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Stock Market Outlook for Wed Dec 6 2023 – Another Bounce Attempt

Dec 6, 2023 | Stock Market Outlook

Stock Market Outlook Another bounce attempt probablePrior Trading Day Summary:

On Tuesday stocks slipped again but the SPX held above the important 4550 valuation. This is building strength in stocks.

The S&P ended the day well off the lows and down just 2 points to close at 4567.

The NASDAQ rose to end the day up 44 points to 14,229.

Volumes were low on both indexes which, during down days, is usually a signal to advise investors are consolidating recent gains and preparing for another move higher.

Let’s review the closing technical indicators from Tue Dec 5 2023 to see what to expect for Wed Dec 6 2023.


Stock Market Outlook: SPX Closing Chart For Tue Dec 5 2023

The index closed above all major moving averages and was still below the Upper Bollinger Band. The 21 day moving average is nearing the index which if it reaches it, will be bearish.

The closing candlestick is also bearish for Wednesday but with long shadows both top and bottom on the candlestick, we could see a bounce attempt once again today.

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 today or Thursday 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 Tue Dec 5 2023


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 Thu Nov 2. On Tue Dec 5 2023 the up signal was almost gone.

  • 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 down signal in place and is very 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 falling and positive. It is no longer overbought.

  • 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 and positive. It is signaling no large swings are expected intraday.

  • 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.

Stock Market Outlook: Support and Resistance Levels

4650 is resistance
4625 is resistance
4615 is resistance
4600 is resistance
4590 is resistance
4575 is resistance
4565 is resistance
4550 is support
4535 is support
4520 is support
4500 is support
4475 is support
4450 is support
4440 is support
4425 is support
4400 is support
4375 is support
4350 is support


Stock Market Outlook for Wed Dec 6 2023 

The 4550 valuation changed to support by the close today thanks to another day of testing by investors at this level.

The technical indicators are all now pointing lower and the Moving Average Convergence / Divergence technical indicator is almost ready to give a down signal today.

There is still a chance for another bounce attempt today and a positive close. The closing candlestick advised to stay cautious as a bounce is as likely as a further dip is.

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

On Wednesday we get ADP employment which is expect to be 128,000. A higher number could hurt the rally as could a much lower number.

For Wednesday watch for a second bounce attempt.


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%. It climbed to 52.7%

10:00 Job openings are expected to do slip to 9.4 million from 9.6 million prior. They came in at 8.7 million.

Wednesday:

8:15 ADP Employment is expected to be 128,000

8:30 Productivity is expected to be 4.9%

8:30 Trade deficit is expected to be -$64.1 billion






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