Weekend Market Outlook

Market Outlook entering the Week of August 23rd = Downtrend

MOVING AVERAGES

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

COMMENTARY
The bottom of our range-bound market action finally fell out, and took prices with it. Over the span of three days (Wednesday, Thursday, and Friday), the S&P500 managed to take out 2 of the 3 support levels mentioned last week:

  • 2040 = 2.4% decline (~4% decline from 2131 high)
  • 2019 = 3.4% decline (~5% decline from 2131 high)
  • 1820 = 13% decline (~15% correction from 2131 high)

So the price action was awful.  But what about trading volume?  Any silver lining?  No.  As prices declined, trading volumes increased, confirming that market makers were selling.

Tony C. added OEW commentary this week, saying that “a Primary IV correction would suggest a decline back to the October 2014 lows around SPX 1821”, which also happens to be the only support level the SP500 hasn’t breached.

The technical support and resistance levels for the S&P are:

  • Resistance:  1,973 / 2,019
  • Support:  1,929 / 1,956

Regardless of duration, the markets are clearly in a downtrend, so now is the time to get defensive (i.e. do not buy large positions, expect large percentage price swings, and be patient).

Should buyers step in next week and halt the slide, check your positions and make sure your profits don’t turn into loses!

2015-08-23 - US Stock Market Averages

2015-08-23 – US Stock Market Averages

Sources:

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 fell below their moving averages during the trading week
  • Sell signal=Market indexes rose above their moving averages during the trading week
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