Weekend Stock Market Outlook

Stock Market Outlook entering the Week of August 18th = Downtrend

  • ADX Directional Indicators: Downtrend
  • Price & Volume Action: Downtrend
  • Objective Elliott Wave Analysis: Downtrend

COMMENTARY
No change in the market outlook; the ADX, price/volume, and OEW indicators remain in downtrends.

Technical analysis of daily SPX prices

2019-08-17 – SPX Trendline Analysis – Daily

The S&P500 ($SPX) remains under the new down trendline, as well as the 50-day moving average.  On the plus side, prices found a floor of support near the 2,825 three times since the start of August.

Technical analysis of weekly SPX prices

2019-08-17 – SPX Trendline Analysis – Weekly

In the weekly view, the plotted trendline had been holding strong, but finally gave way last week.

U.S. 30-year bonds fell below the Fed Funds rate, meeting yet another definition for an inverted yield curve.  As mentioned last time, don’t try to time the market based on this indicator.  Just know that the economy has issues, and prepare accordingly.  Some companies are already acting like they’re operating within a recession.  Others may not be effected for some time.


If you find this research helpful, please forward to a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

Charts provided courtesy of stockcharts.com.

If you’re interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad.  It’s one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.


Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments.  The goal is to give you to give you an example of how to analyze and continuously improve your own systems.


IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.
Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , | Leave a comment

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of August 11th = Downtrend

  • ADX Directional Indicators: Downtrend
  • Price & Volume Action: Downtrend
  • Objective Elliott Wave Analysis: Downtrend

COMMENTARY
More selling last week, so no change in the market outlook.  The ADX and OEW remain in downtrends.  Price/volume action shifted from mixed to a downtrend with prices below the 50-day moving average.

Technical analysis of daily SPX prices

2019-08-11 – SPX Trendline Analysis – Daily

The S&P 500 ($SPX) broke the long-term trendline we’ve been plotting.  Those key support levels, which I expected to provide some price support, never came into play, as price gaped below those levels to when markets opened.  By Friday, prices recovered significantly, but still met resistance at the 50-day moving average.  At least the selling was on lower volume.

Technical analysis of weekly SPX prices

2019-08-11 – SPX Trendline Analysis – Weekly

In the weekly view, the plotted trendline actually remained intact, with prices almost back to where they closed the week prior.  You can also see the elevated selling activity, which sits in contrast to the April-May correction.

On average, S&P performance is at its worst in August and September.  So probability favors negative market action until the start of Q4.  Furthermore, news (more specifically news on Twitter) is increasing volatility, and there’s no shortage of potential market-moving players.

In the States, the U.S.-China trade-ware has been the noisemaker lately, and rightly so, but there are many other geopolitical issues lurking beneath the surface:  Hong Kong, North Korea, Brexit, negative yield and ballooning corporate debt levels globally, Iranian ship seizures, economic contractions in Europe (don’t call it a recession – we don’t have those any more), etc.

What can you do?

Always limit your losses, preferably 8% or less. Admit the mistake, analyze it, and move on. You may get another chance, with the same stock even, when the overall market turns around.

Always take profits, preferably 20% or above. You don’t have to sell it all, but prune your winning trades so that you have something to show for your hard work. Ideally, you can extract your original investment and let your profits run (i.e. play with the houses money).

And if you’re somewhere in between? Check the price action. Failing to hold key support levels (technical), or missed/lowered earnings (fundamentals) are reasons to get out early. At a minimum, set a stop-loss at your break-even.


If you find this research helpful, please forward to a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

Charts provided courtesy of stockcharts.com.

If you’re interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad.  It’s one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.


Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments.  The goal is to give you to give you an example of how to analyze and continuously improve your own systems.


IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.
Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , | Leave a comment

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of August 4th = Downtrend

  • ADX Directional Indicators: Downtrend
  • Price & Volume Action: Mixed
  • Objective Elliott Wave Analysis: Downtrend

COMMENTARY
No way around it; ugly market action last week led to a shift in market outlook.  Percentage-wise, not a huge sell off so far (~3.5%); the speed (3 days) and the volume (way above average) are concerning.

