Stock Market Outlook for Tue Dec 5 2023 – More Weakness But Bounce Likely

Prior Trading Day Summary:

On Monday stocks gave back Friday’s rally as many investors took profits after November’s rally. In particular many tech stocks saw profit-taking.

The SPX closed down 24 points giving back Friday’s 26 point gain. Volume though was evenly split with 50% of all trades still to the upside and 49% to the downside. There were 157 new 52 week highs and just 13 new lows. This normally signals the selling was profit-taking and not the start of a major downturn.

The NASDAQ closed down 119 points giving back all of Friday’s 78 point gain. The day ended with the index at 14,185. Interesting though was that 61% of all volume was being traded to the upside and 50% of all stocks were still rising. There were 169 new 52 week highs and 78 new lows. The closing statistics indicate that Monday was profit-taking on the NASDAQ but not the start of a major downturn.

Let’s review the closing technical indicators from Mon Dec 4 2023 to see what to expect for Tue Dec 5 2023.

Stock Market Outlook: SPX Closing Chart For Mon Dec 4 2023

The index closed above all major moving averages and was still below the Upper Bollinger Band.

The closing candlestick is bearish for Tuesday but the long shadow also indicates a probable bounce for Tuesday.

The 21 day moving average is rising steadily.

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 which is bearish. A Bollinger Bands Squeeze could start Tuesday or Wednesday unless the chart changes which is unlikely at present.

The S&P chart is more bullish than bearish but there are cautionary signals to be aware of.

Stock Market Outlook review of Mon Dec 4 2023

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Tue Dec 5 2023 

For Tuesday the technical signals have swung to pointing down. There are no signals pointing higher. Despite this, all the signals are still positive which means it will not take much of a bounce to turn the “down” signal to an “up” signal.

Monday saw profit-taking as investors, both large and small, adjusted their positions and took profits after November’s incredible run higher. We could see the profit-taking continue Tuesday but the closing candlestick indicates a bounce is likely, either on Tuesday or Wednesday.

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

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%.

10:00 Job openings are expected to do slip to 9.4 million from 9.6 million prior.