Market Outlook entering the Week of Jan 18th = Mixed
- Short-term (20 DMA): Downtrend
With the exception of the NYSE Composite and Dow Jones Industrial, all the major stock market averages ended the week below their 20-day moving averages.
- Intermediate (50 DMA): Downtrend
With the exception of the NYSE Composite, all the major stock market averages ended the week below their 50-day moving averages.
- Long-term (200 DMA): Uptrend
With the exception of the NYSE Composite, all the major stock market averages ended the week above their 200-day moving averages.
To kick off 2015, we picked up right where we left off after the last full week of trading in 2014; high volatility.
Price/volume analysis documents the market’s continued Dr. Jekyll/Mr. Hyde routine. Last week we started in an uptrend, encountered high volume selling most of the week, and then some signs of life on Friday. This week, we’ll start things off with an uptrend under pressure.
Intermediate-term Elliott Wave Analysis also shows that selling pressure has taken a toll, as the current outlook matches price/volume (uptrend in jeopardy). The S&P500 broke the 2,109 support level, so key numbers to watch for a trend change are altered slightly for this week:
- Resistance: 2,019 / 2,070
- Support: 1,956 / 1,973
Volatility is a traders friend, and there are definitely opportunities for people with a process focused on a short-term time frame (1-2 weeks). Those of you with longer term processes likely find the increased volatility “less friendly”.
The best thing that you can do, in either case, is stick to Safe Investing Principle #2 – always protect against losses.
For the detailed Elliott Wave Analysis, head to the ELLIOTT WAVE lives on by Tony Caldaro