Weekend Stock Market Outlook

Stock Market Outlook entering the Week of February 17th = Uptrend

  • ADX Directional Indicators: Uptrend
  • Price & Volume Action: Uptrend
  • Objective Elliott Wave Analysis: Best to your week

COMMENTARY
The uptrend rolls on; no change in the technical picture, ADX, or price and volume.

Tony Caldaro, the proprietor of OEW, passed away early last week. He will be missed.  We’ve lost a wealth of objective knowledge and insight, freely shared.  It’s unclear what will happen with the public-facing OEW blog; Tony had many students, so it’s possible that one of them will step up and pastor the flock, so to speak.  For now, we’ll use the sign off from Tony’s public blog posts as the signal and send our prayers to his family.

Weekly SPX Trendline Analysis

2019-02-17 – SPX Trendline Analysis – Weekly

In the weekly view, S&P ($SPX) prices closed at the highs, again, so still no higher “low” to use for drawing the new uptrend.

Daily SPX Trendline Analysis

2019-02-17 – SPX Trendline Analysis – Daily

Switching to a daily view, prices spent most of the week flirting with the 200-day moving average, finally pulling away on above average volume Friday.  I’ve laid in a potential uptrend, based on the most recent “low”.  Next up, the resistance level just above 2,800.

The DI+ / DI- continues to show a bullish environment.  No change in price/volume; the markets are still in rally mode (above the 50 day moving average, limited institutional selling).

2019-02-17 - US Stock Market Averages

2019-02-17 – US Stock Market Averages

An interesting blog post titled, “Putting this Rally Into Historical Context” by Bryce Coward (CFA) at Knowledge Leaders Capital sheds give us some historical context for the current rally (hat tip to Steve Blumenthal over at CMG):

Several weeks ago we did some research to find out what a typical rally looks like after a big waterfall-like decline takes place. The takeaway was that the rallies after those waterfall declines have lasted anywhere from 1 to 74 days and have retraced 20-90+% of the initial decline. That’s quite a wide range in both duration and magnitude of the move, but a universal similarity was that in 19 of 19 post-war instances of a 15% uninterrupted decline (excluding the current one), the stock market ended up testing the waterfall low in some fashion.

Of course, an outlier is possible…there’s a first time for everything and all that.  Near- term, getting back above the 200-day is an important step in the recovery.  But we can’t give the all clear just yet.

Don’t forget to check out the 2018 performance review.

Best to your week.


If you find this research helpful, please tell 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).
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Weekend Stock Market Outlook

Stock Market Outlook entering the Week of February 10th = Uptrend

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

COMMENTARY
The stock markets took a breather last week.  Earnings season has been a mixed bag.  In some cases, future guidance was more important than beating expectations.

The 2018 performance review posted during the week; you can check it out here. The biggest change, from a weekly post perspective, is the switch from 50-day moving averages to the ADX directional indicator.

In the weekly view, the S&P ($SPX) basically ended where it started after running into resistance at the 200-day / 40-week moving average.  Even though it didn’t close at the highs for the first time in several weeks, there still isn’t a higher “low” to use for drawing the new uptrend.

SPX Trendline Analysis

2019-02-10 – SPX Trendline Analysis – Weekly

Switching to a daily view, the bounce lower from the 200-day moving average broke the tentative uptrend I had drawn. Now we wait for signs of support…I’d guess the mid-2600’s…or the 50-day moving average by the time prices get there.

SPX Trendline Analysis

2019-02-10 – SPX Trendline Analysis – Daily

The DI+ / DI- continues to show a bullish environment.  In support of the signal adjustments made in the 2018 performance review, the DI cross-overs (uptrend/downtrend signals) are now overlaid on the daily chart.

No change in price/volume; still in rally mode (above the 50 day moving average, limited institutional selling).  OEW also remains in uptrend mode.

2019-02-10 - US Stock Market Averages

2019-02-10 – US Stock Market Averages

The U.S. stock markets have made an impressive bounce off the late December low, so a brief pause / consolidation is a good thing…fingers crossed this uptrend/rally isn’t just a big bull trap!


If you find this research helpful, please tell 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).
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2018 Performance Review – Invest Safely Stock Market Outlook

It’s time! Time for the annual performance review of the Stock Market Outlook.


calculator and personal financial statement

Back in 2014, I began publishing a weekly post detailing the current state for the U.S. stock markets, specifically the S&P500. The outlook is one piece of an investing process; an example for determining whether to put your money to work or take it off the table.

