Weekend Stock Market Outlook

Stock Market Outlook entering the Week of February 7th  = Downtrend 

MOVING AVERAGES

  • Short-term (20 DMA): Downtrend 
    4 of the 5 major stock market averages fell 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 the major stock market averages remained below their 200-day moving averages.
2016-02-07 - US Stock Market Averages

2016-02-07 – US Stock Market Averages

COMMENTARY
In stark contrast to the previous weekend outlook, Friday’s negative price action helped US equities lose the ground they had gained (e.g. the 20-day moving average).  Price/volume action continues to be weak (in terms of supporting a rally).

Again, now is not the time to take large positions in the market, especially if you don’t use hedging strategies.  You run the risk of buying a Tableau or a LinkedIn.  On Friday, Tableau Software (DATA) fell 49% and LinkedIn (LNKD) fell 44%.  In ONE trading session!

2016-02 - Tableau Software Price Chart

2016-02 – Tableau Software Price Chart

2016-02 - Linkedin Stock Price Chart

2016-02 – Linkedin Stock Price Chart

Chart courtesy of StockCharts.com

While this is only one point in time, and we don’t know how quickly these prices will recover (if at all), you always want to preserve capital.  And in the current environment, holding large, long positions makes that goal difficult.

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 rose above their moving averages during the trading week
  • Sell signal=Market indexes fell below their moving averages during the trading week
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , , | Leave a comment

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of January 31st = Downtrend 

MOVING AVERAGES

  • Short-term (20 DMA): Mixed 
    3 of the 5 major stock market averages rose above 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 the major stock market averages remained below their 200-day moving averages.

COMMENTARY
Friday’s positive price action helped US equities reclaim some ground (e.g. the 20-day moving average).  As expected, the near-term bottom referenced in last week’s outlook held firm and we got our short-term rally.  Going forward, there are a lot of global economic factors making institutional buyers cautious, so individuals should do the same.

Price/volume action waffled last week, with volumes supporting an uptrend one day, then rising even higher as markets sold off the next.  Combined with an OEW call for a new bear market, expect any rally to be short-lived and use it as an opportunity to sell. or “bearify” your portfolio (e.g. shorting, buying put options, selling covered calls, or just selling your positions and sitting on the sidelines until conditions improve).

2016-01-31 - US Stock Market Averages

2016-01-31 – US Stock Market Averages

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 rose above their moving averages during the trading week
  • Sell signal=Market indexes fell below their moving averages during the trading week
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , , | Leave a comment

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of January 24th = Downtrend 

MOVING AVERAGES

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

COMMENTARY
US equities found some support on Wednesday, providing a needed pause to the almost daily selling that we’ve experienced in January.  Prices appear to have reached a near-term bottom.

Price/volume action improved a tiny bit, but we’ll need to see a lot of high volume buying to change the market outlook.

As mentioned on the OEW blog, expect a short-term rally and use it to “bearify” your portfolio.  This means short positions, buying put options, selling covered calls, or just selling your positions and sitting on the sidelines until conditions improve.

2016-01-24 - US Stock Market Averages

2016-01-24 – US Stock Market Averages

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 rose above their moving averages during the trading week
  • Sell signal=Market indexes fell below their moving averages during the trading week
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , , | Leave a comment

2015 Performance Review – Stock Market Outlook

Plan, do, check, act: the simple, four step management process popularized by Edward Deming.  After a year of “doing”, it’s time to check the outcomes and see just how well (or poorly) the weekly “Stock Market Outlook” performed in 2015.

My expectations are mixed. With a relatively flat market, attempts to get into and out of the market often leave investors and traders with a whole lot of nothing…and brokers with a lot of profit from commissions.

That said, the weekly market outlook has a longer timeframe, so the volatility (in terms of number of buy and sell signals) should be low.

Results = Success!

Symbol Type Buy/Hold Market Outlook
S&P500 ^SPX Index -0.5% 3.4%
S&P500 SPY ETF -0.2% 4.8%
S&P500 FXSIX Mutual Fund 0.2% 4.6%
Nasdaq QQQ ETF 9.0% 11.5%
Russell 2000 IWM ETF -4.7% 1.1%

The results are pretty good.  I talk about safe investing as a path to wealth, which includes aggressively protecting your capital from losses. And that is exactly what the methods managed to accomplish last year.

Methodology

As a refresher, I used 3 different trading methodologies and subjectively combine them into a weekly market outlook.

Every Sunday, I review the previous week’s market action and decide whether the outlook (uptrend, mixed, or downtrend) has changed, based on the signals from the 3 trading methodologies.