The ADX directional indicators crossed over on Wednesday, shifting that signal to a downtrend. Price/volume action was mixed; price remains above the 50-day moving average, but institutional selling shows a marked increase. OEW also confirmed a downtrend. OEW has been calling for a sell-off in recent weeks, so kudos the group.

Technical analysis of daily SPX prices

2019-08-04 – SPX Trendline Analysis – Daily

The daily chart shows the S&P 500 ($SPX) resting on the 50-day moving average, with an elevated distribution day count.  Wednesday and Thursday displayed “topping” action, which is when there is a large difference (spread) between the day’s high and low prices, but prices end up finishing the day near the low. On the plus side, the trendline we’ve been tracking hasn’t been broken yet.

Technical analysis of weekly SPX prices

2019-08-04 – SPX Trendline Analysis – Weekly

The weekly chart also shows our trendline intact, with prices hovering at the 10-week moving average. One potential positive; Friday’s close put the S&P near the 38% Fibonacci retracement level (not shown); a key support level for traders using technical analysis.

The U.S. Federal reserve cut interest rates by 0.25%, but also signaled that it was “one and done”. Too much? Not enough? It seems like no one was happy with the outcome, nor do they believe it’s one and done. But I don’t think the cut was the culprit. To me, the real catalyst came in the form of a tweet; the announcement of an additional 10% tariff on Chinese goods.  Most of the immediate sell-off from the rate cut had been recovered by the time the tweet was released! That surprised the investment community, and the only kind of surprises they like are companies beating expectations.

Given the fact that the S&P sits on some key support levels, I expect a rebound early next week. Hopefully it comes with higher volumes, and we can say this downtrend was just a little tantrum thrown by surprised investors.


If you find this research helpful, please forward to a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

Charts provided courtesy of stockcharts.com.

If you’re interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad.  It’s one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.


Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments.  The goal is to give you to give you an example of how to analyze and continuously improve your own systems.


IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.
Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , , | Leave a comment

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of July 28th = Uptrend

  • ADX Directional Indicators: Uptrend
  • Price & Volume Action: Uptrend
  • Objective Elliott Wave Analysis: Uptrend

COMMENTARY
No change in the signals; bullish price action for the ADX, price/volume, and OEW. If you’re paying attention to the earnings game, it was an exciting week; big moves among the popular names (Google for instance).

Technical analysis of daily SPX prices

2019-07-28 – SPX Trendline Analysis – Daily

The daily and weekly chart shows the S&P 500 ($SPX) back at all time highs.

Technical analysis of weekly SPX prices

2019-07-28 – SPX Trendline Analysis – Weekly

Even with that price level, and an economy that continues to grind along, the U.S. Fed is considering pre-emptive rate cuts to decrease the likelihood of a future recession. With that as a backdrop, Ray Dalio published an article on LinkedIn (you can read the article here), discussing market cycles and their effects on returns from different types of investments and asset classes.

Over my roughly 50 years of being a global macro investor, I have observed there to be relatively long of periods (about 10 years) in which the markets and market relationships operate in a certain way (which I call “paradigms”) that most people adapt to and eventually extrapolate so they become overdone, which leads to shifts to new paradigms in which the markets operate more opposite than similar to how they operated during the prior paradigm.

Identifying and tactically navigating these paradigm shifts well and/or structuring one’s portfolio so that one is largely immune to them is critical to one’s success as an investor.

Political leanings aside, he’s managed money successfully for a long time, and it’s a good follow-up to last week’s yield curve discussion.  Both topics deal with change on a longer term time horizon.

But why now? Per Ray:

In paradigm shifts, most people get caught overextended doing something overly popular and get really hurt. On the other hand, if you’re astute enough to understand these shifts, you can navigate them well or at least protect yourself against them.

