Weekend Stock Market Outlook – April 18 2021

Stock Market Outlook entering the Week of April 18th = Uptrend

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

ANALYSIS
The stock market outlook shows an uptrend remains in place to start the week of April 18th.

Technical analysis of daily SPX prices

2021-04-18-SPX Trendline Analysis-Daily

The S&P500 ($SPX) continued higher last week, and sits ~14% above the 200 day moving average…again. It sits 5% above the 50-day, which is roughly the distance to the lower trendline as well.

The ADX rose above 20 for the first time this year, showing a strong bullish trend in place. A few distribution days still fall within the 5 week window, and even those remaining days don’t really reflect the recent bullishness.

Technical analysis of daily SPX prices

2021-04-18-SPX Elliott Wave Analysis-Daily-Primary1

The S&P in the third wave of a Minor 5 according to Elliott Wave counts. A negative divergence in the RSI popped up on Friday’s all time high.

COMMENTARY
Much like a shot of adrenaline running through our veins, the impact of stimulus checks has shown up in economic measures like retail sales, earnings, and inflation. We’re likely to see extraordinarily positive earnings this quarter (since Q2 2020 was so poor), and retail sales will also rise as the economy re-opens this summer, both of which are supporting of a rising stock market.

But inflation is also likely to spike, and the U.S. Fed has already stated that any near-term increase will be transitory. meaning they won’t do much of anything unless something really crazy happens (e.g. hyperinflation).

All these factors continue support further gains from the stock market this quarter, but don’t be surprised if we see some profit taking and/or sector rotation as investments hit overbought and oversold levels.

Best to Your Week!

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