Stock Market Outlook for Wed Mar 23 2022 – Unchanged at Overbought – Dips Likely – Still Bullish

On Tuesday stocks forgot Fed Powell’s comments and pushed all indexes higher.

The S&P closed up 1.1% for a 50 point gain to close at 4511.

The NASDAQ rose 1.9% for an impressive 270 point gain to close back above 14,000 at 14108.  This is the highest level since Feb 11. It leaves the index just below the 200 day moving average.

For the S&P the index has now recovered 397 points from the Feb 24 correction low. This is a 56% rally from the Feb 24 low. Often if this is just a rally in a bigger decline we will begin to see the market run into some selling and a few days of lower lows. For now though the index is overbought as you can see in the technical analysis tonight.

Stock Market Outlook Chart Comments At The Close on Tue Mar 22 2022 

The index pushed higher on Tuesday and closed above all the moving averages and at the Upper Bollinger Band. The Upper Bollinger Band is moving higher and the Lower Bollinger Band is falling, indicating further upside is expected.

The closing candlestick on Tuesday is bullish but also signals an overbought market. Often this will mean some dips intraday are likely on Wednesday and Thursday.

The 21 day moving average is turning higher which is bullish.

The SPX still has 4 down signals in place.  The 200, 50 and 100 day moving averages are still falling lower.

The chart is more bullish again on Tuesday and indicates the index is overbought but there is still some room to the upside.

Stock Market Outlook review of Tue Mar 22 2022

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising and positive.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal Wed Mar 16 2022. On Tuesday the MACD signal remained strong with a reading of 27.68. The MACD histogram also has a very strong reading.

• 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 and now overbought.

• 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 up signal in place and 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 for a sixth day and 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.

• 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:

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 – Wed Mar 23 2022 

At the close on Tuesday, the technical indicators are all rising and most are signaling overbought. Usually when all the indicators are signaling overbought we should be aware there will be dips. These dips on Wednesday could be deeper than expected but they are still opportunities to setup trades as the market remains bullish heading into Wednesday. The close on Wednesday is still higher but another day of large gains is not expected as the index deals with being very overbought.

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