Stock Market Outlook entering the Week of September 24th = Downtrend
- ADX Directional Indicators: Downtrend
- Price & Volume Signals: Downtrend
- Elliott Wave Analysis: Mixed
ANALYSIS
The stock market outlook kicks off autumn in a downtrend.
The S&P500 ($SPX) fell 2.9% last week. As of Friday’s close, the index was ~3.5% below the 50-day moving average, and ~3% above the 200 day moving average.
SPX Price & Volume Chart for the Week of Sept 24 2023
The ADX directional indicators made a bearish cross-over last Monday, re-shifting the signal back to an downtrend. More institutional selling last week confirms the downtrend for price/volume signals.
SPX Elliott Wave Analysis for the Week of Sept 24 2023 – Bearish View
No change in Elliott Wave analysis. Last week’s downside risk callout was prescient, as the SPX sliced through the short-term support level at 4430 and generating a bearish crossover in the MACD. The market enters the week right at the next resistance level (4330), with the oversold RSI(5) suggesting a bullish bounce. Near-term resistance is now at the prior support (4430).
COMMENTARY
The FOMC decided to maintain interest rates at their present levels, reiterating the “higher for longer” message and leaving the door open for future hikes. The U.S. treasury market increased yields on its own to compensate (2 year through the 30 year).
The shutdown showdown continues in the U.S., as the legislative branch of government showcases its inability to perform basic functions like funding itself. Watch for signs of U.S. Treasury intervention, which could be used to mitigate short-term market moves.
The United Auto Workers union expanded its labor strike against U.S. automakers. While the economic impact has been relatively small so far, work stoppages slowly ripple through automotive supply chains (i.e. smaller suppliers), creating damage that lasts well after agreements are reached.
This week brings with it some interesting events, in terms of money flows. It’s the last week in September, meaning both month and quarter end for equities; an important date for funds that measure performance in year-to-date terms. It’s also year-end for some mutual funds, which may drive some profit taking due to the uncertain economic outlook. And we’re entering the black-out period, ahead of Q3 earnings, when companies are not allowed to buy-back their stock.
Last but not least, August PCE data is released Friday pre-market.
Best to Your Week!
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