6 Monster Stock Market Predictions – The Week Of December 21

The New York Stock Exchange building.

It will be a holiday-shortened trading week, with the equity markets closing early on Thursday and shut on Friday. Therefore, it isn’t expected that there will be much in terms of economic news. It may also mean potentially light volumes, although I’m not sure that will be the case this time around with everyone working at home for months.

S&P 500 

The S&P 500 (SPY) managed to finish slightly lower on Friday, dropping by 35 bps. The bigger news is that the index managed to finish below the previous highs to close around 3,709. This was below the prior resistance level around 3,715.

Additionally, we have seen the RSI reverse lower, indicating a change in trend may be underway. It doesn’t mean the index can’t rise from here; if it does, it will likely be a very short-term gain with a pullback the more likely outcome over the next few weeks.  Potentially placing us in that that 3,200 to 3,300 range.  Is this likely to happen this week, no? But is likely to happen over the next few weeks, yes. (Subscriber video – RTM Week Ahead: Stocks Return To Pre-Pandemic Valuations)

The number of stocks above their 50-day moving average in the S&P 500 is around the upper end of the trading range at nearly 85%. Typically we don’t see this number climb to much higher levels.

I explain more in this week’s subscriber video that the most shorted stocks had a bad week for the first time in a while and failed to make a new high.

Amazon

Amazon’s (AMZN) overall patterns are concerning to me, and I tend to think that its inability to push higher during a period where the market has been rising says something. I tend to think as a negative indicator and that the stock’s next major move in the shares will be lower. Additionally, the momentum in the RSI continues to move. I still that over the next few weeks, we will see Amazon head lower towards 2,870.

AMD 

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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