The Safe Investing Blog

Stock Market Outlook entering the Week of November 5th = Uptrend

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

ANALYSIS
The stock market outlook flipped to an uptrend last week, with 2 of 3 signals showing bullish price action. There is a lot of volatility beneath the market’s surface, so tread carefully this week.

The S&P500 ($SPX) ramped 5.9% last week, with the index logging one of its best weekly of gains this year. The index starts this week just above the 50-day moving average.

SPX Price & Volume Chart for the Week of Oct 29 2023

The ADX directional indicators flipped bullish on Thursday, after the SPX gapped above the 200-day moving average.

Price/volume flipped to mixed on Thursday, based on a rally start Monday and a follow-through on Day 4 (Thursday).  With price breaching the 50-day moving average on Friday, the signal is in an uptrend to start the week.

Elliott Wave analysis shows a counter-trend rally in progress, but the higher-level wave count isn’t clear just yet.

SPX Elliott Wave Analysis for the Week of Nov 05 2023

Since it’s the first post of the month, so lets revisit the long-term view.  Dropping the bullish count coincided with a revisit of Elliott Wave guidelines and rules, particularly those related to Wave 4 overlaps with Wave 1.  As a result, the new count puts the SPX in the final wave sequence (Primary [C]) of the bear market that started in late 2021.

Last week’s rally coincided with a bullish crossover in the MACD, suggesting the current downward wave completed and a relief rally takes the SPX back towards 4500. The lack of a positive convergence for the RSI(5), prior the current overbought condition, suggestions the index remains within the downtrend, and another test of the October lows is coming.  The volatility of the price movement last week suggests a corrective wave, so we’ll go with the former, for now.

SPX Elliott Wave Analysis for the Week of Nov 05 2023

In both cases, the SPX should test support between 4200-4250 within the next week or so.

COMMENTARY
Market participants were in a buying mood last week, as evidenced by the high trading volumes and overnight gap ups.  In the U.S., the FOMC held rates constant.  Many analysts now expect that the hiking cycle is over; which means that rate cuts are closer. Even a bearish speech wasn’t enough to keep rates from selling off on the expectation of future cuts.  U.S. jobs data was a bit worse than expected, in that there weren’t as many job openings as expected.

The “earnings recession” continues in Q3.  Yes, some companies are inline or beating expectations.  But those expectations have been lowered throughout the year.  If you compare year over year earnings, the picture is abysmal.  Forward guidance has been the catalyst for many overnight moves in individual names.

Be on the lookout for more sales events this holiday season, as companies look to ramp up their 4th quarter numbers.  Amazon has already had 2 massive sales events (Prime days in July, and Prime “Big deal” days in Oct.), ahead of the “normal” Black Friday event later this month.

We could see an exciting week in the U.S. Treasury market, with several speeches from FOMC officials this week, including 2 from Powell.  Not to mention over 1,000 corporate earnings reports.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

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

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of October 29th = Downtrend

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

ANALYSIS
The stock market outlook shows a downtrend firmly in place, with all three signals highlighting bearish action.

The S&P500 ($SPX) fell 2.5% last week, as the index lost support at the 200-day moving average.

SPX Price & Volume Chart for the Week of Oct 29 2023

The ADX directional indicators maintain a downtrend signal.  Price/volume is also in correction mode, with a high level of institutional selling over the past 2 weeks.

Elliott Wave analysis also moves to a downtrend.  The longer-term bullish count we’ve been tracking this year was invalidated last week, as the SPX fell through the 4195 price level (the Minor 1 high on Jan 30).  The SPX will eventually reestablish a bullish view going forward, but for now the bearish count is now dominant.

SPX Elliott Wave Analysis for the Week of Oct 29 2023

COMMENTARY
PCE data showed inflation moderated in September, increasing +3.4% y/y vs. +3.4% in August.  Core PCE came in at +3.7% y/y, vs. +3.8% in August.

The “advanced” 3rd quarter GDP data also came out last week, showing the U.S. economy grew at +2.9% verses Q3 in 2022.  The 4.9% figure quoted by media outlets is the change versus Q2 2023.  More than likely, both figures will be revised lower in November, when the “second” estimate is released.

In addition to an onslaught of earnings reports, the latest employment reports hit the wire this week (JOLTS, ADP, NFP).

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

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

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of October 15th = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend, despite last week’s bullish move.

The S&P500 ($SPX) rose 0.4% last week.  The index found resistance at the 50-day last week, after finding support at the 200-day moving average two weeks back.  As of Friday’s close, the SPX was ~2% below the 50-day and ~2.5% above the 200 day moving averages.

SPX Price & Volume Chart for the Week of Oct 15 2023

The ADX directional indicators starts the week in a bearish trend, after briefly reversing midweek.

Price/volume remains mixed, waiting for price to recover the 50-day moving average.  That said, 3 distribution days after the start of the rally, isn’t great way to start a rally.

SPX Elliott Wave Analysis for the Week of Oct 15 2023 – Bearish Count

Elliott Wave analysis correctly anticipated last week’s bounce. The index exceeded the August 18th low, which did alter the waves counts slightly.  However, the EW signal remains mixed, with the SPX pinned between the 13 and 34 day moving averages, the RSI(5) coming off overbought levels, and the MACD showing a bullish cross-over.

The bearish count remains in play unless the SPX breaks resistance at 4430 (Sept 7).

