On Thursday the morning ADP employment report spooked investors as it showed a much larger than expected jump in employment to 235,000 from the anticipated 153,000. This signaled to investors that the Fed’s job of battling inflation is nowhere near over. Investors rushed to sell at the open and the SPX fell to 3802. The best bounce came in the afternoon on the back of comments by Fed President James Bullard who seemed to suggest a bit more dovish stance might be coming sooner than expected. That resulted in a rally until 3:00 when sellers returned and dropped the SPX back to close at 3808, for a loss of 45 p points.
The NASDAQ lost 153 points to close at 10305.
For Friday investors get the December non-farm payroll report at 8:30. A stronger report will send stocks lower while a rise in unemployment will bounce stocks.
Let’s review the closing technical indicators from the SPX on Thu Jan 5 2023 to see what to expect for Fri Jan 6 2023.
Stock Market Outlook Chart Comments At The Close on Thu Jan 5 2023
On Thu Jan 5 the S&P closed below all moving averages for the 12th trading day but still managed to stay above the Lower Bollinger Band. This is still bearish. The index is sitting at the 3800 support level.
The closing candlestick is bearish for Friday.
The Upper Bollinger Band is turning lower which is bearish. The Lower Bollinger Band is turning sideways which is also bearish and could be preparing for a potential Bollinger Bands Squeeze.
The 200, 21 and 100 day moving averages are falling. The 50 day is trending sideways. This is all bearish.
The 21 day moving average fell below the 100 day moving average on Friday Dec 30 and below the 50 day on Wednesday Jan 4. Both are bearish signals and they wipe out the last two remaining up signals from the moving averages.
At present there are are 6 down signals in place since April 24 and no up signals.
The chart is back to 85% bearish for Friday.
Stock Market Outlook review of Thu Jan 5 2023
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and has turned negative.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal Tuesday Dec 6 2022. On Thu Jan 5 the down signal was unchanged. The histogram lost 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 rising and positive.
- 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 an up signal in place and moving above 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 falling and back negative.
- 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 and negative.
- 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:
4050 is resistance
4030 is resistance
4025 is resistance
4000 is resistance
3975 is resistance
3965 is resistance
3950 is resistance
3925 is resistance
3900 is resistance
3875 is resistance
3850 is good support
3830 is good support
3810 is light support
3800 is good support
3775 is good support
3750 is good support
3730 is light support
3725 is light support
3715 is light support
3700 is good support
3685 is light support
Stock Market Outlook for Tomorrow – Fri Jan 6 2023
For Friday the open and much of the day’s market direction will be determined by the December jobs numbers. However the technical indicators are still of significance and they are still strongly bearish, especially the S&P chart which has no up signals of any kind since April, in place.
For Friday I am expecting a strong jobs report which will see stocks slip below 3800. A weak report would be ideal but there are not many signs of a potential rise in unemployment yet. If the unemployment rate falls to 3.5%, that will be negative for stocks.
Potential Economic and Political Market Moving Events
Today’s December non-farm payroll report is the most significant event for this week.
Friday:
8:30 December non-farm payroll numbers are expected to be 200,000 which is stronger than the prior month.
8:30 Unemployment rate is expected to stay at 3.7%. A lower percentage will send stocks lower. A higher percentage should help to rally stocks.
Stock Market Outlook Archives
Stock Market Outlook For Wed May 6 2026 – Choppy But Higher Still
Morning Investing Strategy Notes for Tue May 5 2026
Stock Market Outlook For Tue May 5 2026 – Overbought and Lower
Morning Investing Strategy Notes for Mon May 4 2026
Stock Market Outlook For Mon May 4 2026 – Dips Likely With Possible Lower Close
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Stock Market Outlook For Fri May 1 2026 – Overbought But Higher
Morning Investing Strategy Notes for Thu Apr 30 2026
Stock Market Outlook For Thu Apr 30 2026 – Dips Likely Possible Lower Close
Morning Investing Strategy Notes for Wed Apr 29 2026
Stock Market Outlook For Wed Apr 29 2026 – Choppy But Higher Ahead Of More Earnings
Morning Investing Strategy Notes for Tue Apr 28 2026
