Stock Market Outlook entering the Week of May 24th = Uptrend
- ADX Directional Indicators: Uptrend
- Price & Volume Action: Uptrend
- Elliott Wave Analysis: Downtrend
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.
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.
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:
- B-wave completed on May 14th
- B-wave is ~halfway complete
- 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.
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!