Stock Market Outlook for Tue Apr 26 2022 – Dips Likely But Higher Ahead Of Big Earnings Releases

Monday saw the SPX tumble all the way to the 4200 level, nearing the lows from February and March. This helped to spark a technical bounce higher. The bounce was aided by news of Twitter’s purchase by Elon Musk which inspired some confidence in the market.

The S&P ended the day up 24 points at 4296. The NASDAQ ended higher by 165 points to close at 13004.

Let’s review Monday’s closing technical indicators to see what to expect for Tue Apr 26 2022.

Stock Market Outlook Chart Comments At The Close on Mon Apr 25 2022 

On Monday the closing candlestick is signaling that Monday’s bounce was a technical bounce off the 4200 level which was near the lows from February and March. Often the following day can start with a continuation of the rally but then a pullback to test part of the dip on Monday.

The 21 day moving average continued to move lower which is bearish. It could fall below the 100 day early this week which would end the up signal from April 12.

Meanwhile the Bollinger Bands Squeeze is ending as the index is falling lower. The Upper Bollinger Band is rising and the Lower Bollinger Band is falling. This is bearish.

The 200 day moving average is no longer rising but still just above 4400. The 50 day moving average fell below the 200 day on Thursday April 23 for a new down signal.

The 100 day moving average is also dipping lower.

The chart is still 95% bearish for Tuesday. The drop to 4200 though was a major technical inflection point and I would not expect the SPX to fall that low again on Tuesday.

Stock Market Outlook review of Mon Apr 25 2022

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising 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 Monday the down signal gained more strength despite the rally off the 4200 level. The histogram also gained 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 trying to rise.

• 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 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 but still 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.

• 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 support

4400 is support

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 – Tue Apr 26 2022 

Monday’s rally was technical in nature. Tuesday could start positive and try to build on Monday’s rally but dips back are expected and they could reach 4270, or if selling intensifies, 4250. The close on the day should still end positive despite most technical indicators being bearish.  This is because we get earnings Tuesday after the close from some of the big stocks like Alphabet Stock (GOOGL), Microsoft Stock (MSFT), Chipotle Mexican Grill Stock (CMG), F5 Networks (FFIV), Mondelez Stock (MDLZ), Skechers Stock (SKX), Texas Instruments Stock (TXN) and VISA Stock (V). This will give a good cross-section of the economy. Normally investors will take a bullish stance ahead of those earnings.

On Thursday we get Apple, Amazon, Intel, Mercer, Roku and Western Digital. This should help keep stocks up, this week.

On Tuesday there are a number of potential market moving events as listed below but the big story will be the stocks listed above for Tuesday.

Potential Market Moving Events

Tuesday:

8:30 Durable Goods Orders

9:00 Case-Shiller US Home Price Index and FHFA Home Price Index (year-over-year)

10:00 Consumer confidence index

10:00 New Home Sales

Wednesday: 

8:30 Pending Home Sales

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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