Stock Market Outlook for Tue Jan 7 2025 – Morning Bounce Likely But Lower Close

Prior Trading Day Summary:

On Monday I had expected a bit of a dip in the morning and then a push higher. Instead the SPX opened above 5990, raced to 6020 and then fell back to close below the morning open at 5975. Investor enthusiasm over Friday’s big jump brought in more investors but as stocks rose, sellers appeared, ready to take profits. Many of these are short-term traders who bought into the last week’s selling and then took profits on the rally above 6000. Volumes today were the best in weeks.

The S&P closed up 33 points to 5975 on 5.1 billion shares traded, the best volume since Dec 20. By the close 55% of stocks were falling, but until the lunch hour, advancing stocks were outpacing decliners by over 2 to 1.

On the NASDAQ it closed up 243 points to end the day at 19865. 10.3 billion shares were traded, the best volume since Dec 20. By the close advancing volume had fallen to 50% but earlier in the day it was over 77%. There were 142 new highs and just 55 new lows.

The question for Tuesday is whether the rally can stretch into a third day or if Tuesday’s afternoon decline, marked the end of the rally that started on Friday.

Let’s review the technical indicators at the close on Mon Jan 6 2025 to see what the technical indicators can tell us about what to expect for Tue Jan 7 2025.

Stock Market Outlook: SPX Closing Chart For Mon Jan 6 2025

The index closed just below the 21 day and above the 50 day moving averages. This is still bearish.

The closing candlestick is bearish. It is signaling that we could see a bounce at the open but a lower close should be expected.

The 21 day moving average fell back to 5992 which is bearish.

The 50 day moving average is rising and closed at 5948 which is bullish.

The 100 day moving average is rising and closed at 5811 which is bullish.

The 200 day moving average is in an uptrend and closed at 5568 which is bullish.

The Lower Bollinger Band is below the 50 day and moving lower which is bearish. It may fall below the 100 day shortly which would be a bearish signal. The Upper Bollinger Band is falling which is bearish.

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

SPX Stock Market Outlook review of Mon Jan 6 2025

Stock Market Outlook: Technical Indicators Review

Stock Market Outlook for Tue Jan 7 2025 

The morning could see a resumption of the rally but the closing candlestick on Monday is a warning that a lower close could be in the works for Tuesday.

The remaining technical signals are all gaining strength to the upside. Even the MACD indicator has lost a large part of the down signal.

Overall the day looks to see a pop to start the day or in the morning but a flat to lower close by the end of the day.

Any slip in the dollar or bond yields will improve the outlook for stocks.

Potential Economic and Political Market Moving Events

Monday:

9:45 S&P final services PMI came in slightly higher than expected at 56.8

10:00 Factory orders for November were lower than estimated at -0.4%

Tuesday:

8:30 Trade deficit is estimated to have risen to -78.4 billion for November

10:00 ISM services are estimated to have risen to 53.4% for December

10:00 Job openings are expected to remain unchanged at 7.7 million