On Wednesday the market moved lower after an initial positive reaction to lower inflation readings. As more analysts and comments from Fed officials created some anxiety among investors that a recession could start this year. If it did, valuations could be too high and that would mean stocks will move lower. By the end of the day, stocks were modestly lower, but again on below average volume for the S&P.
The S&P ended the day down 17 points at 4091. The NASDAQ lost 102 points to end below 12,000 at 11,929.
Let’s review the closing technical indicators from Tue Apr 11 2023 to see what we should expect for Wed Apr 12 2023.
Stock Market Outlook Chart Comments At The Close on Wed Apr 12 2023
The index closed with a bearish candlestick for Thursday although the candlestick also shows the index could attempt a morning bounce. The chance of the morning bounce holding the market higher though is slim on Thursday.
The Upper Bollinger Band is turning up and the Lower Bollinger Band is also turning higher. Both are bullish signals.
The 200 day moving average is at 4000 and climbing which is bullish. The 21 day is above the 100 day and moved above the 200 day on Wednesday for another up signal.
The 50 day continues above the 200 day which is bullish. The 100 day is starting to rise which is still bearish but if it can move above the 200 day, it will end the down signal from April 24.
If you look at the list of down and up signals, there are now just 2 down signals in play with the most important being the April 24 down signal. That signal is now almost a year old and is a prime reason many analysts still believe this is a bear market. There are 5 up signal since January. The SPX chart is more bullish than bearish which indicates a down day on Thursday should be followed by more upside on Friday.
Stock Market Outlook review of Wed Apr 12 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is dipping and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) up signal from Mar 21 lost a bit of strength. The histogram also shows a drop in 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 and positive.
- 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 weak down signal in place. It is also 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 falling sharply but still positive.
- 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 but still positive.
- 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:
4150 is resstance
4135 is resistance
4125 is resistance
4100 is resistance
4090 is resistance
4075 is resistance
4050 is resistance
4030 is light support
4025 is light support
4000 is 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 Thu Apr 13 2023
For Thursday the technical signals are showing dips are probable with a strong chance of a lower close. The bullishness though is not gone and weakness on Thursday should end up with more upside either Friday or Monday. A lot will depend on the start of earnings season with banks reporting shortly.
The indicators are still bullish in general and indicate the SPX should move higher after this bit of weakness ends.
Potential Economic and Political Market Moving Events
The PPI numbers on Thursday could add more weakness for the indexes.
Thursday:
8:30 Producer Price Index
8:30 Core PPI
8:30 PPI Year-over-year and Core PPI year over year.
8:30 Weekly Initial Unemployment Insurance Claims