After four straight days of the SPX clinging to the 200 day moving average, investors finally decided on Tuesday to push back against the sellers and move the index meaningfully higher.
The S&P closed up 70 points to 4462 for a 1.6% gain. This was the best rally of the month and the best rally since March 16.
The NASDAQ had a mammoth day rising 287 points for a 2.15% gain, closing at 13619. It was also the best one day gain since March 16.
Unfortunately on Wednesday the decline in subscriber growth will drop Netflix Stock (NFLX) and that means the markets will start the day lower.
Let’s review Tuesday’s closing technical indicators to see what to expect for Wed Apr 20 2022.
Stock Market Outlook Chart Comments At The Close on Tue Apr 19 2022
On Tuesday the closing candlestick showed a solid bounce off the Lower Bollinger Band with a close at the 100 day moving average. This left behind a bullish candlestick for Wednesday.
The 21 day moving average continued to move sideways which is bearish.
Meanwhile the Bollinger Bands are into a squeeze which is still looking bearish.
The 200 day moving average is rising above the 4400 level which is bullish. The 50 day moving average is still at the 200 day. A drop below it will be another down signal. That could happen as early as Wednesday, if the index ends the day lower.
The 100 day moving average is also dipping lower.
The chart is about 80% bearish for Wednesday but if Wednesday is lower, Thursday may be higher based on the SPX closing chart from Tuesday.
Stock Market Outlook review of Tue Apr 19 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 Tuesday the down signal lost some strength. The histogram also lost strength. Overall though the signals are still quite bearish.
- 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 rising for a second day..
- 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 stronger up signal in place for a third day and is still somewhat 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 turned slightly 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 rising slightly which indicates wider price swings can be expected.
- 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:
4650 is resistance
4640 is resistance
4625 is resistance
4600 is strong resistance
4590 is resistance
4575 is light resistance
4560 is light resistance
4550 is light resistance
4525 is light resistance
4500 is light resistance
4490 is light support
4475 is light support
4450 is light support
4400 is support
4370 is light support
4350 is light support.
4300 is good support
Stock Market Outlook for Tomorrow – Wed Apr 20 2022
For Wednesday the technical indicators are slightly more bullish than they were on Monday.
Two technical indicators are signaling there is still bullishness in the market. MACD is still pointing lower but it lost a lot of its down signal on Tuesday.
The biggest problem for Wednesday will be the decline in subscriber growth in Netflix. That means Netflix Stock (NFLX) will be lower and that will weigh on both indexes, certainly in the morning.
A lower open is expected thanks to Netflix earnings release on Tuesday after the close. After hours the stock plunged $90 and more analysts turned bearish after hours.
Housing permits and starts on Tuesday morning beat all estimates and matched those of February which caught analysts by surprise. It also shows the housing market is doing better than analysts had predicted. The question now is whether analysts are too pessimistic on the economy as a whole.
For Wednesday stocks will move lower but the bullish bias remains. Intraday we should see a bounce attempt. Even with a probable lower close on Wednesday thanks to Netflix, there is a strong possibility of a higher day on Thursday.
On Wednesday we get existing home sales and the Fed’s beige book is released at 2:00 PM. Both could be market moving events.
Potential Market Moving Events
Tuesday:
8:30 Building permits beat estimates at 1.87 million
8:30 Housing starts beat estimates at 1.79 million.
Wednesday:
10:00 Existing home sales
10:30 to 1:00 – 3 different Fed Presidents speak at different events
2:00 Fed Beige Book released
Thursday:
8:30 Initial jobless claims and continuing jobless claims
8:30 Philadelphia Fed manufacturing survey
10:00 Leading economic indicators
12:30 St Louis Fed Bullard speaks (nothing new expected)
1:00 Fed Chair Powell speaks on global economy to IMF (nothing new expected but could see market shift slightly depending on what is said)
Friday:
9:45 S&P global US manufacturing PMI and US services PMI
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