Stock Market Outlook entering the Week of May 5th = Uptrend
- ADX Directional Indicators: Uptrend
- Price & Volume Action: Uptrend
- Objective Elliott Wave Analysis: Uptrend
No change in the signals to start the first full week of May. The ADX still shows a bullish trend in place, although it’s weakened a bit. The Price & Volume signal looks good; above the 50-day moving average with minimal distribution days. OEW still shows an uptrend in place as well.
The S&P shows weekly prices start the week near all time highs; just above the last resistance level from 2018 (~2,930). So we can say the v-shaped recovery is complete! But that 2019 Q1 trendline looks like it’s done.
2019-05-05 – SPX Trendline Analysis – Weekly
In the daily view, the S&P 500 ($SPX) briefly dipped below the uptrend channel. Since prices immediately recovered, I won’t call it done just yet. But given the weakening ADX, be on the lookout for signs of selling next week.
2019-05-05 – SPX Trendline Analysis – Daily
Given the completion of the recovery, and what appears to be some loss of momentum (ADX and trendlines), I wouldn’t be surprised to see market prices encounter a short correction. Most of the “growth stocks” that I follow are well extended from proper buy points and/or sitting on >20% gains. And new set-ups aren’t exactly setting the world on fire (e.g. low volume breakouts). “Sell in May and Go Away” really happens…especially if you’re sitting on 20% gains within 4 months!
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Charts provided courtesy of stockcharts.com.
If you’re interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad. It’s one of my favorites.
For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.
Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.
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