Friday started with a bounce which came within 8 points of 4300 but within 20 minutes sellers returned and stocks spent the entire day falling lower. The final hour and a half were particularly brutal as the index simply fell steadily on increasing volume. It dropped from 4251 to 4200. The end of the day saw a small bounce with the index closing up 4 points off the low at 4204.
From the morning high to the closing low on Friday the S&P fell 91 points. The close saw a loss of 55 points for a loss of 1.3%.
Losses mounted for the NASDAQ with the index down 286 points on Friday for a 2.18% loss. The index closed at 12,843 still above the 52 week low of 12587 but down 20.7% from the 52 week high of 16212. The week ended with losses again for all three indexes. The S&P is down 12.75% to start off the third week of March but still doing better than the tech heavy NASDAQ.
Let’s review Friday’s closing technicals and candlestick to see what to expect for Monday.
Stock Market Outlook Chart Comments At The Close on Fri Mar 11 2022
There were some changes in the S&P chart following Friday’s close.
The Upper Bollinger Band is turning lower while the Lower Bollinger Band is still trending sideways. This is a mixed signal advising that investors are not sure they want to take stocks much lower. If the Lower Bollinger Band begins to fall then we know the market will move lower. If though it rises to meet the Upper Bollinger Band there is a good case for the market to change back to higher. We will know more as this week unfolds.
The closing candlestick on Friday is bearish but after the candlestick on Thursday, often we will see a slightly weaker day but more a sideways action similar to what was seen on Jan 27.
The other important event on Friday is a new down signal. The 50 day moving average fell below the 100 day for the first time on Friday.
There are now 4 down signals in place which you can see in the chart below.
All the major moving averages are falling lower including the 200 day which is also starting to fall.
The chart remains negative as of Friday’s close.
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 on Mon Mar 7 2022 . The down signaled strengthened only slightly on Friday but is signaling sideways rather than strongly lower. The MACD histogram shows a further weakening as well but still negative.
- 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 negative and 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 still has an up signal in place for a second 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:
4500 is resistance
4490 is light resistance
4475 is light resistance
4450 is light resistance
4400 is good support and the 200 day moving average
4370 is light support
4350 is light support
4300 is good support
4290 is light support
4270 is light support
4250 is good support
4225 is light support
4200 is good support
4150 is good support
4000 is good support
Stock Market Outlook for Tomorrow – Mon Mar 14 2022
The biggest issue facing the index on Monday is the continuing war in Ukraine. Weekend developments may start the index off negative although some hopeful talk about both sides still looking for a settlement may help the index to try to pop. This week investors also get the highly expected first rate increase from the Fed. Often when an event such as that finally gets implemented, stock markets actually rise with yet another unknown finally out of the way. Fingers crossed on that one. Overall the focus of investors will be on the war, its fallout, oil prices and any expansion of the war for much of this week if not all of it.
The closing candlestick on Friday is advising that we could see a sideways day on Monday with a possible higher day on Tuesday. This is a cautious day with a bias to the upside.