Weekend Stock Market Outlook – September 4 2022

Stock Market Outlook entering the Week of September 4th = Downtrend

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

ANALYSIS
The stock market outlook flipped to a downtrend last week as U.S. equities continue to sell-off.  The S&P500 ($SPX) dropped a little more than 3% last week, finding some support near 3900 (the late May early July support/resistance area).

Technical analysis of daily SPX prices

SPX Price & Volume Chart for the Week of September 04 2022

In terms of short-term trendlines, an uptrend drawn through closing prices broke last Tuesday, while a trendline through daily lows remains intact.

On Tuesday, price & volume joined the ADX in signaling a downtrend, after the SPX sliced through the 50-day moving average on increased trading volume.

Technical analysis of daily SPX prices

SPX Elliott Wave Analysis for the Week of September 04 2022

Elliott Wave also flipped to a downtrend when index closed below the June 28 intraday high of 3,946, causing Wave 4 to overlap Wave 1.

COMMENTARY
Since touching the 200-day moving average 3 weeks ago, the SPX corrected ~10%! I know I wrote about downside risk and choppy price action, but that was a bit more than I expected.

Recent price action is a good reminder that anything’s possible.  Some back and forth whipsawing wouldn’t surprise me one bit with Wall Street returning to the trading desks.

A few economic data points came out last week. All of them are backward looking, but could support a view that the U.S. economy hasn’t been impacted by recent rate hikes and can therefore handle more.

The Job Openings and Labor Turnover Summary or JOLTS for July was essentially unchanged from June. The August ISM data for manufacturing PMI remained the same as July with a reading of 52.8 (>50 indicates expansion in manufacturing activity). And total nonfarm payroll employment showed a 0.2% increase in unemployment, up to 3.7%.

U.S. markets are closed Monday (today) for Labor Day.

Best To Your Week!

P.S. If you find this research helpful, please tell a friend.   If you don’t, tell an enemy.

Sources: Bloomberg, CNBC, Hedgeye, US Bureau of Economic Analysis

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