Stock Market Outlook for Thu Jan 13 2022 – Weakness With Dips Likely

Wednesday started with a strong opening but then buying slowed. Sellers though didn’t unload shares but instead took a wait and see attitude ahead of earnings set to start on Friday with banks reporting earnings for the quarter.

The S&P ended the day up 13 points at 4726 and the NASDAQ ended with a 35 point gain to close at 15,188.39.

The big news on Wednesday was the inflation number jumping to 7% but the market instead of selling off seemed to handle the news without a lot of selling. That could change depending on earnings.

Let’s review the close on Wednesday to see what to expect for Thursday.

Stock Market Outlook Chart Comments At The Close on Wed Jan 12 2022 

The closing candlestick on Wednesday is bearish for Thursday.

The Upper Bollinger Band stayed sideways, a bullish signal. The Lower Bollinger Band still looks ready to fall back below the 100 day moving average, which is also bullish.

Meanwhile the 21 day moving average is still turning lower which is bearish but the 50 day is turning back up. This is bullish.

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

For Thursday the index is still more bullish than bearish but there are some signals in the chart advising weakness and some dips on Thursday are probable.

Stock Market Outlook review of Wed Jan 12 2022

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is unchanged and is negative.

• Settings: For momentum I use a 10 period when studying market direction.

MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued a down signal on Thursday Jan 6. On Wednesday the down signal was weaker 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 rising.

• 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.

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.

• 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.

• 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:

4800 is resistance

4725 is resistance

4700 is support

4670 is support

4655 is light support.

4600 is good support

4550 is light support

4525 is light support

4500 is support

 Stock Market Outlook for Tomorrow – Thu Jan 13 2022 

For Thursday the technical signals are advising that weakness is creeping back into stocks and investors should be prepared for some further dips.

The close looks set to be slightly negative or fairly flat on the day.

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