Weekend Stock Market Outlook – October 3 2021

Stock Market Outlook entering the Week of October 3rd = Downtrend

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

ANALYSIS
The stock market outlook kicks off the week in a downtrend, as 2 signals finally turned bearish at the same time during last week’s trading sessions.

Technical analysis of daily SPX prices

SPX Price Chart for the Week of October 03 2021

The S&P500 ($SPX) opened last week at the 50-day moving average, but it’s actually the 34-day moving average that provided resistance.

The ADX shows a strengthening bearish trend, keeping that signal in a downtrend. Price and volume signal moves from an uptrend back to mixed, as price was unable to hold the 50-day moving average after last Monday. Distribution days are still relatively low.

Technical analysis of daily SPX prices

SPX Price Chart for the Week of October 03 2021

For Elliott Wave, the market took the second option from last week’s post:

Wave [a] of Wave 4 completed, we’re in Wave [b], and Wave [c] will retest the 4300 low to complete the correction near 4246.

The correction appears to be Minor waves (rather than Minute), so I made a few changes to the wave count.

COMMENTARY
Concerns over interest rates and inflation are scapegoats for the recent sell-off. Rising rates tend to put a dent in large cap tech stocks, so we may see indexes like the NASDAQ lag small caps. It’s no surprise that the S&P500 struggled lately as well, given that 20% of that index is Apple, Amazon, Google, Microsoft and Facebook.

Timing-wise, the last time we had a ~5% correction was? Last September! It’s possible that we have a similar October in the works too, which would entail a rally back near the all time highs, then a sell-off back to the September low. None of that would be a surprise, given October’s historical volatility.

Best to Your Week!

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