Stock Market Outlook entering the Week of November 19th = Uptrend
- ADX Directional Indicators: Uptrend
- Price & Volume Signals: Uptrend
- Elliott Wave Analysis: Downtrend
ANALYSIS
The stock market outlook heads into the third week of the current uptrend. There’s STILL no shortage of volatility within the stock market, despite the volatility index ($VIX) showing a low volatility environment.
The S&P500 ($SPX) gained 2.2% last week. The index starts this week 4% above the 50-day moving average, and ~6% above the 200-day moving average.
SPX Price & Volume Chart for the Week of Nov 19 2023
The ADX directional indicators remain bullish, as well as price/volume.
No change in Elliott Wave analysis versus last week, continuing to show a corrective-wave rally in progress. The negative divergence in the RSI(5), noted last week, was a false signal. Several wave counts are still possible.
SPX Elliott Wave Analysis for the Week of Nov 19 2023
COMMENTARY
October headline CPI came in slightly below expectations, and well below last year, fueling a jump in the indexes on Tuesday.
- Headline (Y/Y) : +3.2% vs. +3.7% last year vs. +3.3% expected
- Core (Y/Y): +4.0% vs. +4.1% last year vs. +4.1% expected
October PPI performed similarly to CPI:
- Headline (Y/Y) : +1.3% vs. +2.2% last year vs. +1.9% expected
- Core (Y/Y): +2.4% vs. +2.7% last year vs. +2.7% expected
Last week’s price movement definitely fell into the “high volatility” category. But that can mean downside AND upside moves. For example, Target ($TGT) gapped up ~14% after their earnings report, then added another ~3.5% intraday. Walmart ($WMT), on the other hand gapped down 6.5% before market open on Thursday, then lost another 1.7% intraday. Those types of moves suggest both stocks were mispriced, either in the days prior to the earnings report, or afterwards.
And while you can find examples of up and downside volatility within many asset classes, the “magnificent seven” (i.e. $AAPL, $AMZN, $GOOG/$GOOGL, $META, $MSFT, $NVDA, $TSLA) drive equity index performance right now, although $TSLA hasn’t been pulling its weight this month.
A short trading week coming up, with U.S. markets closed on Thursday for the Thanksgiving holiday and an early end to Friday’s session (1pm EST). There’s a 20-year treasury bond auction Monday afternoon (1pm). If the previous longer-term bond auctions are any indication, this one will be lousy, send rates higher and equities lower. Tuesday afternoon, we get a 10-year TIPS auction and release of the latest FOMC meeting minutes.
Best to Your Week!
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