Stock Market Outlook entering the Week of December 13th = Uptrend

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

ANALYSIS

The stock market outlook remains in an uptrend, despite the small sell-off last week.

2020-12-13-SPX Trendline Analysis-Daily

The S&P500 ($SPX) is still extended from the 200-day moving average (~13%). But uptrend signals remain in place for both ADX directional indicators and price/volume action.

2020-12-13-SPX Elliott Wave Analysis-Daily-Primary1

Elliott Wave remains in an uptrend.

COMMENTARY

In the U.S., elected officials can’t find common ground for another round of fiscal stimulus, and the unemployment situation is deteriorating as coronavirus cases spike. The E.U., Brexit talks continue, but both sides have hedged, stating that a no-deal Brexit is likely.

And the overall stock market remains very over-valued (CMG blog), on both a Price to Earnings and Market Cap to GDP basis.

None of that has stopped the markets as they march higher, led by small capitalization stocks. Typically, small caps don’t lead markets higher during bear markets, or even late stage bull markets. And cyclical companies, like energy and financials, have also performed well, signaling an expectation of further economic recovery.

Keep working your plan, raise your sell stops to protect against a sudden drawdown, and try to enjoy the holidays.  We’ve all earned it!

Best to Your Week!