Weekend Stock Market Outlook – March 28 2021

Stock Market Outlook entering the Week of March 28th = Uptrend

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

ANALYSIS
The stock market outlook flipped after receiving confirmation of the new uptrend on Friday.  Better late than never, I guess.

Technical analysis of daily SPX prices

2021-03-28-SPX Trendline Analysis-Daily

The S&P500 ($SPX) trended lower for most of the week, before snapping finding support at the rising trendline and the 50-day moving average and snapping back sharply on Thursday and Friday.

The ADX still shows bearish price action in control, while two distribution days fell off the count, and one was added.  Friday’s action qualified as a follow-through day, so the price/volume signal switches to an uptrend with two asterisks.

Asterisk #1:  The number of distribution days is very high, especially considering this rally is just getting started.

Asterisk #2:  The follow-through day occurred outside the 10-day window that you’d typically like to see a strong follow-through.

Technical analysis of daily SPX prices

2021-03-28-SPX Elliott Wave Analysis-Daily-Primary1

The Elliott Wave count shows the S&P is now two waves into a Minor 5.

COMMENTARY
Not much in the way of economic news last week, although the Suez Canal blockage is something to keep an eye on.

One interesting note from the stock market was that as of Friday’s close, the S&P500 has risen ~81% from the market low on March 23, 2020! That’s an amazing 1 year return!

Best to Your Week!

Posted in Historical Data, Market Trends | Tagged , , , , | Comments Off on Weekend Stock Market Outlook – March 28 2021

Weekend Reading – Money and More – March 27 2021

Money

“…sometimes it MUST go down in order to make the upside sustainable.”

“…different kinds of buyers and sellers come out at different times”

“…looking at a range of carefully selected metrics is useful, if only for assessing the probability of what comes next.”

And More

Posted in Current Events, Investing, Money Management, Personal Finance | Tagged , , | Comments Off on Weekend Reading – Money and More – March 27 2021

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of March 20th = Downtrend

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

ANALYSIS
The stock market outlook is still showing a downtrend; confirmation of the new uptrend hasn’t happened yet. The back and forth of price action continues to create “whipsaw” effects (false signals and/or delay new ones).

Technical analysis of daily SPX prices

2021-03-21-SPX Trendline Analysis-Daily

The S&P500 ($SPX) trended lower last week. The ADX flipped back and forth between bullish and bearish readings during the week (ever so slightly), landing in bearish territory at the time of this post. For the price/volume signal, 2 more distribution days were added to the count, bringing the total to 9. That level of selling isn’t great for the start of a new rally, but the market as a couple more days to get its act together. Price is still above the 50-day, so the signal remains “mixed”.

Technical analysis of daily SPX prices

2021-03-21-SPX Elliott Wave Analysis-Daily-Primary1

The current Elliott Wave count shows the S&P is one wave into the Minor 5. I’ve seen many different counts, which is common when the market is trying to figure out which way it wants to go.

COMMENTARY
Last week, many readers took issue with the downtrend signal, because price had just reached an all time high. They’re not “wrong” per se, as anyone looking at a 6 month or 1-year chart can see prices trending higher (myself included). Not to mention how counter-intuitive it is in the face of a massive government stimulus, direct payments to taxpayers, continued bond purchases by the Fed, and a reopening economy.

The questions are actually a good sign; it means readers are thinking for themselves and aren’t blindly following any one signal.

The purpose of the Weekend Market Outlook series is to provide an example of how using rules can limit risk when they’re part of a repeatable decision-making process. That means showing the good with the bad; when rules work and when they don’t. Unfortunately, any rule that limits losses can also limit gains.

If I adjust a signal because I don’t like it, I’ve changed the rules for that one point in time. The “process” is no longer “mechanical” (i.e. repeatable), which makes back-testing and evaluating performance more difficult. Instead, at the end of each year, I analyze whether the system reduced risk and if adjusting the rules could improve long-term performance. Sometimes new rules are better, sometimes they aren’t. At this point, I’m assuming an adjustment will be needed, but you know what people say when you assume.

This week is the one year anniversary of the bottom for the pandemic sell-off. While things are definitely NOT back to normal (unemployment, masks, and vaccines, oh my), the main concern has shifted to interest rates. Treasury yields continue to rise, with investors and traders focused on the 10-year as a sign of inflation. Central banks continue to make the case for keeping interest rates low, and that higher inflation will be tolerated for a while.

Some argue that interest rates aren’t really signaling high inflation as much as they are just returning to normal. Regardless, increasing interest rates are bad news for stocks with valuations that rely heavily on future earnings for any chance at profitability (we’re looking at you SPACs).

Best to Your Week!

