Stock Market Outlook for Fri Jan 26 2024 – Choppy Dips Possible But Still Up

Prior Trading Day Summary:

On Thursday investors viewed the GDP number as the best of both worlds. GDP expanded at 3.3% which was higher than analysts had forecast but personal consumption came in at just 2% which showed no increase. This is the fourth straight reading at 2% which investors looked as as a sign the Fed may win the war on inflation. As soon as the numbers came out, talk of a rate reduction in March or April returned. Just days earlier analysts had believe any rate reductions would be in June or July after originally believing the first rate reduction would come in March. With talk of rate reductions back in the forefront, investors pushed stocks higher in a fairly broad-based rally on Thursday.

The SPX rose 25 points to close at 4894. This is the 6th straight trading day with a higher close.

The NASDAQ rose a more modest 28 points to close to 15510.

Let’s review the closing technical indicators from Thu Jan 25 2024 to see what to expect for Fri Jan 26 2024 to end the week.

Stock Market Outlook: SPX Closing Chart For Thu Jan 25 2024

The index closed at the Upper Bollinger Band at a new all-time high which is bullish.

The 21 day moving average is moving higher which is bullish.

The closing candlestick is still bearish. The closing candlestick is signaling dips on Friday but the potential for a higher close still remains.

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 above the 4400 on the SPX which is bullish.

The Bollinger Bands Squeeze is still underway with the Lower Bollinger Band turning lower and now below the 50 day moving average. The Upper Bollinger Band is moving higher which is bullish. The signal now looks like stocks will move higher out of the Bollinger Bands Squeeze.

The S&P chart is bullish for Friday aside from the closing candlestick.

Stock Market Outlook review of Thu Jan 25 2024

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Fri Jan 26 2024 

For Friday the technical indicators are still split with some pointing higher and others signaling the index is overbought and a dip could occur.

On Friday investors get the latest PCE numbers which are expected to be slightly higher. This would support the outlook that the economy is doing fine but not stoking inflation. If the numbers do come in as expected it will support Thursday’s numbers and stocks will move higher and close at or above 4900 in what will be a choppy day.

Potential Economic and Political Market Moving Events

The main economic reports this week are PMI on Wednesday, GDP on Thursday and PCE on Friday.

Monday:

10:00 Leading economic indicators were expected to rise slightly to -0.3% but rose to -0.1% showing some strength.

Tuesday:

No economic events

Wednesday:

9:45 S&P flash services PMI is expected to decline to 51.2 but rose to 52.9

9:45 S&P flash manufacturing PMI is expected to decline to 47.2 but rose to 50.3

Thursday:

8:30 4th Quarter GDP was expected at 2.0% but came in an 3.3%

8:30 Weekly Initial Unemployment Insurance Claims were estimated at 200,000 but came in at 214,000

8:30 Durable goods orders were expected at 1.5% but came in at 0.0%

8:30 Advanced trade balance in goods was estimated at -$90 Billion but came in at -$88.5 Billion

8:30 Advanced retail inventories were estimated at -0.2% but came in at 0.8%

8:30 Advanced wholesale inventories were estimated at -2.0% but came in at 0.4%

10:00 New home sales was estimated at 649,000 up from 590,000 but came in at 664,000

Friday:

8:30 Personal income is estimated at 0.3%

8:30 Personal spending is estimated at 0.5%

8:30 PCE Index is estimated at -0.1%

8:30 Core PCE is estimated at 0.2%

8:30 PCE year-over-year is expected at 3%

10:00 Pending home sale is estimated at 2%