Weekend Stock Market Outlook

Stock Market Outlook entering the Week of July 26th = Uptrend

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

ANALYSIS
The stock market outlook uptrend continues; no change in the signals last week.

Technical analysis of daily SPX prices

2020-07-26-SPX Trendline Analysis-Daily

The S&P500 ($SPX) remains above key support levels, the ADX remains bullish, and institutional selling remains low.

Technical analysis of daily SPX prices

2020-07-26-SPX Elliott Wave Analysis-Daily-Intermediate A

No change to the Elliott Wave count; the Minor 4 wave completed at the end of June, and the Minor 5 in progress since then. With the market selling off Thursday and Friday, it looks like S&P completed the (3) sub-wave last week. Based on this count, I wouldn’t expect prices to fall much further, since first waves and fourth waves aren’t allowed to overlap; (1) completed at 3184.

All that said, now is not the time to be complacent. It’s earnings season, and your favorite stock may just be one conference call away from a major selloff; just ask Intel shareholders.

COMMENTARY
Not the best week for equities. The E.U. agreed on a stimulus package, but that was about the only positive. The U.S. is still negotiating a second packages, but current benefits set to expire at the end of the week. Initial jobless claims increased for the first time since March.

As if Q2 earnings and a global pandemic weren’t enough to keep markets occupied, geopolitical tensions came back into the headlines last week. The U.S. State Department ordered China to close its Houston consulate, alleging the site was part of a Chinese espionage effort using diplomatic facilities across the US. In response, China ordered the U.S. to close its consulate in Chengdu.

Earnings season kicks into high gear this week, with almost 40% of the S&P500 reporting.

Best to your week!

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Weekend Stock Market Outlook

Stock Market Outlook entering the Week of July 19th = Uptrend

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

ANALYSIS
The stock market outlook uptrend continues, with the ADX, Price/Volume, and Elliott Wave all in the green.

2020-07-19-SPX Trendline Analysis-Daily

The S&P500 ($SPX), closed above the resistance trendline pretty consistently. But it was unable to get past the June 8th high.  The ADX remains bullish. Distribution day count is still low and recent ones have below average trading volume.

Technical analysis of daily SPX prices

2020-07-19-SPX Elliott Wave Analysis-Daily-Intermediate A

No change to the Elliott Wave count; 5th wave still in progress. We do have a pretty good set-up for a new high on lower relative strength (RSI divergence) that was missing back in early June, which can be seen in both the daily and weekly views.

Technical analysis of weekly SPX prices

2020-07-19-SPX Trendline Analysis-Weekly

COMMENTARY
Bank earnings were better than expected, thanks in large part to “trading” based revenues.  That said, here are a couple of quotes from the conference calls (hat tip to Steve Blumenthal):

“May and June will prove to be the easy bumps in terms of this recovery. And now we’re really hitting the moment of truth, I think, in the months ahead.”

– Jennifer Piepszak, CFO, JPMorgan

“Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter.”

– Charlie Scharf, CEO, Wells Fargo

“I don’t think anybody should leave any bank earnings call this quarter simply feeling like the worst is absolutely behind us and it’s a rosy path ahead.”

— Mike Corbat, CEO, Citigroup

Earnings season ramps up this week, with ~100 companies reporting results.

Best to your week!

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Weekend Stock Market Outlook

Stock Market Outlook entering the Week of July 12th = Uptrend

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

ANALYSIS
The stock market outlook uptrend remains in place this week, though there wasn’t a lot of activity either way. That’s not to say there wasn’t ANY activity in the markets; Tesla stole the show by jumping ~20%.

Action in the ($SPX) was flat last week. The ADX remains bullish. Distribution days are spread out, so the elevated count (6) isn’t cause for concern.

Technical analysis of daily SPX prices

2020-07-12-SPX Trendline Analysis-Daily

The index closed at the resistance trendline on Friday. Bulls are expecting a gap up on Monday that negates the trendline, bears are expecting a drop back to support levels.

Technical analysis of daily SPX prices

2020-07-12-SPX Elliott Wave Analysis-Daily-Intermediate A

No change to the Elliott Wave count this week (still in a 5th wave, looking to get past the June 8th high), though there was a small divergence in the RSI (slightly higher close/ slightly lower RSI reading on Friday vs Monday).

COMMENTARY
Big name U.S. banks begin Q2 earnings reports this week, so we could be in for some volatile moves. Since they are typically used for income investing strategies, be on the lookout for dividend cuts and or changes in the payout ratio.

Best to your week!

Posted in Historical Data, Market Trends | Tagged , , , , | 2 Comments

Market Insights from JP Morgan for 2020 Q3

Each quarter, JP Morgan Asset Management provides a ton of useful information via its “Guide to the Markets”:

“a comprehensive array of market and economic histories, trends and statistics through clear, compelling charts and graphs you can share with your clients.”

You can find this little gem on JP Morgan’s Asset management website, including the “Guide to the Markets” PDF and audio commentary.  Topics include Equities, Fixed Income, International markets, the U.S. economy, as well as alternative investments and investor behavior.

JPMorgan – 3Q 2020 – Guide to the Markets


Source (PDF): JP Morgan Guide to the Markets: Q3 2020
https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-the-markets/viewer

Posted in Current Events, Historical Data, Investing, Market Trends, Uncategorized | Tagged , , , , , , ,

Weekend Stock Market Outlook

Stock Market Outlook entering the Week of July 7th = Uptrend

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

ANALYSIS
The stock market outlook uptrend remains in place this week.

