Prior Trading Day Summary
On Fri Jan 2 2026 the index dipped below the 21 day moving average and then bounced higher into the close.
The S&P closed up 12 points to 6858 on 4.2 billion shares traded as volume rose on Friday. 66% of stocks closed higher. For the week the SPX was down 71 points.
The NASDAQ fell just 6 points closing at 23235. Volume was 7.5 billion shares traded an increase of 1.5 billion shares over Dec 31 trading. 60% of stocks on the index were rising. For the week the index lost 357 points.
This is the final day of the much anticipated Santa Claus Rally. The SPX has to close above 6909.
Let’s review the closing technical indicators from Jan 2 2026 to see what to expect on Mon Jan 5 2026.
Stock Market Outlook: SPX Closing Chart For Fri Jan 2 2026
The index closed below the Upper Bollinger Band but slightly above the 21 day moving average. This is still bearish but signals a potential bounce to continue today.
The closing candlestick is bullish pointing to a probable bounce today.
The 21 day moving average is rising and closed at 6856. This is bullish but the rise in the 21 day is slowing considerably.
The 50 day moving average is rising and closed at 6805. This is bullish but the rise in the 50 day is also slowing considerably.
The 100 day moving average is rising and closed at 6661 which is bullish.
The 200 day moving average is rising and closed at 6416 which is bullish.
The Lower Bollinger Band is trending sideways and still above the 100 day moving average. This is neutral. The Upper Bollinger Band is also trending sideways which is neutral. A Bollinger Bands Squeeze is underway. The initial outlook appeared higher for stocks out of the squeeze but caution is advised until the signal is clearer.
The SPX chart has slightly more bearish signals than bullish although the closing candlestick points to a probable bounce.
SPX Stock Market Outlook review of Fri Jan 2 2026
Stock Market Outlook: Technical Indicators Review
Momentum: Momentum is rising and positive. This is bullish.
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MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Tue Dec 23 2025. The up signal was gone on Friday and a new unconfirmed down signal was issued at the close.
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Ultimate Oscillator: The Ultimate Oscillator is rising.
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Slow Stochastic: The Slow Stochastic has a down signal in place.
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Relative Strength Index: The RSI signal is rising.
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| Rate of Change: The rate of change is falling and signaling a possible lower close on Monday. It is at levels where often stocks attempt a bounce. 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 |
| 6950 is resistance |
| 6925 is resistance |
| 6900 is resistance |
| 6875 is resistance |
| 6850 is resistance |
| 6800 is resistance |
| 6775 is resistance |
| 6750 is resistance |
| 6715 is resistance |
| 6700 is resistance |
| 6675 is support |
| 6650 is support |
| 6625 is support |
| 6600 is support |
| 6590 is support |
| 6570 is support |
| 6550 is support |
| 6500 is support |
Stock Market Outlook for Mon Jan 5 2026
A strong bounce today is possible and there are some signs we could see one. The SPX needs to rally 52 points to prove the Santa Claus Rally is still alive. That is possible but the last rally of 50 plus points was Dec 19.
For Monday stocks are facing a new unconfirmed down signal from the MACD technical indicator. However there are also signs that a bounce could occur. Overall the outlook is for a bounce with a higher close but whether that changes the direction for January is questionable until later in the week.
Potential Economic and Political Market Moving Events
Monday:
10:00 ISM Manufacturing index for Dec is estimated to rise slightly to 48.3% from 48.2%
Through the day we get auto sales