Stock Market Outlook entering the Week of June 18th = Uptrend
- ADX Directional Indicators: Uptrend
- Price & Volume Signals: Uptrend
- Elliott Wave Analysis: Mixed
ANALYSIS
The stock market outlook starts the week in an uptrend, on the back of lower than expected inflation, no Fed rate hike, and the largest option expiration on record.
The S&P500 ($SPX) rallied 2.6% last week. The index is up ~15% since the start of the year, up ~26% from the bear market low (Oct 2022), and down ~9% from the high of the last bull market (Feb 2022).
SPX Price & Volume Chart for the Week of June 18 2023
No change in signal from the ADX, but both directional indicators (DI+/ DI-) sit at extreme levels. The last time the ADX set-up like this was at end of August, 2020. A 10% correction occurred during the next month.
Price/volume also shows an uptrend in place. Even the Innovator IBD 50 ETF ($FFTY) fund joined the action, rising past prior resistance levels.
SPX Elliott Wave Analysis for the Week of June 18 2023 – Bullish Count
Believe it or not, there’s no change in Elliott Wave counts. Both the bullish and bearish views allowed for last week’s move within their respective 5th waves. As mentioned last week, watch for a bearish MACD cross-over in the daily charts to confirm the end of the rally.
COMMENTARY
An impressive rally in U.S. stocks last week, with economic data showing the effect of higher interest rates.
The headline number for May consumer inflation data (CPI) came in at +4.0% Y/Y, which is down 0.9%. Core CPI also declined +5.3% Y/Y, which is a deceleration of 0.2%. The Producer Price Index (PPI) declined 0.3 percent in May, showing +1.1% Y/Y.
In response to slowing inflation, the U.S. FOMC announced a pause or “skip” in interest rate increases.
Retail sales were slightly better than expected, rising 1.6% Y/Y, showing that the consumer is still willing to spend. However, initial jobless claims appear to be bottoming, highlighting that producers remain cautious when it comes to labor costs.
And after a week of “dovish” data, market participants used Friday’s quadruple witching day to book some gains.
Best to Your Week!
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