Market Outlook entering the Week of Nov 2nd = Uptrend

TECHNICALS

• Short-term (20 DMA): Uptrend
  All the major stock market averages ended the week above their 20-day moving averages.

• Intermediate (50 DMA): Uptrend
  Except for the Nasdaq, all the major stock market averages ended the week above their 50-day moving averages.

• Long-term (200 DMA): Uptrend
  All the major stock market averages ended the week above their 200-day moving averages.

COMMENTARY
Trying to understand this market reminds me of the conversation between the Caterpillar and Alice from “Alice in Wonderland”:

‘Who are you?’ said the Caterpillar. This was not an encouraging opening for a conversation. Alice replied, rather shyly, ‘I — I hardly know, sir, just at present — at least I know who I was when I got up this morning, but I think I must have been changed several times since then.’

After encountering the highest amount of selling since 2012, the market commentary from October 12th mentioned a potential rebound.

Well, we got that rebound and then some!

Within 1 week, the S&P500 rose so much that it appeared to complete the first short-term uptrend/recovery in the mid-term downtrend that started in September (per Elliott Wave analysis). The key price level for the S&P500 was 1,973.  If the market passed that level, we would need to reassess the market outlook.

I admit it:  I was skeptical.  A correction is long overdue, and represents an eagerly awaited buying opportunity for a few of my investing strategies.  And with the Fed’s ending of QE, now is the perfect time…at least that’s what I thought.

No such luck.  Last week, the S&P500 blew past that resistance level, along with a few others, ending the week at 2,014.  No QE?  No problem.

For the week, William O’Neal’s Big Picture analysis remained in a confirmed uptrend, and the NASDAQ picked up a distribution day.

I am surprised, but the chart’s don’t lie, and that’s why we use them to determine market direction. Remember the words of John Maynard Keynes:

The markets can stay irrational longer than you can stay solvent.

Keep your loses small, regardless of which way you think the market is headed.  And keep your eye out for that correction! Key S&P500 price levels to watch:

• Support: 2,000 and the old resistance level of 1,973
• Resistance: 2019, 2070

Elliott Wave Analysis from the ELLIOTT WAVE lives on by Tony Caldaro

2014-11-02 – US Stock Market Averages