Stock Market Outlook for Tue Dec 12 2023 – Bias Is Still Up

Prior Trading Day Summary:

On Monday investors saw the so-called magnificent seven stocks slip lower while the broader market climbed making a new 52 week high of 4623..

The day ended with the S&P up 18 points to close at 4622 on light volume of 3.7 billion shares traded.

The NASDAQ ended the day up 28 points, closing at 14,432. Volume was slightly up from Friday to 5.7 billion shares traded.

Let’s review the closing technical indicators from Mon Dec 11 2023 to see what to expect for Tue Dec 12 2023.

Stock Market Outlook: SPX Closing Chart For Mon Dec 11 2023

The index closed above all major moving averages and just below the Upper Bollinger Band. This is bullish.

The 21 day moving average is rising further, which is also bullish.

The closing candlestick is bullish for Tuesday.

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 closed on Monday above the 100 day moving average for a second day. A Bollinger Bands Squeeze is underway which could see stocks move lower or higher. At present the signals are pointing higher for the SPX out of the Bollinger Bands Squeeze.

The S&P chart is more bullish than bearish with only a couple of cautionary signals, in particular the 50 day moving average still being below the 100 day which is bearish.

Stock Market Outlook review of Mon Dec 11 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Tue Dec 12 2023 

For Tuesday there is a new support level at the 4565 valuation. This is presently light support but shows that support levels are starting to rise. The longer the SPX is above 4600, the more support levels will be formed. The SPX 4550 level is still strong support for the rally.

For Tuesday the signals are all pointing to a higher day. The dip today in the so-called magnificent seven stocks is a good signal for the rally. It shows investors are spreading their capital wider, taking on more risk in a wider number of stocks. This is important for the market overall.

Historically the second week of December has been positive 65% of the time since I have kept records from 1974. Tuesday will end higher for the index as investors prepare for Wednesday’s FOMC interest rate announcement. Normally we can expect the final hour of trading today to be a bit volatile with dips but eventually a higher close.

Potential Economic and Political Market Moving Events

Major economic events this week are Consumer Price Index readings due out on Tuesday (tomorrow), the Producer Price Index due out on Wednesday and the latest FOMC interest rate decision due out at 2:00 PM on Wednesday followed by Fed Chair Powell’s new conference.

Monday:

There are no economic events that will impact markets.

Tuesday:

8:30 Consumer price index is expected to be unchanged at 0.0%

8:30 Core CPI is expected to rise slightly to 0.3% from 0.2%

8:30 CPI year-over-year is expected to dip to 3.1% from 3.2%

8:30 Core CPI year-over-year is expected to be unchanged at 4.0%

2:00 Monthly federal budget is estimated at -290N which is worse the the prior reading of -$249 billion.