I think now is a good time 1) to look at past paradigms and paradigm shifts and 2) to focus on the paradigm that we are in and how it might shift because we are late in the current one and likely approaching a shift.

Need something visual?  Check out that run! (chart courtesy of JP Morgan Asset Management)

Visual representation of S&P500 returns

“Buying and holding” equities has crushed it for over a decade.  So it’s highly likely many investors are overweight equities and underweight other asset classes.  And who could blame them?

But under the surface, low rates have contributed to an explosion in corporate debt…mainly the kind one level above ‘junk’ (or non-investment grade). Even worse, some companies are unable to generate enough profit to pay their debts…even with record low interest rates. Government debt levels around the world are astronomical. Some have even suggested that those debt levels are no longer relevant because the government (at least in the U.S.) can just print more money to cover them…indefinitely. A new paradigm indeed.

Ray’s article is worth a look, and at the end, he gives his opinion on what asset classes should perform well.  The time to prepare for an emergency is before the wheels fall off, so to speak. So now is a great time to ask yourself am I diversified? How do I decide how much money to allocate to other asset classes? How will I decide when it’s time to reallocate? Who can help me make those decisions?


If you find this research helpful, please forward to a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

Charts provided courtesy of stockcharts.com.

If you’re interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad.  It’s one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.


Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments.  The goal is to give you to give you an example of how to analyze and continuously improve your own systems.


IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.
Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , ,

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of July 21sth = Uptrend

  • ADX Directional Indicators: Uptrend
  • Price & Volume Action: Uptrend
  • Objective Elliott Wave Analysis: Uptrend

COMMENTARY
No change in the signals this week; the same story as last week:  bullish ADX, subdued price/volume, and an uptrend call from OEW.

Earnings season is upon us and a slew of big names report Q2 results this week, including the rest of the FANG stocks:  Facebook (FB), Amazon (AMZN) and Alphabet (GOOGL).  Analysts expect lower growth, so a surprise could result in oversized moves…in either direction.

The daily chart shows the S&P 500 ($SPX) hasn’t made much progress since mid-June.

Technical analysis of daily SPX prices

2019-07-21 – SPX Trendline Analysis – Daily

The weekly chart shows the first decline on higher trading volume since December…and below average volume at that.  Look at how much prices have risen since that December low!

Technical analysis of weekly SPX prices

2019-07-21 – SPX Trendline Analysis – Weekly

Weak volume continues to plague the stock market as a whole. It’s hard to put much conviction behind any type of move until volume returns.  Leading stocks are no exception.  Several growth stocks on my watch list broke out over the past few weeks, but the action left a lot to be desired; <1.5% price moves with anemic trading volume.

Friday was options expiration, which usually produces really high volume.  Even that activity couldn’t drive trading volumes up.  Is it uncertainty about the U.S. / China trade war?  Brexit?  The Strait of Hormuz?  Will they or won’t they cut interest rates in U.S.?

OEW is still looking for 3,300 on the S&P.  If we do see prices fall before that level, look for support between 2,900 and 2,830.

I’ve been part of several “debates” about inverted yield curves and recessions; particularly trying to time when we’ll see the next one. Bear markets occur without recessions, but recessions make bear markets a lot worse.  Since we haven’t had a recession in a long time, it’s definitely a worthwhile discussion and something to keep on your radar.

There was agreement on the fact that before every recession in the past 40 years, the yield curve has inverted.  Also, that there are times (2 to be exact) when the yield curve inverts, and there isn’t a recession.

There wasn’t agreement on whether the yield curve has or hasn’t inverted this year.  I figured this might be something you’re encountering in your research as well, so I wanted to show you the source of the disagreement.  There were 2 different criteria for an inverted yield curve:

  1. 10-year yield < 2-year yield
  2. 10-year yield < 3-month yield

And as of July 19, 2019:

  • 10-year yield = 2.05%
  • 2-year yield = 1.80%
  • 3-month yield = 2.06%

The 3-month and 10-year inverted back in March; the 2 & 10 year’s haven’t inverted yet.