But it’s not enough to just monitor the market. You need to translate that knowledge into action. To that end, I created a simple trading system using rules and criteria for entering and exiting trades based on the weekly market outlook signals (e.g. the “execute” step in the safe investing process). Example trades come with example profits and losses, so I can use those rules to estimate performance…another critical piece of the “monitor” step in your investing process.

At the start of 2016, I posted the first annual review, examining the outlook, the opportunities and challenges that come with translating signals into trades, as well as refinements that can improve performance.

So without further ado, let’s get started.

Click here to continue reading the 2018 Performance Review

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Weekend Stock Market Outlook

Stock Market Outlook entering the Week of February 3rd = Uptrend

  • 20/50 Day Moving Averages: Uptrend
  • Price & Volume Action: Uptrend
  • Objective Elliott Wave Analysis: Uptrend

COMMENTARY
Positive action last week keeps the outlook in an uptrend as we start the month of February.  Punxsutawney Phil didn’t see his shadow, so we don’t’ get 6 more weeks of a bear market…that’s how it works, right?

In the weekly view, we see another close at the highs…that’s 5 straight weeks.  Three of them on higher than average trading volume.  The 2018 Q4 downtrend we’ve been following is finished and prices ended the week above the 40-week moving average.  We still don’t have a “low” to use for the new uptrend.  But we can say that when we do see that low, it represents a good buying opportunity in the near future, rather than a continuation of the downtrend.

SPX Trendlines

2019-02-03 – SPX Trendline Analysis – Weekly

Switching to a daily view, the S&P ($SPX) found support at the 50-day moving average, broke the 2018 Q4 downtrend, and closed above the 200-day moving average (with volume).  Mirroring the weekly view, the SPX still needs to put in a higher “low” price of some kind.  For now, we’ll use what we have to estimate the trendline.

SPX Daily Trendlines

2019-02-03 – SPX Trendline Analysis – Daily

The DI+ / DI- continues to show a bullish environment.  Price and volume was bullish last week, courtesy of high volume accumulation days.  The latest OEW analysis also puts us back in an uptrend, with the probability of a new bull market 80%.

2019-02-03 - US Stock Market Averages

2019-02-03 – US Stock Market Averages

More broadly speaking, all the indexes start the week above their 50 day moving averages.  The VIX is back around 16…is that an indication we’ll see a spike in volatility? Asking for a friend…

So what investing “lessons learned” can we take away from January?  Don’t fight the Fed.  It’s amazing what a few dovish speeches will do in today’s trading environment, considering nothing has changed in the past few weeks (underlying fundamentals, etc.).


If you find this research helpful, please tell 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.

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.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.


 

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Weekend Stock Market Outlook

Stock Market Outlook entering the Week of January 27th = Uptrend

  • 20/50 Day Moving Averages: Uptrend
  • Price & Volume Action: Uptrend
  • Objective Elliott Wave Analysis: Uptrend

COMMENTARY
No change in signals after a fairly quiet week of trading; the S&P opened at 2671 and closed at 2665.  Zooming out, it looks like prices are at an inflection point.  The S&P closed just above the 2018 Q4 downtrend two weeks ago but didn’t make much progress last week.

SPX Trendline Analysis

2019-01-27 – SPX Trendline Analysis – Weekly

In fact, the S&P appears to have closed below the recent uptrend line; without a real “lower high” closing price, the uptrend was always tentative. So there’s a small chance that the Q4 downtrend isn’t complete.

Switching to the near-term, the S&P ($SPX) found support at the 50-day moving average, but couldn’t sustain the pace its uptrend, as mentioned above.  And prices still haven’t broken the 2018 Q4 downtrend line.

Trendlines for SPX Daily chart

2019-01-27 – SPX Trendline Analysis – Daily

The DI+ / DI- continues to signal a bullish environment.  As mentioned last week, we haven’t seen a lower weekly close in some time.  I could imagine a scenario where prices meet resistance at the 2018 Q4 downtrend and lose some ground before establishing a real uptrend and moving higher the rest of Q1.

Price charts for $SPX,$COMPQ,$INDU,$NYA,$RUT,$VIX

2019-01-27 – US stock market averages

The averages start the week above their 50 day moving averages.  Price and volume also looks positive, as the S&P hasn’t seen a distribution day since early January.  And finally, OEW puts the probability of an uptrend at 80% this week, and odds of a bull market at 50%.

