Stock Market Outlook for Wed Jan 17 2024 – Weakness With Dips Likely

Prior Trading Day Summary:

On Tuesday investors had trouble moving stocks higher despite excellent earnings from Goldman Sachs (GS) and mediocre earnings from Morgan Stanley (MS). Investors sold Morgan Stanley Stock (MS) and managed to push Goldman Sachs Stock (GS) up but less than 1%. Volume rose to 4.3 billion shares on New York, the best volume since Dec 15 and 6.6 billion shares on the NASDAQ the best day since Dec 27. On the SPX 82% of all volume was to the downside and 75% of all stocks were falling. This was the worse showing since Dec 13. On The NASDAQ new lows jumped to 207 with 68% of all stocks pulling back.

The indexes have been unable to build on new highs. If they dip lower, which seems likely, we will see a double top form. That means another pullback is likely. You can also see in the technical indicators below there are a number of growing bearish signals to be aware of.

The S&P closed down just 17 points to 4766 and the NASDAQ closed down only 28 points to 14,944 but while losses were small, it is the deteriorating signals that are a concern.

Let’s review Tue Jan 16 2024 closing technical indicators to see what to expect for Wed Jan 17 2024.

Stock Market Outlook: SPX Closing Chart For Tue Jan 16 2024

The index closed at the 21 day and below the Upper Bollinger Band which is bearish.

The 21 day moving average is starting to turn sideways which is bearish.

The closing candlestick is bearish for Wednesday.

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 200 day is moving above the 4400 on the SPX which is bullish.

The Bollinger Bands Squeeze is well underway with the Lower Bollinger Band starting to turn lower. This may be a signal that stocks will fall out of the Bollinger Bands Squeeze.

The S&P chart is more bearish than bullish for Wednesday.

Stock Market Outlook review of Tue Jan 16 2024

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Wed Jan 17 2024 

For Wednesday the technical indicators, as you can read above, are changing from bullish to bearish as stocks continue to have trouble convincingly moving higher. A dip is likely which could be deeper than expected. The day looks set to close below the 21 day moving average.  The technical indicators have changed quickly as a result of investors being unable to move the broader market higher.

On Tuesday investors were spooked by a terribly poor Empire state manufacturing survey that fell to -43.7 when analysts had expected a rise to -4.0 from the prior reading of -14.5. Many analysts worried that this number increased the likelihood that an economic slow down could be in the cards by spring.

On Wednesday a multitude of economic reports will probably weigh on investors. The Fed’s Beige Book which is released at 2:00 PM is probably going to show a continuation of a reluctance to lower the Fed’s fund rates. This cautious stance, if in the Beige Book as expected, could weigh on stocks today.

Potential Economic and Political Market Moving Events

The main economic reports this week are on retail sales on Wednesday along with the latest Fed Beige Book. Friday is consumer sentiment. More banks earnings arrive this week.

Tuesday:

8:30 Empire state manufacturing survey was expected to rise to -4.0 from -14.5 previously but instead fell to -43.7 which spooked investors on Tuesday.

Wednesday:

8:30 Important price index is expect to come in at -0.6% down from 0.4% prior

8:30 Retail sales are expected to rise to 0.4% from 0.3%

9:15 industrial product is expected to fall to -0.1% from 0.2%

9:15 capacity utilization is expected to slip to 78.6% from 78.8%

10:00 Business inventories are expected to fall to -0.1% from 0.2%

10:00 Home builder confidence index is expected to rise to 39 from 37

2:00 Fed Beige Book is released