Which of these datasets you choose to follow is up to you.  In either case, it’s safe to say that the yield curve is saying the U.S. economy has issues to work through over the next 12 months, so watch manage your holdings accordingly (position sizing, allocations, etc.).


If you find this research helpful, please forward to a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

Charts provided courtesy of stockcharts.com.

If you’re interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad.  It’s one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.


Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments.  The goal is to give you to give you an example of how to analyze and continuously improve your own systems.


IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.
Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , ,

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of July 14th = Uptrend

  • ADX Directional Indicators: Uptrend
  • Price & Volume Action: Uptrend
  • Objective Elliott Wave Analysis: Uptrend

COMMENTARY
Signals remain unchanged; the ADX is bullish, price/volume is subdued, and OEW shows an uptrend. Fed Chairman Powell testified in front of Congress and seemed to indicated that a rate cut is very likely.

Technical analysis of daily SPX prices

2019-07-14 – SPX Trendline Analysis – Daily

Technical analysis of weekly SPX prices

2019-07-14 – SPX Trendline Analysis – Weekly

The daily and weekly charts show the S&P 500 ($SPX) grinding higher on lower than average trading volume. Ideally you want to see new high prices on high trading volume, but an uptrend is an uptrend.

While it seems like there “should” be a correction any day now (pick your reasoning, there is plenty to choose from), let prices tell you what to do. And don’t fight the Fed!

An interesting set of charts from this week’s On My Radar from Steve Blumenthal at CMG. It’s one of his favorite valuation measures: S&P 500 Total Return Index vs U.S. Household Stock Allocation. It’s the second chart (in the Concluding Thoughts – What Might The Endgame Look Like? Section)

Basically, it compares how much money individual investors have put into U.S. equities at a given point in time, with average annual return from the S&P500 over the next 10-years for that same point in time. Typically, individual investors are heavily invested in stocks at market tops, and that’s when forward returns are their lowest.

The bad news: Your starting point matters quite a bit. 2019 will represent a peak in 10-year rolling returns until at least 2029.   Why?  Because money invested in 2009 occurred at a bear market low and right now we have an all time high in the S&P.  Every year afterwards (2010, 2011, etc.) the starting price is higher, so the rolling return will decline at little.

The good news: 10-year rolling returns are almost always positive, even when investors are “all in”. And since we know there will be another bear market, and another “low”, you can prepare yourself now to go against the grain and buy, setting yourself up for great 10-year returns.


If you find this research helpful, please forward to a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

Charts provided courtesy of stockcharts.com.

If you’re interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad.  It’s one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.


Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments.  The goal is to give you to give you an example of how to analyze and continuously improve your own systems.


IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.
Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , ,

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of July 7th = Uptrend

  • ADX Directional Indicators: Uptrend
  • Price & Volume Action: Uptrend
  • Objective Elliott Wave Analysis: Uptrend

COMMENTARY
Low volumes and a shortened trading week left market signals unchanged.  The OEW blog expects another 10% gain before the current uptrend ends, but sees increasing probability of a “sizeable” decline first.

Technical analysis of daily SPX prices

2019-07-07 – SPX Trendline Analysis – Daily

In the daily chart, the S&P 500 ($SPX) broke through all time highs.

Technical analysis of weekly SPX prices

2019-07-07 – SPX Trendline Analysis – Weekly

The weekly view also shows the uptrend in command.

All eyes are on the Fed now, as investors await the July meeting / rate cut decision.


If you find this research helpful, please forward to a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

Charts provided courtesy of stockcharts.com.

If you’re interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad.  It’s one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.


Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments.  The goal is to give you to give you an example of how to analyze and continuously improve your own systems.


IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.
Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).
Posted in Historical Data, Market Trends, Other Blogs | Tagged , , , ,