Posted in Historical Data, Market Trends | Tagged , , , , | Comments Off on Weekend Stock Market Outlook

Weekend Reading – Money and More – March 20 2021

Money

Posted in Current Events, Investing, Money Management, Personal Finance | Tagged , , | Comments Off on Weekend Reading – Money and More – March 20 2021

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of March 14th = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend to start the week, as we await confirmation of the new uptrend. The current price action is choppy at best, thanks to sector rotation, and that “whipsaw” effect will generate false signals and/or delay new ones.

Technical analysis of daily SPX prices

2021-03-14-SPX Trendline Analysis-Daily

The S&P500 ($SPX) rallied from the 50-day moving average and briefly touched an new all time high, though trading volumes left a lot to be desired.

The ADX shows a weakening “weak” trend, but it’s still bearish. From a price & trading volume perspective, the signal is back to mixed as we wait for confirmation of the rally over the next 9 days (>1.5% gain on higher than average volume prior to March 22nd).

Technical analysis of daily SPX prices

2021-03-14-SPX Elliott Wave Analysis-Daily-Primary1

True to form and as eluded to last week, downtrends  continue to last about 3 weeks in this run up from the pandemic low.  The S&P remained above 3700, and took another run at all time highs.  So the bullish alternative appears to have won out (no surprise there), and the Elliott Wave chart was updated to match.

COMMENTARY
The big news, last week, came out of Washington D.C., with the passage and signing of the American Rescue Plan (ARP).  Among other things, ~$400 billion in direct payments will begin making their way into the hands of consumers via $1400 checks and direct deposits.  That money “should” give the stock market some kind of boost, via increased spending or just outright investment in stocks.

In other news, the S&P500 will be shaking things up a bit on March 22. NXP Semiconductors (NXPI), Penn National Gaming (PENN), Generac Holdings (GNRC) and Caesars Entertainment (CZR) will be added to the index before market’s open on March 22. They’re replacing Flowserve (FLS), SL Green Realty (SLG), Xerox Holdings (XRX) and Vontier (VNT), which are moving to other indexes.

Best to Your Week!

Posted in Historical Data, Market Trends | Tagged , , , , | Comments Off on Weekend Stock Market Outlook

Weekend Reading – Money and More – March 13 2021

Money

Historically, women have been less likely than men to invest, but that gap is slowly closing.

“The cryptocurrency collectibles that are taking the digital art and music world by storm”

And More

Source: Crash.net

Posted in Current Events, Investing, Money Management, Personal Finance | Tagged , , | Comments Off on Weekend Reading – Money and More – March 13 2021

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of March 7th = Downtrend

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

ANALYSIS
The stock market outlook starts March in a downtrend, on the back of institutional selling.

stock-market-outlook-2021-03-07

2021-03-07-SPX Trendline Analysis-Daily

More selling for the S&P500 ($SPX) last week.  Prices dropped below the 50-day moving average on Thursday on higher trading volume, then rallied on Friday to close just north of that level.

The ADX shows a weak trend overall (reading below 20), but one that is strengthening with bearish price action; similar to late October 2020.

We added a few more distribution days last week, and since prices fell through the 50-day moving average, the price & volume signal shifts to a downtrend. The good news is that Friday’s strong rally is the first day of a new rally attempt. Be on the lookout for high-volume trading days.  A follow-through day (>1.5% gain on higher than average volume)  between March 10th  and March 22nd) would confirm a new rally, while additional distribution days would confirm a longer correction.

Technical analysis of daily SPX prices

2021-03-07-SPX Elliott Wave Analysis-Daily-Primary1

Elliott Wave shows a downtrend as well.  At the moment, it looks like the Minute 4 wave of a Minor 3 wave.  If this is true, then I’d expect some further upside Monday, followed quickly by another leg down to complete the Minor 3 (somewhere just below 3700).

Until the S&P breaches 3700, there’s still hope for a more “bullish alternative” (that we haven’t completed the 5th wave yet, and prices will take another run at new highs before we see a “real” correction).  The downtrends since the pandemic started have been ~3 weeks.  So just as we mentioned the wave completing after 1.5 weeks, this downtrend should be nearly over as well…if symmetry continues to hold.

COMMENTARY

As expected, the focus on interest rates sent high-tech stocks plunging, and we’re seeing the latest round of sector rotation.  Investors looking for growth are feeling the pain, like the those who invested in ARK funds.  Meanwhile, income and dividend plays held up fairly well, as did commodities.

Best to Your Week!

P.S. The 2020 Annual Performance Report is out; check it out here: https://www.invest-safely.com/stock-market-outlook-2020-performance.html

Posted in Historical Data, Market Trends | Tagged , , , , | Comments Off on Weekend Stock Market Outlook