By cross-referencing three different methods and only changing outlooks when they all align, I reduce the number of false signals.

  • 20, 50, and 200 day moving averages
  • Price/volume, distribution days, follow-through days
  • Objective Elliott Wave (via Tony Caldero)

Trading Criteria – Investment Type

Since we can’t directly buy shares of an index, we need to go with the next best thing; funds. I chose two S&P funds (SPDR SPY and Fidelity FXSIX) based on their common availability in individual and retirement trading accounts, as well as a fund based on the NASDAQ (Powershares QQQ) and Russell 2000 (iShares IWM), to see how well the signals translate across the various market average types and providers.

Trading Criteria – Buy and Sell Prices

The forward looking outlook (uptrend, downtrend, mixed) is posted on Sunday, based on stock market price action from the prior week.  Since that week is already in the books, there is no way for you to “trade” at the same prices that shaped the outlook.

That means, if you decided to take action, you’d make your moves between the market’s opening price on Monday (the next day) and the closing price on Friday afternoon.  For better or worse, I’m using Friday’s weekly closing price as my buy/sell price for any trade.  You will rarely, if ever, get the opening price, funny things happen when price “gaps” at the open, and catching the high or low during the week isn’t feasible for 95% of the people reading this blog.

Trading Criteria – Transaction Prices

I’m assuming that trades are placed in an account with Fidelity, so transactions cost $7.95 per trade.  Everyone should be using a low cost broker, and there are several with lower costs than Fidelity…just FYI.

Trading Criteria – Position Sizing

For this study, I used a position size of 100 shares to keep the math simple. If I were buy shares of an index ETF (SPY for example), position size would be customized based on the size of my total portfolio and my risk tolerance (how much I’m willing to lose before selling the position).

Trading Criteria – Buy and Sell Signals

Shares are purchased if the market outlook changes to an uptrend.

If the outlook is mixed, sit on your hands and watch.

If the outlook changes to a downtrend, the entire position is sold.

Issues and Objections

Stock markets can fluctuate quite a bit during the trading week, which makes the weekly review lag the market. Also, trend changes aren’t nice enough to change at the same time every week. Thinking that a change in trend will happen at the end of every week is like expecting fellow drivers to use their turn signals.  Not gonna happen. So using Friday’s closing price as the buy or sell price will not always match the price level that triggered the change in trend.

Are you always going to buy in an uptrend, sit on your hands when the market is “mixed”, or sell before a downtrend takes hold?  No. General trends are great for giving you a sense of the overall investing environment. But each of your positions needs to be evaluated on its own merits.

Data

For the analysis, I used historical data from Yahoo Finance.  Here’s an example for the SPY calculations:

Week Date Signal SPY 100 Buy/Sell
Open Close
52 12/28/2015 Mixed 204.86 203.87
51 12/21/2015 Down 201.41 205.68
50 12/14/2015 Down 202.07 200.02 $19,994.05
49 12/7/2015 Up 209.23 200.69
48 11/30/2015 Up 209.75 208.38
47 11/23/2015 Up 209.38 208.32
46 11/16/2015 Mixed 202.32 208.07
45 11/9/2015 Up 209.31 201.34
44 11/2/2015 Up 208.32 208.80
43 10/26/2015 Up 207.30 206.70
42 10/19/2015 Up 202.50 206.28
41 10/12/2015 Up 201.42 202.07 $(20,214.69)
40 10/5/2015 Mixed 196.46 200.14
39 9/28/2015 Down 191.78 193.85
38 9/21/2015 Mixed 196.44 191.73
37 9/14/2015 Down 196.95 194.29
36 9/8/2015 Down 195.94 194.56
35 8/31/2015 Down 198.11 190.46
34 8/24/2015 Down 187.49 197.08
33 8/17/2015 Down 208.71 195.64
32 8/10/2015 Down 209.28 207.10 $ 20,702.48
31 8/3/2015 Mixed 210.46 205.65
30 7/27/2015 Mixed 206.94 208.17
29 7/20/2015 Up 212.75 205.70
28 7/13/2015 Mixed 208.99 210.12
27 7/6/2015 Mixed 205.77 205.19
26 6/29/2015 Mixed 208.05 205.03
25 6/22/2015 Up 211.91 207.50
24 6/15/2015 Mixed 208.64 208.48
23 6/8/2015 Mixed 209.64 206.68
22 6/1/2015 Mixed 211.94 206.45
21 5/26/2015 Up 212.40 207.79
20 5/18/2015 Up 212.24 209.62
19 5/11/2015 Mixed 211.57 209.07
18 5/4/2015 Mixed 211.23 208.27
17 4/27/2015 Up 212.33 207.38
16 4/20/2015 Mixed 209.06 208.30
15 4/13/2015 Up 209.87 204.66
14 4/6/2015 Mixed 205.37 206.71
13 3/30/2015 Mixed 206.98 203.17
12 3/23/2015 Up 210.42 202.48
11 3/16/2015 Mixed 206.71 207.08
10 3/9/2015 Mixed 207.74 201.67
9 3/2/2015 Up 210.78 203.30
8 2/23/2015 Up 210.94 206.40
7 2/17/2015 Up 209.40 206.97
6 2/9/2015 Mixed 204.77 205.54
5 2/2/2015 Mixed 200.05 201.39
4 1/26/2015 Up 204.71 195.42 $(19,549.70)
3 1/20/2015 Mixed 202.40 200.83
2 1/12/2015 Mixed 204.41 197.55
1 1/5/2015 Mixed 204.17 200.12
Timing $932.14
4.8%
Buy/Hold $(45.90)
-0.2%
Posted in Historical Data, Investing, Market Trends, Money Management | Tagged , , , , | Leave a comment

