Stock Market Outlook entering the Week of January 21st = Uptrend

• ADX Directional Indicators: Uptrend
• Price & Volume Signals: Uptrend
• Elliott Wave Analysis: N/A

ANALYSIS
The stock market outlook continues to show an uptrend in place, with the S&P500 ($SPX) gaining 1.2% last week.  The move pushed the index to a new, all time high, exceeding the market top in December 2021.

The index sits ~4.5% above the 50-day moving average, and ~9.5% above the 200-day moving average.

SPX Price & Volume Chart for the Week of Jan 21 2024

No change in the ADX and price/volume signals based to start the week.  The ADX did flip briefly midweek, but not by a large enough margin to trigger a signal.  On the price/volume side, distribution days remain elevated (5).  Watch for addition selling pressure, especially with the market at all time highs and above key support levels (i.e. 50-day).

For Elliott Wave, reader feedback late last year suggested Elliott Wave was too complex for use for an introductory example of trading signals and systems.  On the other side of that argument, Elliott Wave “purists” never liked the fact that these counts didn’t provide future targets or completed waves.

In either case, using Elliott Wave does require a lot of time…and that’s just to get “bad” at it.  So the stock market outlook will move on, and incorporate a different signal; one that is more data-based like the ADX.

COMMENTARY
December retail sales came in much higher than expected (+o.6% vs +0.3%), in an otherwise quiet week, data-wise.  Aside from all those Fed speeches, monthly option & futures expiration also influenced price and volume action last week; Wednesday was monthly expiration of volatility options (i.e. “vixperation”), and Friday’s monthly option expiration included long-term hedges (i.e. LEAP options).

This week, the market will react to initial estimates of 4th Quarter GDP (Thursday) and December PCE (Friday).

Best to Your Week!

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Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

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