Weekend Market Outlook

Market Outlook entering the Week of August 30th = Downtrend

MOVING AVERAGES

  • Short-term (20 DMA): Downtrend
    All major stock market averages remained below their 20-day moving averages.
  • Intermediate (50 DMA): Downtrend
    All the major stock market averages remained below their 50-day moving averages.
  • Long-term (200 DMA): Downtrend
    All of the major stock market averages remained below their 200-day moving averages.

COMMENTARY
Quite the volatile week for global stocks.  In the US, we haven’t seen that type of volatility in a really long time.  The front half of the week was terrible.  Buyers stepped in on the back-half of the week giving the market some relief.  But daily trading volumes made the outlook dim; high volume price declines with low volume price increases.

The question on everyone’s mind is what’s next?  Was the price action Monday and Tuesday the first step in a longer correction, or did we compact several weeks of selling into a few hours?

Experts have made the case for both.  For example, the S&P500 didn’t test the 1,820 support level, so further downside is expected.  And if we hit that level, the bull market in US equities is likely over.

On the other side of the fence, US stocks have already recovered a majority of last week’s losses.  The S&P500 is well above Tuesday’s low, indicating the worst of the selling is over.  We can then expect a rally to reach new highs, potentially in the 2210’s, 2300’s or even  2500’s for the S&p500.

Patience is required, so plan your trades and trade your plan.  I’ve got a watchful eye on any positions that didn’t participate in the recovery.

Unless your plan is to trade based on volatility and short-term indicators, now is the time to be defensive (i.e. do not buy large positions, expect large “paper” gains and losses and market prices swing back and forth).

2015-08-30 - US Stock Market Averages

Sources:

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  For price/volume data, head to stockcharts.com.

Moving Average Signals:

  • Uptrend=Market indexes remained above their moving average during the trading week
  • Downtrend=Market indexes remained below their moving average during the trading week
  • Buy signal=Market indexes fell below their moving averages during the trading week
  • Sell signal=Market indexes rose above their moving averages during the trading week
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Weekend Reading – Personal Finance, Money Management, and Investing

Personal Finance

Money Management

  • Predictions are not investment plans (Monevator)

Investing

  • Income Investing – Emotional Attachment to Stocks (DGI)
  • Growth Investing – 10 months to breakeven? (Marketwatch)

Odds and Ends

  • 2016 Ford Shelby GT350 Mustang

Grey 2016 Ford Shelby GT350 Mustang

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…and THAT’S a Bounce!

US Stock Market Performance – August 24 2015

US Stock Market Performance – August 24 2015

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Stock Market Damage

Here’s a great piece of work from Barry Ritholtz on the current state of the stock market.  It’s not the typical “perspective” you’ve been hearing about…it comes with some actual data.  I’ll summarize, but it’s worth a read:

  • From a trend perspective, the US stock market looks weak (Bad)
    • We broke the 10 month moving average, which isn’t a good sign and is historically followed by more price declines.
S&P500 with 10 Month moving Average

S&P500 + 10 Month moving Average

  • From a technical perspective, the US stock market looks oversold (Good)
    • We basically had three days where all the US stocks sold-off on high volume.
    • This is the kind of action you need before ending a downtrend, we just experienced it over the span of three days, rather than three months.
    • Getting back to the May/June price levels is going to take more than three days, because people are sitting on losses and will look to “break-even” ASAP.
  • From a fundamental perspective, the stock market has improved (Good)
    • Stocks are more reasonably priced (on the basis of Price to Earnings Ratio) then they have been for quite some time.

So it’s not all doom and gloom.  Just remember that stocks can go from oversold to very oversold, to ridiculously oversold before you see a rally.

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Now THAT’s a sell-off…

US Stock Market Performance - August 24 2015 | Finviz.com

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Weekend Market Outlook

Market Outlook entering the Week of August 23rd = Downtrend

MOVING AVERAGES

  • Short-term (20 DMA): Downtrend
    All major stock market averages remained below their 20-day moving averages.
  • Intermediate (50 DMA): Downtrend
    All the major stock market averages remained below their 50-day moving averages.
  • Long-term (200 DMA): Sell Signal / Downtrend
    All of the major stock market averages remained or fell below their 200-day moving averages.

COMMENTARY
The bottom of our range-bound market action finally fell out, and took prices with it. Over the span of three days (Wednesday, Thursday, and Friday), the S&P500 managed to take out 2 of the 3 support levels mentioned last week:

  • 2040 = 2.4% decline (~4% decline from 2131 high)
  • 2019 = 3.4% decline (~5% decline from 2131 high)
  • 1820 = 13% decline (~15% correction from 2131 high)

So the price action was awful.  But what about trading volume?  Any silver lining?  No.  As prices declined, trading volumes increased, confirming that market makers were selling.

Tony C. added OEW commentary this week, saying that “a Primary IV correction would suggest a decline back to the October 2014 lows around SPX 1821”, which also happens to be the only support level the SP500 hasn’t breached.

The technical support and resistance levels for the S&P are:

  • Resistance:  1,973 / 2,019
  • Support:  1,929 / 1,956

Regardless of duration, the markets are clearly in a downtrend, so now is the time to get defensive (i.e. do not buy large positions, expect large percentage price swings, and be patient).

Should buyers step in next week and halt the slide, check your positions and make sure your profits don’t turn into loses!

2015-08-23 - US Stock Market Averages

2015-08-23 – US Stock Market Averages

Sources:

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  For price/volume data, head to stockcharts.com.

Moving Average Signals:

  • Uptrend=Market indexes remained above their moving average during the trading week
  • Downtrend=Market indexes remained below their moving average during the trading week
  • Buy signal=Market indexes fell below their moving averages during the trading week
  • Sell signal=Market indexes rose above their moving averages during the trading week
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Weekend Reading – Personal Finance, Money Management, and Investing

Personal Finance

  • A small emergency fund is better than no emergency fund (The Aleph Blog)

Money Management

Investing

  • Income Investing – Tax loss harvesting (DGI)
  • Growth Investing – S&P500 takes out the 200 day moving average (The Short Side of Long)

Odds and Ends

  • 2017 Mercedes-AMG C63 Coupe
White 2017 Mercedes-AMG C63 Passenger Side

2017 Mercedes-AMG C63 | Boldride

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