Prior Trading Day Summary:
On Friday Dec 29 trading volumes were better than expected for the final trading day of the year. As anticipated the day end slightly lower but for 2023 the indexes had an amazing year.
The S&P closed down 13 points at 4769 and the NASDAQ fell 84 points to end the year at 15011.
The technical indicators below show weakness to start the year as explained in the technical review. But historically the first trading day of a new year has been bullish 80% of the time since I have kept records since 1974.
Let’s review the closing technical indicators from Fri Dec 29 2023 to see what to expect for the first trading day of 2024.
Stock Market Outlook: SPX Closing Chart For Fri Dec 29 2023
The index closed above all major moving averages and below the Upper Bollinger Band.
The 21 day moving average is rising further, which is also bullish. It has been in a steady rise without even a dip since Nov 22.
The closing candlestick is neutral to start 2024.
The 50 day moving average is above the 100 day and still climbing which is bullish.
The 100 and 200 day moving averages are climbing which is bullish.
The Lower Bollinger Band has moved back above the 50 day moving average which is bearish.
The S&P chart is bullish heading into Tuesday but there are some warnings from the technical indicators below.
Stock Market Outlook: Technical Indicators Review
Momentum: Momentum is falling and positive.
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MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thu Nov 2. On Fri Dec 29 2023 the up signal was gone and a neutral signal took its place. The histogram turned negative on Friday.
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Ultimate Oscillator: The Ultimate Oscillator is falling and positive.
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Slow Stochastic: The Slow Stochastic has a down signal in place and is positive. It is still overbought.
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Relative Strength Index: The RSI signal is falling and positive. It is leaving overbought.
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Rate of Change: The rate of change signal is falling and positive. It is signaling not much change expected.
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Stock Market Outlook: Support and Resistance Levels |
| 4815 is resistance |
| 4800 is resistance |
| 4780 is resistance |
| 4750 is resistance |
| 4720 is resistance |
| 4700 is resistance |
| 4675 is support |
| 4650 is support |
| 4625 is support |
| 4600 is support |
| 4590 is support |
| 4575 is light support |
| 4565 is light support |
| 4550 is support |
| 4535 is support |
| 4520 is support |
| 4500 is support |
Stock Market Outlook for Tue Jan 2 2024
For Tuesday the Moving Average Convergence / Divergence is starting the day with a neutral signal and a negative histogram. A number of other technical indicators have also turned lower but are still positive. This indicates there is a good chance we will see some dips on Tuesday but the stance is still quite bullish.
The first trading day for 2024 still looks positive but dips should be expected. For now, dips are still opportunities to place capital into trades.
In two weeks we enter the quarterly earnings season starting with financial stocks. As well, on Friday this week we get the December non-farm payroll numbers which are expected to show a bit more weakness in employment. To start off 2024, many analysts and investors are expecting no Fed rate hikes but instead rate cuts as early as March or April.
Tuesday should see stocks end the day flat to slightly higher as stocks enter the final two days of the Santa Claus Rally from last week.
Potential Economic and Political Market Moving Events
Major economic events this week include the latest Fed minutes on Wednesday at 2 PM and Friday is the December non-farm payroll numbers. Both of these events could swing markets.
Tuesday:
9:45 S&P final manufacturing PMI is expected at 48.2
10:00 Construction spending is expected unchanged at 0.6%