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Stock Market Outlook for Mon Jan 13 2025 – Still Bearish – Bounce Attempt Likely

Jan 13, 2025 | Stock Market Outlook

Bearish bounce likelyPrior Trading Day Summary:

On Friday investors sold stocks lower following a stronger than anticipated December jobs report which showed over 100,000 more jobs created than estimated. Many investors looked at the jobs numbers as possibility inflationary and a reason for the Fed not to cut interest rates for probably the first half of the year.

The SPX fell back 91 points to close at 5827 still ahead of the close on Nov 5 of 5782, election day. Volume was 4.8 billion shares with 8 times more 52 week lows than highs. 79% of all stocks were falling on Friday. For the week the SPX lost 115 points and marked the 5th week out of 6 that have closed lower.

The NASDAQ closed down 317 points to 19,161 almost the same level the index was at on Nov 26.  Volume was 8.7 billion shares. There were 4.5 times new lows versus new highs on Friday but up volume was 46% versus 53% declining. For stocks though, 75% were lower. For the week, the NASDAQ lost 480 points, the second worse week since the second week of November when the NASDAQ lost 606 points and ended the week at 18,680.

If the SPX holds here, it will be another test of the mid-December lows which reached a low of 5832 before the SPX rebounded.

This is a full week of trading with a number of economic reports that could swing markets and the start of earnings season with many financial stocks and UnitedHealth Group (UNH) reporting their latest quarterly results. This will be a big week for the markets.

Let’s review the technical indicators at the close on Fri Jan 10 2025 to see what they can tell us about Mon Jan 13 2025.


Stock Market Outlook: SPX Closing Chart For Fri Jan 10 2025

The index closed below both the 21 day and the 50 day moving averages and down at the 100 day moving average. This is bearish.

The closing candlestick is bearish but also signals that many stocks are oversold and a bounce is possible.

The 21 day moving average fell back to 5965 which is bearish. It may fall below the 50 day today which would be another down signal.

The 50 day moving average is unchanged and closed at 5952 which is bearish.

The 100 day moving average is unchanged and closed at 5815 which is bearish.

The 200 day moving average is rising and closed at 5578 which is bullish.

The Lower Bollinger Band fell below the 100 day moving average and still falling which is bearish. The Upper Bollinger Band is falling which is bearish.

The S&P chart is almost all bearish for Monday. We could see a bounce today or early in the week.

SPX Stock Market Outlook review of Fri Jan 10 2025


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is falling and negative. It is 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 Tuesday Dec 10 2024 . The down signal gained strength on Friday but is near readings that often see a bounce.

  • 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 falling but actually trending more sideways than either clearly up or down since Dec 24.

  • 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 down signal in place to start the week.

  • 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 but not signaling oversold yet.

  • 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 and signaling Monday will end lower.

  • 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.

Stock Market Outlook: Support and Resistance Levels

6100 is strong resistance
6090 is resistance
6070 is resistance
6050 is resistance
6025 is resistance
6015 is resistance
6000 is resistance
5990 is resistance
5970 is resistance
5950 is resistance
5900 is support
5890 is support
5875 is support
5850 is support
5830 is support
5800 is support
5780 is support
5725 is support
5700 is support


Stock Market Outlook for Mon Jan 13 2025 

For Monday the SPX may slip below the 100 day moving average and then attempt a bounce. Not all the technical indicators are in agreement that a bounce is imminent for Monday but all are showing stocks are now under stress. That could mean a bounce, especially if stocks slip lower early morning. If the SPX holds around the present level on Monday, we could see some strength on Tuesday but investors are presently cautious and waiting for others to buy into stocks before committing much capital.

Tuesday we get the Producer Price Index numbers and on Wednesday the Consumer Price Index numbers. Then Thursday we get retail sales and Friday housing starts, building permits and industrial production and capacity utilization. All of these reports will be scrutinized by investors to get somme idea on the strength of the economy. Many investors are worried that a strong economy will push inflation higher and delay any further Fed rate cuts. With bond yields higher on Friday, investors are spooked.

Today could see a bounce but without much buy-in from more than just traders, the chance any bounce today will hold is slight. A lower close is still expected.


Potential Economic and Political Market Moving Events

Monday:

2:00 Monthly US Federal budget is expected to rise to -$75 billion from -$129 billion

 


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