Here is my weekly stock market outlook for the week of December 9, 2024. It helps me determine if I’ll be placing new trades during the week, gives me a sense of market health, and how much or little of my capital I want to deploy.

Conditions DO change during the week, and as the conditions change so does the outlook. This is why, each week, I discuss what I like and don’t like. I monitor market health daily, although this article is only updated once weekly.

The stock market outlook is based on:

• how the major indices are performing
• “Market Health Indicators”
• recent watchlist and trade performance
• sector performance

My swing trading is based on: Overall market conditions (discussed below) –> strong/weak individual stocks for longs or shorts –> patterns –> trade triggers.

Stock Market Outlook for This Week

For the week of December 9, stock market conditions are ok. One Yellow Flag has developed. Bitcoin is struggling near $100K but hasn’t turned lower, and gold remains weak.

Here are the current stock watchlists:

• Best Swing Trading Stocks List for November (will be updated Monday)- Two lists, one with very strong stocks and one with very weak stocks.
  
  
• You can also check for setups on these lists, as they showcase strong performers: Best Performing ETFs and Best Performing Stocks.
  
  
• For those also interested in investing: the Buy the Dip Stock List, the Buy & Hold Stock List, and Best Long-Term Dividend Stocks (investing is different than swing trading; have trading plans for both).

How the Market Indexes Are Doing

I look at 4 different US indices because they each tell a different story about overall stock market health. The stock market is healthiest—and swing trading stocks on the long side is most profitable—when all these indexes are in uptrends. Here’s what each of the 4 indices represents:

• Nasdaq 100 – Tech stocks
• S&P 500 – Large US companies
• NYSE Composite – A wide array of stocks, varying in size and industry
• Russell 2000 – Smaller companies

The Canadian index tracks large-cap Canadian stocks.

Charts provided by TradingView , the charts I personally use.

From a price action perspective, all the stock indices remain in uptrends. NYSE Composite, the broadest measure of indices looked at, has started a correction. Same with Russell 2000.

Bitcoin is struggling near $100K but hasn’t turned lower. I am on the sidelines currently with this.

Gold and gold miners (GDX) have shown traits of downtrends. Therefore, I have no interest in buying right now. Big lower swing lows on those charts. That is not uptrend behavior. Not matching any patterns I trade right now.

State of the Market Health Indicators

The following chart shows the market health indicators I track.

They tell me the condition of the stock market overall, and whether it’s a good time to swing trade individual stocks.

Market Health Indicators are in ok shape. A yellow flag has developed.

• Volume shows nothing of interest at this stage in the price action.
  
  
• The dark blue bars are the daily percentage movement of the S&P 500. Big moves to the downside are associated with downtrends and turning points. Small values are associated with an uptrend. Good.
  
  
• The blue line is the cumulative NYSE Advance-Decline Line. It is no longer moving higher with the S&P 500. It is dropping while S&P 500 has moved up. This is a so far mild bearish divergence. Poor.
  
  
• The blue columns are NYSE up volume divided by NYSE total volume. Values of 90 or higher show very strong buying; values of 10 or below show very strong selling. Nothing recent. Neutral.
  
  
• 58% of S&P 500 stocks are above their 50-day moving average. 61% of all US stocks are above their 50-day moving average. It’s generally much easier to swing trade profitably (on the long side) when most stocks are above their 50-day average. When this indicator is below 50% it tends to be sideways or a downtrend for most stocks/indexes. Good
  
  
• The ultimate indicator is how many quality setups there are and how trades are working. You can look at your own results and watchlists recently to determine whether this is an easy money environment or hard.

The Complete Method Stock Swing Trading Course covers my entire method of swing trading stocks. 
Great time to check out the course because it is 20% off for Black Friday.

Sectors on the Move

I don’t typically focus on Utility or Consumer Defensive stocks because they don’t move as much in good market conditions as the other sectors. In poor market conditions, these sectors hold up a bit better but are often still dropping.

Main sectors to watch: Consumer Cyclicals, and Communication Services and Technology making a resurgence.

Sector performance provided by Finviz.

The article, How to Scan for the Strongest Stocks in the Strongest Sectors covers how to find high-momentum stocks by looking at sector performance in Finviz, StockRover, StockFetcher, or StockCharts. It also shows you how to determine when money is flowing into or out of a sector.

There are times when market conditions may not be so good, but certain INDUSTRIES are really performing well. For example, gold or oil stocks may be rallying hard while the major indices are flat or declining. Or Semiconductors may be hot while the indices are flat.

It is possible to trade in these “hot” sectors even while market conditions may not be ideal…just realize nothing can fight the market for long. Either the market starts moving up or eventually the hype in the hot stocks ends and they are coming down. With such trades we are often on borrowed time, so I am more inclined to trailing stop losses to avoid giving back all the profits if the target isn’t reached. Basically, take what you can get. Consider how much capital you are willing to deploy in such situations. That is a personal choice.

You can see how various industries have been performing over various time frames on Finviz, here.

What I’m Doing Right Now

Taking longs in stocks but more cautious now. Nothing in gold and nothing in Bitcoin at this point.

I also day trade stocks and the EURUSD. What I like about day trading is that I can trade every day. Swing trading has periods of action and inaction.

You can check out my stock day trading methods in the Price Action Stock Day Trading Course.

See how I day trade forex in the EURUSD Day Trading Course.

Don’t want to have to analyze market conditions and pick individual stocks to trade? You can also passively invest. In my “long-term account,” I buy the same ETFs every month, regardless of market conditions. Buy and hold. Simple. It doesn’t make as much as swing trading or day trading, but it is much less work.

By Cory Mitchell, CMT

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.

Historic Conditions: