Stock Market Outlook entering the Week of November 4h = Downtrend
- 20/50 Day Moving Averages: Downtrend
- Price & Volume Action: Downtrend
- Objective Elliott Wave Analysis: Downtrend
Prices for U.S. stocks bounced and indexes finished up for the week. With midterm elections Tuesday, it’s anyone’s guess how investors and traders will respond when the votes are tallied. And we have a Fed meeting this week.
All the indexes continue to trade below their 20 and 50 day moving averages, keeping this signal in a downtrend.
The price/volume signal remains in a downtrend. Now that the indexes have rallied a bit, start looking for a follow-through day (1.5% gain on higher than average trading volume), which would change this signal back to an uptrend. Thursday was close, but couldn’t pull through.
the decline from SPX 2941 to 2604 might have ended the first downtrend…and a potential…uptrend is now underway.
The S&P ($SPX) appears to have bottomed just above 2600. On Friday, prices tested the 200 day moving average.
Last week we mentioned a change in the character of the market, in terms of volatility. I received an email asking how to visualize that “change”. Many people use the VIX (see above). But if you’re looking for something more specific to the index or stock you’re following, try the Average True Range indicator; I actually calculate within one of my mechanical trading systems.
My opinion is still that the SPX will test support around 2581, but now it appears it will claw back some of the decline first. We could even see 2875 before selling off again. I imagine the price action could look similar to what occurred between the February and April lows.
Again, use your process to determine what and when to buy or sell. Per OEW:
…the four major US indices have not confirmed bear markets yet. We may not see a bear market confirmation in the US until the bear market is nearly over. That’s what happened in 2016, and is part of the reason we were caught off guard at that low.
Participate. Protect. Prepare.
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- 2015 Performance – Stock Market Outlook
- 2016 Performance – Stock Market Outlook
- 2017 Performance – Stock Market Outlook