Stock Market Outlook for Fri Apr 22 2022 – New Down Signal – Bias Is Lower

Thursday started with a strong bounce on the back of excellent earnings reports. The S&P moved above 4510 but by 10:00 AM as Fed Chair Powell began to discuss why a half point increase was coming in May and may be followed by others, investors began to sell.

By the end of the day 83% of all volume was to the downside, the worst single down volume day of the month. It was also the worse down volume day since Nov 30. By the end of the day 76% of all stocks were lower. The S&P lost 65 points to close at 4393. The NASDAQ lost 278 points to close at 13174.

Let’s review Thursday’s closing technical indicators to see what to expect for Fri Apr 22 2022.

Stock Market Outlook Chart Comments At The Close on Thu Apr 21 2022 

On Thursday the closing candlestick was bearish for Friday. The candlestick ended the day below the 100, 50 and 200 day moving averages.

The 21 day moving average continued to move sideways which is bearish.

Meanwhile the Bollinger Bands are into a squeeze which now looks set to send the index lower.

The 200 day moving average is rising above the 4400 level which is bullish. The 50 day moving average fell below the 200 day on Thursday for a new down signal.

The 100 day moving average is also dipping lower.

The chart is now 90% bearish for Friday and with the drop on Thursday, too much technical damage was down to expect an immediate recovery. The chart advises Friday will be lower.

Stock Market Outlook review of Thu Apr 21 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 a down signal Friday April 8. On Thursday the down 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 falling.

• 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 fifth day.

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.

• 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.

• 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:

4650 is resistance

4640 is resistance

4625 is resistance

4600 is strong resistance

4590 is resistance

4575 is light resistance

4560 is light resistance

4550 is light resistance

4525 is light resistance

4500 is light resistance

4490 is light support

4475 is light support

4450 is light support

4400 is support

4370 is light support

4350 is light support.

4300 is good support

 Stock Market Outlook for Tomorrow – Fri Apr 22 2022 

For Friday the technical indicators have moved back to bearish again. As well a new down signal was issued at the close on Thursday as the 50 day moving average fell below the 200 day. The Bollinger Bands Squeeze also looks prepared to end with the SPX moving lower.

The index is back to the 4400 level. The index is not yet oversold which leaves room to move lower on Friday. A close at 4370 to 4350 is a high probability.

Initial jobless claims came in at 184,000 which is very low. This will keep the Fed’s focus on inflation and raising rates. The first half percent rate increase is expected in May. Fed Chair Powell made it clear, that may not be the only half point rate hike to come and that was a major catalyst to the downside on Thursday.

Potential Market Moving Events

Friday:

9:45 S&P global US manufacturing PMI and US services PMI

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