Stock Market Outlook for Mon Jan 9 2023 – Some Dips But Higher Close

On Friday the unemployment rate declined to 3.5% with December employment rising above expectations. Initially the index dipped to 3809 but then buying quickly returned and stocks staged a strong rally which saw the SPX back above 3900.

The SPX rallied 87 points to close at 3895. It was a 2.28% gain marking the best one day rally since Nov 30.

The NASDAQ rallied 264 points closing at 10569. It was the best rally since Dec 13.

Let’s review the closing technical indicators from the SPX on Fri Jan 6 to see what to expect for Mon Jan 9 2023

Stock Market Outlook Chart Comments At The Close on Fri Jan 6 2023 

On Fri Jan 6 the S&P closed above the 21 day moving average and below the 50, 100 and 200 day. This remains bearish but is constructive.

The closing candlestick is bullish for Monday but an intraday dip back to 3875 is likely.

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 though is 75% bearish for Monday, an improvement from Friday’s open.

Stock Market Outlook review of Fri Jan 6 2023

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising slightly and positive.

• 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 Fri Jan 6 the down signal was pretty well gone. The histogram also is ready to turn positive.

• 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 rising sharply.

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 rising sharply and positive.

• 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 almost positive.

• 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 – Mon Jan 9 2023 

For Monday, stocks have to digest the big rally from Friday. That will mean intraday dips which could be as low as 3975 are likely. The close though will be higher. The technical indicators are gaining strength and the MACD indicator is almost ready to issue an up signal.

Potential Economic and Political Market Moving Events

On Monday we could see a swing up or down depending on the NY Fed 1 and 5 year expectations report. Thursday though is the big day with Core CPI being reported. We could see a large move up or down on Thursday.

Monday:

11:00 NY Fed 1 and 5 year inflation expectations.

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