Stock Market Outlook entering the Week of June 26th = Mixed
- Short-term (20 DMA): Downtrend
All the major stock market averages remained below their 20-day moving averages.
- Intermediate (50 DMA): Downtrend
All of the major stock market averages remained or fell below their 50-day moving averages.
- Long-term (200 DMA): Uptrend
4 of the 5 major stock market averages remained above their 200-day moving averages.
As expected, last week we experienced some pricing volatility in the US stock markets. Through Thursday, everything looked okay; price/volume was even strong enough to confirm the uptrend. Results from the US bank stress test were a non-issue.
For Friday, the Russell rebalancing would generate more volume, but was not expected to shift the market one way to the other. Then, to almost everyone’s surprise, Great Britain voted to leave the EU, and sent the US stock market plummeting.
The silver lining? Friday’s massive slide was just one trading day, so the overall damage was limited. Price/volume registered a distribution day. OEM changed from an uptrend bias to confirmed downtrend, although the longer term outlook is still mixed. And 4 of the 5 indexes are still trading above their 200-day moving average. Looking at weekly performance for some context, we see the S&P 500 lost 1.6%, the NASDAQ lost 1.9%, and the Dow Jones lost 3.0%…not exactly a huge loss.
Last week I mentioned that we could have changed the outlook to mixed, and this week I’ve made it official. I’m not sure what to expect from the markets going forward. The impact of the Great Britain leaving the EU will play out over the next decade, so it’s the unintended consequences that will have the most influence on market performance.
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 rose above their moving averages during the trading week
- Sell signal=Market indexes fell below their moving averages during the trading week