Stock Market Outlook for Fri Dec 22 2023 – Sideways With Bias Up

Prior Trading Day Summary:

On Thursday stocks opened the day higher but saw the opening highs given back as the S&P slipped to 4708 just 10 points from Wednesday’s market plunge low of 4698. For much of the day, spikes higher ran into sellers but by late afternoon sellers moved aside and buyers pushed the index to close at 4746 for a gain of 48 points or 1%.

The NASDAQ rallied 186 points for a gain of 1.2% to close at 14,963.

Volumes were lower, particularly on New York where just 3.5 billion shares traded.

Normally a bounce is suspect of giving back the bounce when it recovers roughly 50% of the prior sell-off loss. For the S&P that would mean a recovery of 35 points was needed. Instead the S&P gained 48 points.

For the NASDAQ a 50% gain would be 112 points. Instead the S&P rose 186 points or 1.2%.

Overall the signals are indicating that Wednesday’s sell-off was a one day event. We will definitely know on Friday.

Let’s review the closing technical indicators from Thu Dec 21 2023 to see whether the index can move higher on Fri Dec 22 2023.

Stock Market Outlook: SPX Closing Chart For Thu Dec 21 2023

The index closed above all major moving averages but below the Upper Bollinger Band.

The 21 day moving average is rising further, which is also bullish.

The closing candlestick is bullish for Friday.

The 50 day moving average is above the 100 day and still climbing which is bullish.

The 100 and 200 day moving averages are climbing which is bullish.

The Lower Bollinger Band is turning lower and the Upper Bollinger Band is turning higher, signaling the Bollinger Bands Squeeze is ending.

The S&P chart is bullish heading into Friday.

Stock Market Outlook review of Thu Dec 21 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Fri Dec 22 2023 

For Friday the technical indicators are advising investors to stay invested even if the index slips lower by the close. The signals are advising the rally will recommence if not on Friday, then shortly after.

The recovery of more than 50% of Wednesday’s late day sell-off is encouraging.

On Friday expect some dips and negative periods but overall the index will close flat to higher for the final trading day before Christmas holidays.

Potential Economic and Political Market Moving Events

Major economic events this week are Housing starts on Tuesday, GDP (revised) on Thursday and durable goods orders and PCE on Friday.

Monday:

Home builder confidence is expected to come in higher at 36 from last month’s 34 but came in at 37

Tuesday:

8:30 Housing starts are expected to be 1.36 million but came in much higher at 1.56 million.

8:30 Building permits are expect to be 1.48 million but came in at 1.46 billion.

Wednesday:

8:30 Current Amount for third quarter is expected to rise to -197.5 billion.

10:00 Existing home sales is expected to dip to 3.6 million but rose to 3.76 million

10:00 Consumer confidence is estimated to rise to 104.5

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are estimated to come in at 215,000 but were lower at 205,000

8:30 GDP revised is expected at 5.1% but was lower at 4.9%

8:30 Philadelphia Fed Manufacturing is expected at -4.0

10:00 Leading economic indicators are expected to come in at -0.5%

Friday:

8:30 Durable goods orders is expected at 2.0%

8:30 Personal income is expected at 0.4%

8:30 Personal spending is estimated at 0.3%

8:30 PCE Index

8:30 Core PCE is expected at 0.1%

8:30 Core PCE year after year is expected at 3.3%

10:00 New Home Sales is expected at 688,000

10:00 Consumer sentiment is expected unchanged at 69.4