Tuesday saw the SPX open higher but struggle within minutes of the open. The first drop saw the index break through 3900 which found ready buyers. The index rallied to recover the morning opening highs but as the morning moved into midday, sellers returned and the index against broke through 3900. By the end of the day the index was at 3908, clinging to just above the important 3900 support level. The SPX lost 16 points while the NASDAQ lost 86 points to close at 11,554.
As stocks continue to struggle, the technical indicators are still advising there is a chance for a bounce but the bearishness remains.
Let’s review the closing technical indicators from Tuesday to see what we should expect on Wednesday.
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Stock Market Outlook Chart Comments At The Close on Tue Sep 6 2022
The closing candlestick remains quite bearish but held the 3900 level. The closing candlestick still points to the potential for a bounce.
The candlestick closed once again below all major moving averages. This is bearish but also indicates extremely oversold adding to the potential for a bounce.
The Bollinger Bands are indicating two possible outcomes. The Upper Bollinger Band is pointing to stocks rising while the Lower Bollinger Band is still pointing to stocks falling.
The 21 day moving average is falling further away from the 200 day. This is bearish.
The 200 day and 100 day moving averages are also falling which is bearish.
The first up signal since April was released Tuesday Aug 2 when the 21 day moving average crossed above the 50 day moving average.
The 21 day moving average moved above the 100 day moving average on Wed Aug 16 for a second major up signal.
The 50 day has been rising but is now turning sideways and could begin to fall shortly unless the index can stage a rally or a bounce.
There are now 2 down signals still in place and two up signals.
The chart is 85% bearish for Tuesday with some signs a potential bounce is still quite possible.
Stock Market Outlook review of Tue Sep 6 2022
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is rising and negative.
- 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 remained strong. The histogram also remained strongly negative. Both are bearish signals.
- 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 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 and is deeply 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 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 and returning to negative readings. It has not been negative since mid-July.
- 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:
4250 is stronger resistance
4220 is light resistance
4200 is light resistance
4150 is light resistance
4100 is light resistance
4050 is light resistance
4025 is light resistance
4000 is light resistance
3975 is light resistance and is a decline of 17.5%
3950 is light support
3925 is light support
3900 is strong support
3875 is light support
3850 is good support
3825 is light support
3810 is good support
Stock Market Outlook for Tomorrow – Wed Sep 7 2022
For Wednesday the technical indicators and the S&P chart pattern are still holding a strong bearish stance. There remains signals that a bounce is still possible but unless 3900 can hold, any bounce will have to come from 3850 or lower. The markets are extremely oversold but investor sentiment is very negative. Rallies are still being used by investors, as we saw on Tuesday, to unload stock.
September has a poor history for stocks especially the second half of the month.
On Wednesday at 2:00 PM investors find out the latest comments with the Fed’s Beige Book. Often investors will push stocks higher in the final half hour before the notes are released. With almost everyone expecting a rate hike of 0.75% this month, the Fed’s Beige Book most likely contains nothing new that could propel stocks higher at present. I am expecting a lower close on Wednesday as I expect nothing new from the Fed. While a bounce would be nice to see at this stage of the decline, there is no Fed support at present for stocks. I am continuing to hold SPY puts and the SQQQ Ultra Bear ETF in the Market Direction Portfolio.
Potential Market Moving Events
There are a number of major events this week in particular the Fed’s Beige Book released today.
Tuesday:
9:45 S&P services PMI which previously was 44.1 and came in at 43.7
10:00 ISM services index which is expected to be 55.5%, down slightly from July’s 56.7% came in at 56.9% which caused some of the selling as this continues to show strength. That strength is being translated by many analysts to mean the Fed will continue raising rates.
Wednesday:
2:00 Fed’s Beige Book
Stock Market Outlook Archives
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Morning Investing Strategy Notes for Tue May 5 2026
Stock Market Outlook For Tue May 5 2026 – Overbought and Lower
Morning Investing Strategy Notes for Mon May 4 2026
Stock Market Outlook For Mon May 4 2026 – Dips Likely With Possible Lower Close
Morning Investing Strategy Notes for Fri May 1 2026
Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
