Stock Market Outlook entering the Week of May 24th = Uptrend

• • ADX Directional Indicators: Uptrend
  • Price & Volume Action: Uptrend
  • Elliott Wave Analysis: Downtrend

ANALYSIS
The stock market outlook flipped to an uptrend last week (Monday) with another change in the ADX signal. Price/volume remained in an uptrend, while the Elliott Wave downtrend remains in place…it’s just a REALLY shallow one.

2020-05-24-SPX Trendline Analysis-Daily

The S&P500 ($SPX) sits ~8% above the 50-day moving average, and just below the 200-day moving average (~3,000). The directional indicators flipped again, but the overall ADX still shows a VERY weak trend, as it has been for the entire month.

The downward trendline fell to last Monday’s strong advance, so there’s a new uptrend traced off the recent lows.  But prices didn’t make much progress the rest of the week.

2020-05-24-SPX Elliott Wave Analysis-Daily

For Elliott Wave, the S&P500 has been working through an intermediate B wave for all of May.  A B-wave is expected to retrace a lot of the A-wave.  So far, that hasn’t really happened.  I’ve seen three potential counts:

1. B-wave completed on May 14th
2. B-wave is ~halfway complete
3. B-wave is just getting started

Scenario 1 would mean a new uptrend (C-wave), with the first level of resistance near the 3140 price level (79% retracement).  Scenarios 2 and 3 mean the S&P could start the next leg of the downtrend at any time…maybe hit ~3,000 first (coincidentally the 200 day moving average).  Odds favor the B-wave is still in place, so this signal is still in a downtrend for now.

COMMENTARY
Stocks jumped on reopening activities and positive news related to COVID19 vaccine trials.  Not to be outdone, the U.S. Senate grabbed headlines by introducing a bill that could require Chinese companies to delist from U.S. stock exchanges.

The Strategic Investment Conference wrapped up last week, and the final sessions did not disappoint.  I’ve got a lot of listening/watching to do; so much information!  If even half of the opinions turn out to be true, we’re in for a very interesting period in history!

Short week coming up, with U.S. exchanges closed for Memorial Day.

Best to your week!