Stock Market Outlook for Tue Dec 31 2024 – Possible Bounce But Santa May Be Gone

Prior Trading Day Summary:

Thursday saw further selling on New York and the NASDAQ. By the end of the day the S&P had lost 64 points to close at 5906. The NASDAQ closed down 235 points closing at 19486.

The Santa Claus Rally may not come this year. On Dec 23 the S&P closed at 5974. It closed today at 5906. With just 3 days left in what is unofficially the Santa Claus rally the S&P needs to close 1.3% above 5974 to claim the Santa Claus Rally occurred this year. 1.3% is the average of the Santa Claus Rally since 1950. That would place the SPX at 6050. For the NASDAQ it would have to reach 20,021.  Both of these numbers are possible over the next 3 days but volume on New York needs to pick up and buyers need to return. So far, buyers have shown little interest in stepping into the sell-off.

The NASDAQ continues to have good volume with 8.7 billion shares traded on Monday and 54% of that volume being traded to the upside. New York however saw just 3.5 billion shares traded with 71% of the volume to the downside.

Let’s review the technical indicators at the close on Mon Dec 30 2024 to see if there is a chance for a bounce on Tuesday.

Stock Market Outlook: SPX Closing Chart For Mon Dec 30 2024

The index closed below the 21 day and 50 day moving averages and reached the Lower Bollinger Band intraday before closing above it. This is bearish.

The closing candlestick shows two long shadows, tail and head. Overall the signal is a bounce could occur but the morning may see a dip still lower before any possible bounce.

The 21 day moving average fell back to 6018 which is bearish.

The 50 day moving average is higher at 5942 which is bullish.

The 100 day moving average is rising and closed at 5802 which is bullish.

The 200 day moving average is in an uptrend and closed at 5554 which is bullish.

The Lower Bollinger Band is below the 50 day and moving lower which is bearish. The Upper Bollinger Band is trending sideways which is neutral.

The S&P chart is more bearish than bullish. The 50, 100 and 200 day moving averages are slowing their rise which is bearish.

SPX Stock Market Outlook review of Mon Dec 30 2024

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Tue Dec 31 2024 

I had expected a dip lower on Monday but then a bounce attempt. That didn’t happen. However there are some signals that a bounce may occur today or Thursday but the technical indicators are flashing warnings and cautionary signals. This may keep investors away today especially as lower volume is expected.

If there is no bounce today but a smaller lower close we could see a bounce attempt on Thursday. While the anticipated Santa Claus Rally looks unlikely there are still 3 more days which could possibly see a rebound.

In yesterday’s outlook I wrote “Monday could end up being lower again but we could still see Santa Claus come to the rescue, only from a lower valuation.” 

There is still that possibility although it does look less likely after the 64 points loss on Monday. On economic reports the Chicago business barometer stunned with a drop to 36.9 from an anticipated 42.2. On the positive side though pending home sales rose 2.2% which was well beyond estimates of 0.7%.

Potential Economic and Political Market Moving Events

Monday:

9:45 Chicago business barometer (PMI) stunned with a drop to 36.9

10:00 Pending home sales rose 2.2% beating estimated of 0.7%

Tuesday:

9:00 Case-Shiller home price index is estimated unchanged 4.6%