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of January 17th = Downtrend 

MOVING AVERAGES

  • Short-term (20 DMA): Downtrend
    All the 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 the major stock market averages fell or remained below their 200-day moving averages.

COMMENTARY
Another volatile week in US equities, continuing the sell-off that rang in the new year.

Price/volume action was awful.  The fledgling uptrend that started two weeks ago had no chance.

OEW called an end to the 2009 bull market, citing last week’s fall through various technical support levels and closing below the August lows (S&P500).

In a bear market, your objectives flip-flop; instead of “buy the dips”, it’s time to “sell strength”.

2016-01-17 - US Stock Market Averages

2016-01-17 – US Stock Market Averages

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 rose above their moving averages during the trading week
  • Sell signal=Market indexes fell below their moving averages during the trading week
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , , | Leave a comment

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of January 10th = Downtrend 

MOVING AVERAGES

  • Short-term (20 DMA): Downtrend
    All the 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 the major stock market averages fell or remained below their 200-day moving averages.

COMMENTARY
Not so happy start to 2016 if you’re long US equities.  Trading volumes came back in a big way, and came via a lot of selling.

Price/volume action confirmed the possibility discussed last week; the latest “uptrend” derailed  before it really started. OEW is firmly in the downtrend camp, although the bull market is still intact…for now.

We’ve returned to the discussions from late August and early September of last year.  Basically, if we fall below the August lows, the bull market is over, and it’s time to aggressively protect capital.  Hopefully you’ve been pruning away weak positions for some time now, and the latest volatility hasn’t had a large impact on your overall portfolio size.

2016-01-03 - US Stock Market Averages

2016-01-03 – US Stock Market Averages

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 rose above their moving averages during the trading week
  • Sell signal=Market indexes fell below their moving averages during the trading week
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , , | Leave a comment

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of January 3rd = Mixed

MOVING AVERAGES

  • Short-term (20 DMA): Sell Signal
    All the major stock market averages fell below their 20-day moving averages.
  • Intermediate (50 DMA): Sell Signal / Downtrend
    3 of the 5 major stock market averages fell below their 50-day moving averages, and the other 2 remained below that mark.
  • Long-term (200 DMA): Sell Signal / Downtrend
    2 of the 5 major stock market averages fell below their 200-day moving averages, 2 remained below, and 1 (NASDAQ) remained above (slightly).

COMMENTARY
Happy New Year!  Another holiday shortened week, but still long enough for the US markets to fall prey to year-end selling.

Price/volume action actually confirmed an uptrend, but two additional distribution days may have already derailed the rally. OEW continues to lean towards an uptrend, but still no confirmation.  Trading volumes should get back to normal this week, which should give us better technical indicators.

For those of you keeping score, only the Nasdaq registered a gain in 2015:

  • Nasdaq = +5.7%
  • S&P500 = -0.7%
  • Dow Jones Ind. = -2.2%
  • Russell 2000 = -5.7%
  • NYSE = -6.4%

Here’s to Profits in 2016!

2016-01-03 - US Stock Market Averages

2016-01-03 – US Stock Market Averages

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 rose above their moving averages during the trading week
  • Sell signal=Market indexes fell below their moving averages during the trading week
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , , | Leave a comment