On Wednesday stocks opened the day lower and then climbed higher until the Fed’s Beige Book was released at 2:00 PM. That was the high of the day but the book showed no sudden revelation of a change in the Fed’s decision-making. May looks steady for another rate increase. The index closed by the end of the day flat with a loss of less than a point to close at 4154.
The NASDAQ had a small 4 point gain, to close a 12,157. The sideways momentum continues as investors are waiting for a catalyst to shoot stocks higher. Each day, dips find ready buyers but none are willing to push stocks to the 4200 level or above.
Let’s review the closing technical indicators from Wed Apr 19 2023 to see what we should expect for Thu Apr 20 2023.
Stock Market Outlook Chart Comments At The Close on Wed Apr 19 2023
The index closed with a weak bullish candlestick for Thursday. The candlestick once again shows the market as overbought and at risk of dips.
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 climbing which is bullish. As explained, a new up signal on Friday occurred with the 21 day above the 50 day. This comes close to normalizing the market back to a bull stance and wiped out the down signal from March 14, leaving just one down signal.
The 50 day continues above the 200 day which is bullish. The 100 day is rising and should move above the 200 day perhaps by the end of the week. That will end the final down signal made April 24 2022, a year ago.
There are 6 up signal since January and just 1 down signal left. The SPX has been above the 200 day moving average for 15 trading days another bullish indicator.
Stock Market Outlook review of Wed Apr 19 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is dipping and positive but could turn negative shortly.
- 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 strength again. 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 neutral signal in place with a bearish bias. 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 rising and positive. It is also signaling 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 and 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:
4250 is resistance
4240 is resistance
4225 is resistance
4210 is resistance
4200 is resistance
4190 is resistance
4180 is resistance
4175 is resistance
4150 is resistance
4135 is resistance
4125 is resistance
4100 is resistance
4090 is resistance
4075 is support
4050 is support
4030 is light support
4025 is light support
4000 is support
Stock Market Outlook for Thu Apr 20 2023
For Thursday the technical indicators are showing still more weakness. Each day that the index fails to advance is another day where the MACD up signal erodes further. As each day the up signal loses strength you can see momentum is falling. If it turns negative we will see the market slip back. That said, the fact that the market keeps dipping but then finds buyers is a bullish signal. It won’t take much to jump-start the rally
For Thursday morning, investors have to deal with poor earnings results from Tesla which will weigh on the open. Meanwhile before the open of trading we get earnings from the like of Taiwan Semiconductor (TSM) which will give us some idea how the semi-conductors are doing, Nucor (NUE) which will show us industrial, Truist (TFC) and Blackrock who will add to financial results and American Express (AXP) which will tell us something about the state of consumers. Thursday promises to be an exciting day of trading but the outlook is for more dips and a possible lower close. A lot will depend on earnings before the opening bell.
Potential Economic and Political Market Moving Events
Thursday we get a slew of economic reports which should tell us how the economy is doing.
Thursday:
8:30 Weekly Initial Unemployment Insurance Claims are expected to come in at 244,000. If they are lower, watch for the market to soften.
8:30 Philadelphia Fed manufacturing survey
10:00 Existing home sales are expect to dip slightly to 4.48 million.
10:00 Leading economic indicators are expected to come in at -0.7%.