024 – All About Bank Earnings
Morning Investing Strategy Notes for Thu Apr 11 2024
Stock Market Outlook for Thu Apr 11 2024 – Weakness and Lower
Morning Investing Strategy Notes for Wed Apr 10 2024
Stock Market Outlook for Wed Apr 10 2024 – All About The CPI Numbers
Morning Investing Strategy Notes for Tue Apr 9 2024