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Stock Market Outlook for Thu Dec 7 2023 – Unconfirmed Down Signal

Dec 7, 2023 | Stock Market Outlook

Stock Market Outlook Unconfirmed MACD Down Signal

Prior Trading Day Summary:

On Wednesday stocks opened higher and tried to break above 4590 but the bounce attempt failed and in the final hour of trading, sellers pushed the SPX back to the 4550 support level. Intraday the S&P covered a range from 4590 to 4549 for a 41 point day. At the close the loss was 17 points to close at 4549.

The NASDAQ ended the day down 83 points, closing at 14,146.

Volumes on the SPX rose to 4.3 billion but on the NASDAQ volume declined for a third day, with 5.4 billion shares traded.

Let’s review the closing technical indicators from Wed Dec 6 2023 to see what to expect for Thu Dec 7 2023.


Stock Market Outlook: SPX Closing Chart For Wed Dec 6 2023

The index closed above all major moving averages and was still below the Upper Bollinger Band. The 21 day moving average is turning sideways following 10 trading days of basically sideways action.

The closing candlestick is also bearish for bearish although a bounce could occur at any time.

The 50 day moving average is still below the 100 day and needs to climb above it for another up signal.

The 100 and 200 day moving averages are climbing which is bullish.

The Lower Bollinger Band is rising sharply and is above the 200 day moving average and reaching the 50 day. A Bollinger Bands Squeeze is starting which could see stocks move lower or higher. At present the signals are lower for the index before a rebound.

The S&P chart is still slightly more bullish than bearish with a number of cautionary signals to be aware of.

Stock Market Outlook review of Wed Dec 6 2023


Stock Market Outlook: Technical Indicators Review

Momentum: Momentum is falling and barely positive.

  • Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thu Nov 2. On Wed Dec 6 2023 a new unconfirmed down signal was issued by the close.

  • 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 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 a down signal in place and is overbought.

  • 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 and negative.

  • 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 positive. It is signaling no large swings are expected intraday.

  • 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

4650 is resistance
4625 is resistance
4615 is resistance
4600 is resistance
4590 is resistance
4575 is resistance
4565 is resistance
4550 is support
4535 is support
4520 is support
4500 is support
4475 is support
4450 is support
4440 is support
4425 is support
4400 is support
4375 is support
4350 is support


Stock Market Outlook for Thu Dec 7 2023 

The unconfirmed down signal from MACD is the first signal since the up signal on Nov 2 from the MACD technical indicator. This is a reliable indicator which has been excellent at pinpoint swings as well as changes in market direction for the S&P.

At present the 4550 valuation is major support and looks set to be tested, probably several times on Thursday.

With all the technical indicators pointing lower, Thursday will see a negative close which is below 4550 by the close.

Historically the first week of December has been positive 72% of the time since I have kept records from 1974.

The ADP number on Wednesday before the open surprised investors with a fall to 103,000 instead of the expected 128,000. This weighed on stocks throughout the day.

On Thursday we get the Weekly Initial Unemployment Insurance Claims  which could show a slow down underway in employment.


Potential Economic and Political Market Moving Events

Major economic events this week are US services PMI on Tuesday and the big event is the November non-farm payroll report due out on Friday before the open.

Monday:

10:00 Factory orders are expected to drop to -3.5% from a positive 2.8%. They fell to -3.6% which added to the selling on Monday.

Tuesday:

9:45 S&P services PMI is expected to be unchanged at 50.8.

10:00 ISM services are estimated to climb to 52.4% from 51.8%. It climbed to 52.7%

10:00 Job openings are expected to do slip to 9.4 million from 9.6 million prior. They came in at 8.7 million.

Wednesday:

8:15 ADP Employment is expected to be 128,000 came in at 103,000

8:30 Productivity is expected to be 4.9% but came in at 5.2%

8:30 Trade deficit is expected to be -$64.1 billion but was -64.3 billion.

Thursday:

8:30 Weekly Initial Unemployment Insurance Claims are expected to be 222,000

10:00 Whole inventories are expect to remain unchanged at -0.2%

3:00 Consumer credit is expected to fall to $8.0 billion.






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