Prior Trading Day Summary:
On Fri Dec 22, volumes were low heading into the Christmas Holiday Weekend but on average the NASDAQ saw reasonably good volumes reaching 4.9 billion shares traded. The SPX on the other hand saw just 3.1 billion shares traded. The day ended positive with the SPX up almost 8 points at 4754 and the NASDAQ up 29 points to 14,992 and ready again to retake 15,000.
The question now is whether a Santa Claus Rally will end this year and start 2024. Normally the Santa Claus Rally occurs in the final 4 or 5 trading days of the year and into 2 or 3 days in January of the new year.
Let’s review the closing technical indicators from Fri Dec 22 2023 to see whether we will see a Santa Claus Rally start on Tue Dec 26 2023.
Stock Market Outlook: SPX Closing Chart For Fri Dec 22 2023
The index closed above all major moving averages but below the Upper Bollinger Band for a third straight day. The SPX index had not fully recovered from the sell-off on Wednesday last week..
The 21 day moving average is rising further, which is also bullish. It has been in a steady rise without even a dip since Nov 22, a full month as of last Friday (Dec 22).
The closing candlestick is bullish for Tuesday although there is a bit of indecision shown through two long shadows.
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 Lower Bollinger Band is turning lower and the Upper Bollinger Band is turning higher. The last Bollinger Bands Squeeze is ended.
The S&P chart is bullish heading into the start of the week.
Stock Market Outlook review of Fri Dec 22 2023
Stock Market Outlook: Technical Indicators Review
Momentum: Momentum is rising and positive.
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MACD Histogram: MACD (Moving Averages Convergence / Divergence) issued an up signal on Thu Nov 2. On Fri Dec 22 2023 the up signal lost strength. It is now down to just 3.47 and a further slip could signal trouble to start 2024.
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Ultimate Oscillator: The Ultimate Oscillator is falling and positive.
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Slow Stochastic: The Slow Stochastic has a down signal in place and is positive. It is still overbought.
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Relative Strength Index: The RSI signal is rising and positive. It is not overbought.
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Rate of Change: The rate of change signal is falling and positive. It is signaling not much change expected to start the week.
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Stock Market Outlook: Support and Resistance Levels |
| 4800 is resistance |
| 4780 is resistance |
| 4750 is resistance |
| 4720 is resistance |
| 4700 is resistance |
| 4675 is resistance |
| 4650 is support |
| 4625 is support |
| 4600 is support |
| 4590 is support |
| 4575 is light support |
| 4565 is light support |
| 4550 is support |
| 4535 is support |
| 4520 is support |
| 4500 is support |
Stock Market Outlook for Tue Dec 26 2023
To start the week, the technical indicators are still positive enough to indicate buyers are still present and the index can move higher. There are though a number of signals advising that the expected Santa Claus Rally will be smaller than expected and could run into trouble late this week or into the start of January 2024. Dips are still opportunities for short-term trades and the Santa Claus Rally does look like it will be underway today, there are signals to watch, particularly MACD which is near another down signal.
For Tuesday, expect dips to occur but a higher day is expected. Volumes will be lighter again today as Boxing Day continues the holidays and many investors are away and not trading. This usually favors the bulls and economic news this week is scattered which again favors bulls. The chance of a Santa Claus Rally is good.
Potential Economic and Political Market Moving Events
Major economic events this week few with most on Thursday with retail and whole inventories and pending home sales. Bond markets are closed early on Friday.
Tuesday:
9:00 Case-Shiller home price index is expected to rise to 5% from a prior 3.9% reading. This is inflationary if it occurs.