On Monday stocks opened fairly flat and then climbed. There was no morning dip. Instead stocks spent the day climbing higher. A top near 2:00 PM of 4039 could not hold. Instead the index closed at 4019 but on strong buying volume. The NASDAQ rose 224 points to close at 11,364. The NASDAQ is reaching for levels investors have not seen since the end of November.
Let’s review the closing technical indicators from the SPX on Mon Jan 23 to see what to expect for Tue Jan 24.
Stock Market Outlook Chart Comments At The Close on Mon Jan 23 2023
On Mon Jan 23 2023 the S&P rose above the 200 day and pressured the Upper Bollinger Band higher. This is bullish.
The closing candlestick is bullish for Tuesday but also signals the morning may see some weakness. A dip as low as 4000 or even 3990 would not be unusual.
The Upper Bollinger Band is continuing to rise as is the Lower Bollinger Band. This is bullish.
The 200 day moving average is falling which is bearish but all the remaining moving averages are rising. This includes the 21, 50 and 100 day moving averages. This is bullish.
At present there are are 5 down signals in place since April 24 and one up signal.
The chart is 45% bearish for Tuesday which is another improvement for the index.
Stock Market Outlook: Technical Indicators Review:
Momentum: Momentum is falling and positive.
- Settings: For momentum I use a 10 period when studying market direction.
MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Monday Jan 9. The up signal regained more strength on Monday. The histogram also regained more strength.
- 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 falling and positive.
- 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 a strong up signal in place and is not signaling overbought.
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 sharply and positive.
- 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 and positive. It is signaling that a bigger move is coming for the index.
- 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:
4050 is resistance
4030 is resistance
4025 is resistance
4000 is resistance
3975 is resistance
3965 is resistance
3950 is light support
3930 is light support
3900 is light support
3875 is light support
3850 is good support
3830 is good support
3810 is light support
3800 is good support
3775 is good support
3750 is good support
3730 is light support
3725 is light support
3715 is light support
3700 is good support
3685 is light support
Stock Market Outlook for Tomorrow – Tue Jan 24 2023
The technical signals gained more strength in Monday’s rally.
Two technical indicators are still pointing to weakness. Momentum and the Ultimate Oscillator are both dipping lower despite the market climbing above 4000. The remaining technical indicators are pointing higher for the index on Tuesday.
The Rate Of Change is still pointing to a large move coming for the S&P. With so many investors and analysts still bearish, that move could be to the upside which would surprise many.
New 52 week highs are continuing to outpace new lows which is a good sign for the bulls.
For Tuesday we should see some dips in the morning which is being identified by the Ultimate Oscillator and Momentum technical indicators. The other indications are pointing to further upside as is the chart.
Potential Economic and Political Market Moving Events
There are a number of events this week that may impact stocks. Tuesday should not be impacted by the economic reports.
10:00 Leading economic indicators were expected to come in at -0.7%. Instead they came in at -1.0%.
9:45 S&P manufacturing PMI
9:45 S&P services PMI
Stock Market Outlook Archives