Stock Market Outlook for Thu Apr 28 2022 – Second Bounce Attempt

Wednesday saw stocks attempt a rebound thanks to earnings from Microsoft and VISA among others, that surprised with the strength of their earnings and revenue numbers.

Through the day stocks struggled and early morning they plunged to 4162, lower than Tuesday’s low of 4175 but that found some buyers. By the lunch hour the SPX was pushing to 4240 which represented a swing of 78 points intraday. The afternoon though, couldn’t hold that level and by the close the index was at 4183 just 8 points above Tuesday’s close.

The NASDAQ closed down just 1.8 points after losing a rather stunning 514 points on Tuesday. Overall Wednesday found some investors were willing to pick at a variety of stocks and that may help setup a second attempt to bounce. Let’s review the close of Wed Apr 27 to see what to expect for Thu Apr 28 2022.

Stock Market Outlook Chart Comments At The Close on Wed Apr 27 2022 

On Wednesday the closing candlestick shows the index is again oversold. This candlestick is typically seen when the index is about to try for a bounce. While never a guarantee of course, the chance is high that investors will again try to push stocks higher. It may not succeed.

There are now two more down signals in place which is bearish.

The low for the year is still at 4114. The low on Wednesday was roughly 50 points higher. The close was 69 points higher. You can see that a slip to a new low remains a distinct possibility.

Meanwhile the Bollinger Bands Squeeze is over, leaving behind a bearish signal with the Lower Bollinger Band falling deeper while the Upper Bollinger Band is struggling to climb. It may turn back down shortly.

The 200 day moving average is no longer rising and is now at the 4400 level.

The 100 day moving average is falling as are all the other moving averages.

The chart is probably 95% bearish for Thursday with the candlestick the only bullish signal. Everything else points lower for the S&P.

Stock Market Outlook review of Wed Apr 27 2022

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 Friday April 8. On Wednesday the down signal gained more strength. The histogram also gained strength. These are strong down readings for the past two days. Often a bounce follows such negative readings.

• 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 into oversold readings.

• 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 and is signaling 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 and oversold.

• 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 further.

• 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:

4550 is light resistance

4525 is light resistance

4500 is resistance

4490 is light resistance

4475 is light resistance

4450 is light resistance

4400 is resistance

4370 is light support

4350 is light resistance

4300 is light resistance

4290 is light resistance

4270 was light support

4250 was good support

4225 was light support

4200 is good support

4150 is good support

4100 is light support

4050 is light support

4025 is light support

4000 is good support

 Stock Market Outlook for Tomorrow – Thu Apr 28 2022 

Once again on Thursday the technical indicators are almost all bearish. There are though a couple of brighter spots including Relative Strength Index (RSI) which is trying to rise and Slow Stochastic which has a neutral outlook for Thursday.

The chance of a second bounce attempt on Thursday is high. As well, on Thursday investors get earnings from Apple Stock (AAPL), arguably one of the more important stocks for the bulls. An earnings beat on Thursday will help the bulls try to push higher on Friday.

On Thursday we also get earnings from Amazon, Intel, Roku and Western Digital. Until then there is a strong chance of a second bounce attempt.

On Thursday we get initial jobless claims and continuing claims.

Potential Market Moving Events

Wednesday: 

8:30 Pending Home Sales fell 1.8% which was above forecasts of minus 4.1%. Housing remains strong.

Thursday:

8:30 Initial jobless claims and continuing jobless claims

8:30 Red GDP first estimate

Friday:

8:30 Employment cost index

8:30 PCE Price Index

8:30 Core PCE price index

8:30 Nominal personal income and consumer spending

8:30 Real disposable incomes and real consumer spending

9:45 Chicago PMI

10:00 University of Michigan consumer sentiment and 5 year inflation expectations

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