Stock Market Outlook for Mon Apr 4 2022 – Higher

On Friday the March unemployment report was not quite as strong as expected but February’s was adjusted considerably higher. Investors spent the morning and lunch hour trying to decide what to make of the numbers. By 1:20 the index was at the low of the day 4507. The second half of the day found buyers pushing back once again and by the close the index was up 15 points to end the day at 4545.

The NASDAQ rose 41 points ending the day at 14261.

Let’s review the technical indicators from Friday’s close on the S&P to see what they can tell us about Monday and the start of April trading.

Stock Market Outlook Chart Comments At The Close on Fri Apr 1 2022

The SPX index held 4500 and closed above it again, on Friday. The closing candlestick is bullish although a dip in the morning should be expected.

The Upper Bollinger Band has moved back to climbing on Friday and the Lower Bollinger Band is still turning lower. The bands are still bullish.

Also on Friday the 21 day reached the 200 day moving average. On Monday it should cross above it issued the first up signal from the moving averages.

The 200 day moving average is back at the 4400 level which is bullish. If the index continues to stay above the moving averages, the 50 day moving average will not fall below the 200 day but instead will climb higher. This would be a major up signal if the 50 day were to cross above the 100 day this week. The 100 day moving average is trending sideways. These are bullish signs.

The SPX still has 4 down signals in place but if the 21 day crosses above the 200 day it will be a major up signal supporting the bulls.

The chart is a a bit more bearish than bullish for Monday but there is still bullishness enough, to push the index higher to start off April.

Stock Market Outlook review of Fri Apr 1 2022

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is falling and positive.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal Wed Mar 16 2022. On Friday both the MACD up signal and the histogram have lower readings than we saw on prior days. The signal is still positive but weakening.

• 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 unchanged.

• 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 a down signal in place and is still signaling overbought.

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 and no longer overbought.

• 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 rising advises investors that we should see price swings on Monday that can be both up and down.

• 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 support

4560 is support

4550 is light support

4525 is light support

4500 is support

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 – Mon Apr 4 2022 

For Monday the market direction looks positive although a morning dip is likely. The technical indicators are showing there is some weakness in the rally, which is to be expected following such a strong move over the past two weeks.

4500 remains important for the S&P just as 14,000 is for the NASDAQ. A closed below those levels for either index would be negative for the market direction. At present though the signals are for a higher day to start the first week of April.

Potential Market Moving Events

These are the events this week that could move markets.

Monday

10:00 Factory order which are expected to decline 0.6%. A positive number will be negative for the market, at least initially.

Tuesday

8:30 Foreign Trade Deficit which is expected to be negative 88.2 billion. Normally this is not a market moving number.

11:00 to 2PM – 1 Fed Governor and 2 Fed Presidents are speaking but none are expected to make market moving comments.

Wednesday 

2:00 FOMC minutes which could move the market

8:30 Initial Jobless Claims and continuing jobless claims are reported.

9:00 Fed President Bullard speaks on the economy – could see some market movement before the open depending on how hawkish or dovish his speech is.

2:00 Fed Bank presidents Evan and Bostic speak. No market movement is expected.

Friday

10:00 Whole inventories which are expected to come in a 2.1% which is unchanged.

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