On the plus side, any extension of the Q4 downtrend or signal change is likely a buy the dip opportunity.  And no whipsaw last week!


If you find this research helpful, please tell 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.

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.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.


 

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Weekend Stock Market Outlook

Stock Market Outlook entering the Week of January 20th = Uptrend

  • 20/50 Day Moving Averages: Uptrend
  • Price & Volume Action: Uptrend
  • Objective Elliott Wave Analysis: Uptrend

COMMENTARY
Another solid week of gains in the stock markets has the weekend market outlook showing green.  Reports of progress on a trade deal with China seems to be the catalyst.  Watch the $VIX; it’s approaching 16, which has been a floor during the recent downtrend.  And a short trading week this week, as US markets are closed Monday to observe Martin Luther King Day.

All the indexes start the week above their 50 day moving averages, with the S&P closing above that level on Thursday, which puts this signal back to an uptrend.

Price charts for $SPX,$COMPQ,$INDU,$NYA,$RUT,$VIX

2019-01-20 – us stock market averages

Price and volume also looks positive, with prices back above the 50-day moving average and accumulation days outpacing distribution.  Overall, trading volume is still below average, and lower than I’d expect for the speed with which market prices have rebounded.

OEW is evaluating 5 criteria to determine if the market will retest the December low, or if the bear market has already ended:  the size of rally, NDX/NAZ and SPX/DOW wave patterns, rebound percentage from the low, and breadth rise from the low.  Right now, the size/percentage of the rally and NDX/NAZ criteria point to an end to the bear market, putting the odds of an uptrend at 60%.  So this signal moves to an uptrend as well.

2019-01-20 - SPX Trendline Analysis - Daily

2019-01-20 – SPX Trendline Analysis – Daily

The S&P ($SPX) punched through the 2,600 resistance level mentioned in the last update.  The DI+ / DI- crossed over early in the week, supporting the case for an uptrend.  Next up is the downward trendline created in 2018 Q4; piercing that level would confirm an end the bear market.

2019-01-20 - spx trendline analysis - weekly

2019-01-20 – SPX Trendline Analysis – Weekly

Switching to a weekly view, prices appear to have broken the downtrend created in Q4.  But there hasn’t been a higher “low”, in terms of closing prices yet, so it’s hard to define the new uptrend.  Weekly prices have closed at or near the high for the past 4 weeks, creating a steep trendline.  Even a trend drawn through the intra-week lows is steep.  At this rate, the S&P would be back to the 2018 Q3 highs within the next 3-4 weeks!

The situation reminds me of the last week in November 2018.  All the signals went green and everyone pointed towards a year-end rally. Then KABLAMO, prices dropped like a rock.  It just feels like a whipsaw is coming, and within the next week or two, I’ll be writing about a signal change again.  Fool me once, shame on you.  Fool me twice…participate and protect indeed.


If you find this research helpful, please tell 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.

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.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.


 

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Market Insights from JP Morgan for 2018 Q1

Each quarter, JP Morgan Asset Management provides a ton of useful information via its “Guide to the Markets”:

“a comprehensive array of market and economic histories, trends and statistics through clear, compelling charts and graphs you can share with your clients.”

You can find this little gem on JP Morgan’s Asset management website, including the “Guide to the Markets” PDF and audio commentary.  Topics include Equities, Fixed Income, International markets, the U.S. economy, as well as alternative investments and investor behavior.

Since this edition covers all of 2018, we can even take a look at annualized asset class performance.  Cash was king last year…though with a 1.8% return that’s not saying much.

Asset Class Performance

2004-2018 Asset Class Performance – JP Morgan

An inverted yield curve is a pretty good signal for a recession.  As discussed before, where not quite there yet.  I seems like an inevitable outcome of rate hiking cycles…maybe it will get postponed like the mid-90’s.

US yield curve and recessions

US yield curve and recessions – JP Morgan

After the 2018 Q4 sell-off, some valuation measures for the S&P500 look pretty good verses a 25 year average.  Forward P/E ratio is affected by our abnormally low interest rates, so I wouldn’t say the S&P is “cheap”.  But it’s trending in the right direction if you’re looking to add more dividend plays to your portfolio.

SP500 PE Ratio

SP500 Valuation Measures – JP Morgan

 

Sources:


JP Morgan Guide to the Markets: Q1 2019
https://am.jpmorgan.com/blob-gim/1383407651970/83456/MI-GTM_1Q19_Linked.pdf?segment=AMERICAS_US_ADV&locale=en_US

 

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