Stock Market Outlook entering the Week of August 19th = Uptrend
- 20/50 Day Moving Averages: Uptrend
- Price & Volume Action: Uptrend
- Objective Elliott Wave Analysis: Uptrend
Now I can say that earnings season is winding down; 90% of the companies in the S&P500 have reported earnings for Q2. Sales, profits, and earnings per share are all higher…which is typical for this stage in the business cycle.
All the indexes are back above their 20 and 50 day moving averages this week.
All the indexes picked up a distribution day last Wednesday. And although prices bounced off session lows, volume fell on Thursday and Friday (except for the Dow). Ideally, volume would increase during the rebound.
OEW uptrend call remains in play. The S&P didn’t quite reach the 2790 support level (2,802 on Wednesday), but the decline was enough to meet the “test support” call from last week, so it’s risk on.
The S&P ($SPX) found support just above the 50-day moving average last week, so a test of the lower channel trendline will have to wait. A weak trend persists per the ADX, with the bearish directional indicator (DI-) just above the bullish (DI+).
Expanding the view, the S&P is within striking distance of the all-time high from January (2,873); we topped out at 2,863 two weeks ago after touching the upper channel. Keep an eye on that level as potential support/resistance. Powering through on high trading volume is a great sign…selling off not so much.
Despite the recent spike in volatility, trading remains subdued (it IS August after all). Now is not the time to be complacent. Rather, take this time to review your holdings and adjust position sizes that may be out of whack. And don’t forget to review/renew your watch lists. Mine have grown a bit this month, even for income investments!
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You can check out how well (or poorly) the outlook has performed as a stand-alone, signal generator using past performance estimates:
- 2015 Performance – Stock Market Outlook
- 2016 Performance – Stock Market Outlook
- 2017 Performance – Stock Market Outlook
For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro. Charts provided courtesy of stockcharts.com.