Weekend Stock Market Outlook

Stock Market Outlook entering the Week of May 6th = Downtrend

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

COMMENTARY
Market prices made some progress last week, finding support near the 200-day moving average.  But the downtrend is still hanging on by a few points. Basically, we’re looking for a weekly close above the 50-day or below the 200-day to confirm which of the technical patterns we’ve been following will win out (mid-term descending triangle or long-term price channel). Since the gap between those two price levels is ~2.5%, we shouldn’t have to wait much longer.

The Nasdaq joins the Russell 2000 above the 50-day moving average, thanks to Friday’s rally.  The other indexes sit just below that level, so it won’t take to change this signal to an uptrend.

Price charts for $SPX,$COMPQ,$INDU,$NYA,$RUT,$VIX,$TNX,$USD,$CRB,$GOLD

2018-05-07 – US Stock Market Averages

While Thursday’s bounce came with higher trading volume (good), Friday’s rally to the 50-day had lower trading volume (bad). So price / volume action remains mixed.  Growth stocks with solid fundamentals have responded positively to earnings strength; what’s not clear is whether those gains will hold (as mentioned last week).

OEW maintains a medium term downtrend, but expects that trend to end soon, and for markets to take another run at all time highs.

The descending triangle pattern remains intact, and continues to narrow, with an upper trendline sitting at ~2,675 (almost the same as the 50-day moving average). The floor remains at 2,581. The ADX indicator is rising ever so slightly, but remains bearish.

2018-05-07 - SPX Technical Analysis - Daily

2018-05-07 – SPX Technical Analysis – Daily

The longer term price channel has seen a lot of action recently, with prices bouncing off that level for the second straight week and closing near the highs. On the downside, the last two weeks have seen lower closing prices on above average volume.  Today, the lower bound is roughly the same as the 200-day moving average.

2018-05-07 - SPX Technical Analysis - Weekly

2018-05-07 – SPX Technical Analysis – Weekly

 


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.

You can check out how well (or poorly) the outlook has tracked the market using past performance estimates:

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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