The S&P ($SPX) rebounded last week, and a new support line is in play. The ADX Directional indicators cross-over again, bullishly this time, marking 4 signal changes in the past 4 weeks. Price / volume remains well behaved.

Technical analysis of daily SPX prices

2020-07-05-SPX Trendline Analysis-Daily

The 200-day moving average provided support last week, so now its sights are set on that March to June trendline.

No change to the Elliott Wave count this week.

Technical analysis of daily SPX prices

2020-07-05-SPX Elliott Wave Analysis-Daily-Intermediate A

COMMENTARY
With Q2 in the books, it’s a great time to take stock of your personal financial situation and goals for the year. The first half of 2020 was a wild ride and everyone’s finances were impacted in some way.

The recovery, while impressive in some aspects, is not evenly distributed.  The Nasdaq was up 10.6% for the first half of the year, while the Dow  Jones Industrial was down 10.6% for the year.  Lowes (LOW)a dividend king, is back at all time highs, while Cincinnati Financial (CINF), another dividend king, is down almost 40% for the year.

Review your current situation and figure out if any changes are necessary.  Do you need to take some profits?  Change your allocations or strategy?  Redeploy some capital?

Best to your week!

Posted in Historical Data, Market Trends | Tagged , , , ,

Weekend Stock Market Outlook

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

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

ANALYSIS
The stock market outlook remains in an uptrend again this week, but is really just one down day away from a downtrend.

Technical analysis of daily SPX prices

2020-06-28-SPX Trendline Analysis-Daily

A down week for the S&P ($SPX). Tuesday’s sell-off made short work of the April/May support line; new resistance lines are shown.

We’ll see if the 200-day moving average provides support this week, and the 50-day moving average isn’t far behind. If we see vertical violation of the 50-day (i.e. big price move below the average on high trading volume), this signal will also turn bearish.

The ADX Directional indicators cross-over again, back into bearish territory. Price/volume is still in an uptrend, but selling is elevated…at least the distribution days aren’t bunched together.

Technical analysis of daily SPX prices

2020-06-28-SPX Elliott Wave Analysis-Daily-Intermediate A

For Elliott Wave, the rally I expected to see last week didn’t materialize, but the count hasn’t been invalidated…yet. It looks like we have an ABC 4-wave, with the 4th wave almost complete.  Since Wave 4 can’t overlap Wave 1, a move below 2955 invalidates this count.  Just like last week, the uptrend signal remains in place to start the week, but let price be your guide.

COMMENTARY
My original assumption was that the SPX would rally from the March low into April and May on all of the stimulus programs, as well as other general “improvements” relative to everything being shut down.

Then, as economies reopened and we experienced 2nd waves of COVID, prices would retreat. I assumed this would happen in May, but uncoordinated shutdowns and reopenings look to have drawn out the market impact (flattened the curve, so to speak).

The severity and duration of the second leg down will likely hinge on how much support the government provides. I can imagine scenarios where the U.S. FED starts purchasing index ETFs to stem a selloff!

Second quarter earnings are just around the corner. Since many companies stopped providing forward guidance, expect more volatility when announcements are released.  Also, I’ve seen some discussions about the impact of end of the quarter rebalancing, so stay sharp.

Best to your week!

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Weekend Stock Market Outlook

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

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

ANALYSIS
The stock market outlook remains in an uptrend this week, but is the current rally running out of steam?

Technical analysis of daily SPX prices

2020-06-21-SPX Trendline Analysis-Daily

The S&P ($SPX) rallied Monday and Tuesday, but price drifted lower afterwards. We briefly dipped below the upward trendline on Monday as well, but no enough to call it off.

The ADX Directional indicators crossed-over again, back into bullish territory, but the strength we saw two weeks back is gone. Institutional selling, in the form of distribution days, isn’t elevated yet, and price action in growth stocks remains strong. Friday’s massive volume was thanks, in part, to option expiration.

Technical analysis of daily SPX prices

2020-06-21-SPX Elliott Wave Analysis-Daily-Intermediate A

For Elliott Wave, I checked other possible retracement levels, and found 85.4%…interestingly, it overlaps the recent high on June 8th. That kicked off several discussions about the current count, the lack of divergence in the RSI/MACD, etc.

The uptrend signal remains in place to start the week, but let price be your guide.  I’ve seen a bullish count that put price targets for a 5th wave above 3393 (which would invalidate the Primary A wave count), and bearish counts that already have the S&P in the next leg of a downtrend (which would invalidate the Intermediate A wave).

Near-term, watch the June 8th high and the the June 15th low.

COMMENTARY
The big news last week came from the U.S. Fed, as they announced plans to purchase individual corporate bonds (versus their ETF purchases thus far) to provide more liquidity to the credit markets.

The drawback?  The risk/reward relationship for bonds is screwed up.  The Fed isn’t buying because they bonds are a good investment.  They’re buying bonds precisely because those bonds are bad investments.

Yes, this does continue to support “zombie” companies, but at the moment, employment is the more important concern.  But at some point, there will be consequences, and those consequences will impact people who can least afford it (i.e. people who rely on fixed income investments).

Best to your week!

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