Stock Market Outlook for Mon Oct 9 2023 – Choppy – Dip Possible But Still Up

Prior Trading Day Summary

On Fri Oct 6 2023 investors and analysts were stunned when the September non-farm payroll numbers were double what estimates had been. 336,000 jobs were created versus 170,000 estimated. The prior two months, August and July were also increased which shows a strong labor market continues.

At the outset investors sold stocks on the news and the S&P fell to 4219 by 10:00 AM. That though was the bottom as investors looked deeper into the September jobs numbers and saw that wages rose less than expected which many analysts were quick to point out meant the Fed didn’t need to work about inflation when it came to income. Hourly wages grew 0.2% and year-over-year wages were up 4.2%, both numbers being below estimates. Overall investors felt the numbers could support the “soft-landing” talked about often by the Fed. Few analysts felt the number would push the Fed to raise rates higher.

The technical indicators though, signaled that the bounce on Friday was strongly tied to very oversold stocks that had been set to bounce for days. With the latest jobs numbers out-of-the-way on Friday, the bounce could get underway. How long the rally can last is questionable as the job market shows strong job growth is continuing even with the unemployment rate being pegged at 3.8% from 3.7%. It rose though on the back of more people entering the work force looking for jobs which is another sign of economic strength.

The SPX rose 50 points to end the day at 4308. This is the biggest one day jump since Aug 29.

The NASDAQ rose 211 points to end the day at 13,431. Friday was also the biggest one day gain since Aug 29.

With the bond market closed on Monday, it could help the bulls continue to rally on Monday.

Let’s review the closing technical indicators from Fri Oct 6 2023 to see what to expect for the start of the second week of October.

Stock Market Outlook: SPX Closing Chart For Fri Oct 6 2023

The index closed below the 50, 21, 100 day moving averages which is bearish but closed well above the 200 day moving average which is bullish.

The closing candlestick is bullish for Monday but it also signals the rally was overdone and could dip slightly on Monday before moving higher.

The closing candlestick closed above the Lower Bollinger Band and above the 200 day which is bullish.

The 21 and 50 day moving averages are still falling. You can see in the chart that the 21 day is almost ready to fall below the 100 day. Normally this will be another down signal but if the index keeps climbing, any down signal should reverse with the 21 day moving back above the 50. Remember that the moving averages are lagging indicators.

The 200 day moving average is continuing to climb which is bullish. The 100 day moving average is falling which is bearish.

The Lower Bollinger Band is turning sharply sideways which could be bullish on Monday if it continues.  The Upper Bollinger Band is falling which is bearish. The S&P chart is very bearish but is now showing signs of trying to retake to at least the 50 day which is above 4400.

Stock Market Outlook review of Fri Oct 6 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Mon Oct 9 2023 

On Monday bond markets are closed. This often reduces volatility and assists the bullish side of the market.

The technical indicators are advising that the rally will last longer than just Friday but the morning could see some dips but any dips on Monday will find ready buyers, especially with the bond market closed.

The day could be choppy but the direction is higher.

Potential Economic and Political Market Moving Events

The most important report this week is Wednesday’s PPI which is expected to fall to 0.3% from 07%.  The other event is Thursday’s Consumer Price Index (CPI) which is expected to fall to 0.3% from 0.6%. If percentages rise, stocks could fall.

Monday:

No events

Bond market closed – bullish for stocks.