Stock Market Outlook for Tue Jan 31 2023 – Weakness and Lower

On Monday stocks fell back as nervous investors took profits from the January rally ahead of the Fed’s interest rate decision due out on Wednesday.

The S&P lost 52 points and fell to 4017. The NASDAQ fell 227 points ending the day at 11,393.

Despite the sell-off another up signal was issued at the end of the day on the S&P.

Let’s review the closing technical indicators from the SPX on Mon Jan 30 to see what to expect for Tue Jan 31, the final day of January.

Stock Market Outlook Chart Comments At The Close on Mon Jan 30 2023 

On Tue Jan 31 2023 the S&P traded lower but held above the 200 day moving average.

The closing candlestick bearish and signaling a lower day ahead on Tuesday and a probable break of the 200 day moving average which will be bearish.

The Upper Bollinger Band has turned sideways and looks set to fall, while the Lower Bollinger Band is also rising which is signaling a Bollinger Bands Squeeze is probable.

The 200 day moving average is rising which is bullish. All the major averages are now rising.

The 21 day moving average moved above the 50 day for a third up signal. This ends the most previous down signal from Sep 28.

At present there are are 3 down signals in place since April 24 and now 3 up signals. The drop on Monday however is a signal that more weakness a ahead.

The chart is only 50% bullish for Tuesday.

Stock Market Outlook review of Mon Jan 30 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 Monday Jan 9. The up signal lost strength on Monday as did the histogram.

• 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 no longer overbought.

• 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 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 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 unchanged and positive.

• 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:

4050 is resistance

4030 is resistance

4025 is resistance

4000 is resistance

3975 is light support

3965 is light support

3950 is good support

3930 is light support

3900 is good support

3875 is light support

3850 is good support

3830 is good support

3810 is light support

3800 is good support

3775 is good support

3750 is good support

3730 is light support

3725 is light support

3715 is light support

3700 is good support

 Stock Market Outlook for Tomorrow – Tue Jan 31 2023 

The technical indicators have shifted to the downside despite a new up signal in the SPX chart. The January rally is running out ahead of the Fed’s decision on another interest rate hike. As well, the Fed’s comments and news conference on Wednesday are all expected to be hawkish and endeavor to talk stocks lower.

For Tuesday the technical indicators are pointing to further weakness and more selling. A close below the 200 day moving average is expected.

Potential Economic and Political Market Moving Events

There are a number of reports this week that will impact stocks including the Fed’s interest rate announcement on Wednesday and January’s non-farm payroll numbers due out Friday.

Tuesday:

None of the reports on Tuesday are expected to swing the markets widely.

9:00 S&P Case-Shiller home price index

9:45 Chicago business barometer

10:00 Consumer confidence index

10:00 Rental vacancy rate

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