Weekend Stock Market Outlook

Stock Market Outlook entering the Week of February 14th = Uptrend

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

The stock market outlook shows an uptrend, with prices near the upper bound of a former bullish price channel.

Technical analysis of daily SPX prices

2021-02-14-SPX Trendline Analysis-Daily

The S&P500 ($SPX) is within a bullish trading day of 4,000. The ADX shows a weak trend getting weaker.  Price/volume signal remains bullish, and leading high-growth stocks are acting well.  But declining trading volume as price reaches new highs remains a big concern, and suggests a lack of conviction from institutions.

Technical analysis of daily SPX prices

2021-02-14-SPX Elliott Wave Analysis-Daily-Primary1

For Elliott Wave, the 5th wave uptrend rolls on.  If symmetry with the 1st wave is maintained, the current wave should last a few more days before completing.

Still risk on…for now. By all typical valuation measures, stocks are extremely overvalued.

Shows extremely overvalued stock market

Source: Ned Davis Research (Hat Tip to CMG)

Not too surprising…where else are you going to park your money these days?  Even high yield (junk) bonds aren’t going to do it; yields sit at record lows!

Showcase junk bond yields over time

Hat Tip to CMG…again

Watch volatility ($VIX).  It’s still elevated when compared to the last few years, but nearing the low point of the since the pandemic sell-off.  I’d expect it to be closer to 12 before we see a major sell-off (>20%), but that doesn’t mean a minor one isn’t in the cards (<20%).

Shows volatility over timeBest to Your Week!

P.S. The 2020 Annual Performance Report should be out later this week.

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