The November non-farm payroll numbers defied analysts on all expectations and came in at 263,000, which was well above the 200,000 expected. The unemployment rate remained unchanged at 3.7% and the average hourly earnings rose 0.6%. One of the more important indicators, the labor-force participation rate was steady at 82.4%.
Markets reacted quickly with most analysts reporting the Fed would be hard pressed to slow rate increases. However most didn’t seem to realize that the number was still lower than October’s 284,000.
Stocks which plunged at the open ended the day almost unchanged.
The S&P closed down just 5 points at 4071 and the NASDAQ lost just 21 points to close at 11,461. The Dow ended slightly positive.
Let’s review the technical indicators at the close on Friday Dec 2 to see what to expect to start off the week on Dec 5.
Black Friday Sale Ends Tonight
The Black Friday Sale ends tonight. Original prices return on Saturday. This is the last chance to enjoy some exceptional discounts.
Stock Market Outlook Chart Comments At The Close on Fri Dec 2 2022
On Friday the S&P touched the 200 day moving average in the early sell-off but managed to close back above it. This keeps the 4050 support level intact, although it remains light support. The candlestick is bearish for Monday.
The closing candlestick is still above all the moving averages which is bullish.
The Upper Bollinger Band crossed above the 200 day on Wednesday November 16 which is a bullish signal. On Friday it continued to climb.
The Lower Bollinger Band which was turning lower is turning back up. This will have to be watched to start off the week as it may be the start of signal the rally will stall next week.
A second up signal was generated on Wednesday Nov 30, with the 21 day moving above the 100 day. This ended the down signal from Oct 14 which you can see has been removed from the chart.
The first up signal was Friday Nov 11 when the 21 day moving average moved above the 50 day.
The 50 and 100 day moving averages are starting to turn higher. The 200 day is trending sideways. All three are bullish signals.
There are now 4 down signals in place since April 24 and two up signals.
The chart is 70% bullish for Monday.
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 on Thursday Oct 16. On Friday the up signal gained only a small amount of strength and remains weak. Just a day or two of moving lower could end the up signal this week. The histogram has also lost most of its 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 unchanged and still on the verge of overbought signals. This is a good sign for the bulls.
- 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 is still 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 falling.
- 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 which is signaling stocks will see a change on Monday, up or down.
- 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:
4150 is resistance
4120 is resistance
4100 is resistance
4090 is resistance
4070 is resistance
4050 is resistance
4030 is resistance
4025 is light support
4000 is light support
3975 is light support
3965 is light support
3950 is good support
3925 is light support
3900 is good support
Stock Market Outlook for Tomorrow – Mon Dec 5 2022
For Monday the technical indicators are still slanted to the bullish side but there are pockets of weakness. While there are no strong cautionary signals there are signs to watch this week, especially the Lower Bollinger Band and the MACD indicator. The big jump Wednesday afternoon following Fed Chair Powell’s perceived somewhat “dovish” comments did not change the technical indicators. They are still advising to stay cautious until the index can break higher and hold above 4100.
For Monday stocks look set to have a choppy day with some dips to start the week off. Any dips on Monday will bring in buyers who will bounce the index higher. For Monday the bulls will win out and push the index higher to close the day.
Investors are anxious to see stocks move higher and are holding cash ready to jump into any strong signals to suggest the market will rally into the Christmas Season. I am still holding the SPY Market Direction trade.
Potential Economic and Political Market Moving Events
Next week the biggest events are on Friday with consumer sentiment and 5 year inflation reports. Monday is relatively uneventful which should help the bulls.
9:45 S&P Services PMI
10:00 ISM services index
10:00 Factory orders
Stock Market Outlook Archives