Thursday saw stocks stage a rally following comments Atlanta Federal Reserve President Raphael Bostic speaking about keeping interest rate hikes to a quarter of a percent, going forward. Investors took this as a dovish statement and rallied stocks. On Friday we could just as easily see investors give back the gains made.
On Thursday the SPX closed up almost 30 points for a three quarter point percentage gain to end the day at 3981.
The NASDAQ rose 83 points, ending the day at 11463.
Let’s review the closing technical indicators from Thu Mar 2 to see what we should expect for Fri Mar 3 2023.
Stock Market Outlook Chart Comments At The Close on Thu Mar 2 2023
On Thursday the S&P pushed back from being oversold to close at the 50 and 100 day moving averages.
The index closed above the Lower Bollinger Band but below the 200 and 21 day moving averages. This is bearish.
The closing candlestick is bullish for Friday.
The Upper Bollinger Band is turning higher which is bullish while the Lower Bollinger Band is turning lower which is bearish.
The 200 day moving average is rising which is bullish. The 21 day is falling which is bearish. The 50 day moving average is falling and is still below the 100 day for a down signal on Wednesday.
At present there are now 3 down signals in place since April 24 and 4 up signals since Jan 13. We need to see the 50 and 100 day moving averages climb above the 200 day.
In the chart you can see that while the index is continuing to drift lower, the S&P is still above that start of January which was 3800.
The chart is 80% bearish for Friday.
Stock Market Outlook review of Thu Mar 2 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and negative. It is at oversold levels where often we see a bounce.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) down signal was weaker on Thursday. There are signs that the strength to the downside is starting to erode.
- 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 negative.
- 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 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 sharply.
- 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 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:
4250 is resistance
4220 is resistance
4200 is resistance
4180 is resistance
4150 is resistance
4125 is resistance
4100 is resistance
4090 is resistance
4075 is resistance
4050 is resistance
4030 is resistance
4025 is resistance
4000 is light support
3975 is light support
3965 is light support
3950 is good support
3930 is light support
3900 is good support
Stock Market Outlook for Tomorrow – Fri Mar 3 2023
The technical indicators were only slightly affected by Thursday’s afternoon rally. Overall they are advising investors to stay cautious of any spike higher.
For Friday the chart and technical analysis are advising there will be further weakness today but there is a chance for a higher close.
Potential Economic and Political Market Moving Events
On Friday there are two reports that could shed a bit more light on inflation’s grip of the economy. Both are released after markets open which could swing markets.
Friday:
9:45 Global US Services PMI is estimated to be 50.5
10:00 ISM services expected to be at 54%
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