The November unemployment report failed to meet expectations coming in at 221,000 new jobs created whereas the average estimated was for 580,000. Despite this, the unemployment rate declined to 4.2% but the lower number was enough to get investors back in the selling mood.
The open on Friday saw a quick move higher but on very low volume. That was enough to kick in selling programs. As the index fell, investors joined in and the S&P by 12:00 PM had fallen to 4507. Lunch hour was spent in a sideways pattern where each little spike higher found ready sellers. Early afternoon saw the S&P slide further and break below 4500 brushing the 100 day moving average before buyers returned. The final hour of trading saw the index climb back 40 points to close at 4538.
It was a choppy session with the S&P closing down 38 points for a loss of 0.84% but it was not nearly as “bad” as the NASDAQ.
The NASDAQ had a worse session losing 1.9% to close down 295 points at 15085. Intraday though, the NASDAQ fell to 14931 which was below the 100 day moving average. The index closed at the 100 day on Friday.
Meanwhile the Dow Jones fell just 59 points by the close which was down only 0.17%.
Let’s review the technical indicators from Friday to see what to expect for Monday.
Stock Market Outlook Chart Comments At The Close on Fri Dec 3 2021
The candlestick on Friday is bearish to start the week and is signaling another dip lower should be expected for Monday. The index ended the day at the 50 day moving average after falling to the 100 day intraday on Friday.
The 21 day moving average is continuing to fall while the other remaining major moving averages, namely the 50, 100 and 200 day are still climbing. This is bullish.
The Bollinger Bands Squeeze is over and the bands are widening which at present is bearish in outlook.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling, negative and at oversold readings.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Wed Nov 17 2021 . On Friday the down signal gained more strength to the downside.
- 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 from being oversold.
- 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 for Monday and is 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 slipping lower and is nearing oversold readings again.
- 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 falling.
- 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:
4700 is resistance
4655 is resistance
4600 is good support
4550 is light support
4525 is light support
4500 is support
4490 is support
4475 is support
4450 is support
4400 is support
4370 is light support
4350 is light support
4300 is light support
Stock Market Outlook for Tomorrow – Mon Dec 6 2021
The disappointing jobs numbers concerned many investors on Friday as they wonder if the Fed will move quicker on interest rates at a time when employment may be slowing. On Friday a number of analysts were back talking about “stagflation”.
The technical indicators are mixed for the start of the week but none are signaling an imminent move a lot lower or higher. Instead they are mixed to start the week. The focus on Monday could end up being new omicron cases should numbers should signs of expanding rapidly. That could be enough to sink stocks further on Monday. However the technical indicators are split which means there is as good a chance for a positive close as a negative close on Monday. Watch for a choppy day to develop with a bias lower.