Stock Market Outlook for Tue Jan 4 2022 – Choppy Dips Likely But Higher Close

Monday was a stronger day for the S&P as volumes increased over the low volumes of last week. The S&P rallied to close up 30 points to 4796, the high for the day.

The NASDAQ rose 187 points to close at 15,832.

Let’s review the closing technical indicators from the first trading day of 2022 to see what to expect Jan 4.

Stock Market Outlook Chart Comments At The Close on Mon Jan 3 2022 

The closing candlestick on Monday is bullish for Tuesday but it is also warning that there will be dips on Tuesday, some of which may be deeper than expected. The close should be higher.

The Upper Bollinger Band is still rising which is bullish. The Lower Bollinger Band has turned back up which at present is neutral.

Meanwhile the 21 day moving average is climbing above the 50 day which is bullish.

The 50, 100 and 200 day moving averages are still climbing, all of which is bullish.

For Tue Jan 4 2022 the chart is bullish with warnings of potential dips.

Stock Market Outlook review of Mon Jan 3 2022

Stock Market Outlook: Technical Indicators Review:

Momentum: Momentum is rising 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 Thursday Dec 23. On Monday the up signal was still strong.

• 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 for a third day.

• 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 down signal in place and is extremely 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.

• 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 falling.

• 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:

4800 is resistance

4725 is resistance

4700 is resistance

4670 is support

4655 is light support.

4600 is good support

4550 is light support

4525 is light support

4500 is support

 Stock Market Outlook for Tomorrow – Tue Jan 4 2022 

For Tuesday the closing candlestick is warning of potential dips today. The technical indicators are primarily supportive of the index still rising but there are a couple of indicators that have changed from up, to down. That increases the chance of some deeper than expected drops in the index on Tuesday. The close though will see the SPX higher.

As well historically Tuesday is the final trading day of the “Santa Claus Rally” and with the unemployment report for December due out on Friday, Tuesday will end higher but we could see sideways movement for Wednesday and Thursday ahead of Friday’s important jobs numbers.

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