SPX Elliott Wave Analysis for the Week of Oct 15 2023 – Bullish Count

The bullish view takes shows the first wave of a Minor 5 in progress, which is supported by a positive MACD cross-over.  Support level is last week’s low of 4216.

COMMENTARY
September PPI was higher than expected, and Augusts numbers were revised higher(!). Meanwhile, CPI was was mixed; headline was slightly higher, core was slightly lower.

• Headline = +3.7% y/y vs. +3.67% y/y last month
• Core = +4.1% y/y vs. +4.3% y/y last month

This week we’ve got Retail Sales on Tuesday, Housing data Wednesday and Thursday, plus a bunch of Fed speeches.  Last but not least, more EARNINGS!

#earnings for the week of October 16, 2023https://t.co/lObOE0dgsr$TSLA $NFLX $BAC $UAL $LMT $T $SCHW $ASML $AAL $GS $TSM $ISRG $JNJ $PG $MS $LRCX $LVS $PLD $ABT $AA $BX $IBKR $SFBS $SLB $USB $NOK $AXP $ELV $DFS $KEY $COLB $FCX $BK $JBHT $MTB $NDAQ $TFC $WAL $ERIC $CMA $CSX… pic.twitter.com/azx2tFcBkZ

— Earnings Whispers (@eWhispers) October 13, 2023

No post next week; look for an update on October 29.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

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

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of October 8th = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend, despite last Friday’s bullish reversal.

The S&P500 ($SPX) rose 0.5% last week, after finding support at the 200-day moving average.  As of Friday’s close, the index was ~2.5% below the 50-day moving average, and ~2% above the 200 day moving average.

SPX Price & Volume Chart for the Week of Oct 08 2023

The ADX directional indicators remain bearish.

Price/volume switched to mixed after a big up day on Friday, which came on Day 7 of the latest rally attempt.  That said, the latest attempt isn’t without issues, and those issues are why the signal’s not an outright uptrend.

SPX Elliott Wave Analysis for the Week of Oct 08 2023 – Bearish Count

As noted above, the index remains below the 50-day moving average.  Also, Tuesday’s close was lower than the start point of the rally.  Both of those data points make the price action favor an oversold bounce, rather than the start of a new bull market.  In either case, watch for follow-on strength or weakness in prices to confirm direction.

No change in Elliott Wave analysis, though the charts suggest the latest, downward wave has completed.  However, the SPX’s proximity to the August 18th low creates a bit of uncertainty in that statement, so more price action is needed.

SPX Elliott Wave Analysis for the Week of Oct 08 2023 – Bullish Count

Near-term resistance is the August 18th low (4335), and the support level is last week’s low of 4216.

COMMENTARY
Discussing personal finance and investing seems surreal as we witness the brutal start of a second ground war, this time in Israel.  The geographic scope is limited today, but it’s easy to imagine a much larger conflict unfolding, given the alliances within the region, which would impact global markets.

While I’m not an expert on Middle Eastern diplomacy, I am a student of history and geopolitics, with excellent reading comprehension skills.  Most of the online commentary takes a page from the current “engage and enrage” playbook now prominent on social media. The loudest “voices” provide political finger pointing; weak attempts to blame political opponents or identify singular/simple causes.  Real solutions won’t come in the form of short-form soundbites or clever one-liners about whose at fault for what.

Back in the U.S., politicians struggle to find real solutions to simpler problems, with the legislative branch of government snatching defeat from the jaws of victory last week.  After passing a stop-gap CR to fund the government for another 45 days, Republicans ousted the Speaker of the House. Passing another budget within 45 days was already a difficult task.  Now, the House of Representatives must elect a new speaker AND THEN pass their version of a budget.  Odds of that happening are low.

Last week’s employment data was mixed heading into Friday’s NFP release, with JOLTS showing higher job openings, but ADP showing lower payrolls versus expectations. Friday’s Non-Farm Payroll data blew away estimates, which caught equity and bond markets off guard and lead to a very volatile trading session.

The latest consumer price index (CPI) and producer price index (PPI) data is set for release this week, and major banks kick off Q3 earnings season.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

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

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of October 1st = Downtrend

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

ANALYSIS
The stock market outlook kicks off October in a downtrend.

The S&P500 ($SPX) fell 0.7% last week, breaking a major level of support; a trendline  dating back to the October 2022 low!  A quick recovery is needed this week in order for the trend to remain valid. As of Friday’s close, the index was ~3.5% below the 50-day moving average, and ~2% above the 200 day moving average.

SPX Price & Volume Chart for the Week of Oct 01 2023

The ADX directional indicators remain bearish, as does the price/volume indicator.  The SPX did start a rally attempt on Wednesday. and will need to show a follow-through on higher than average volume sometime after Monday.

SPX Elliott Wave Analysis for the Week of Oct 01 2023 – Bearish View

No change in Elliott Wave analysis either.  The index completed a 3rd Minute wave on Wednesday, but we still don’t know if the Minor wave is corrective (3 wave pattern) or  impulse (5 wave pattern).

SPX Elliott Wave Analysis for the Week of Oct 01 2023

The RSI(5) shows a bullish divergence, and the MACD histogram generated an inflection, increasing the probability of rising prices over the next 2 weeks or so.  Near-term resistance is at 4430, support at 4238.

Looking at the patterns from a longer term (weekly) viewpoint has something for both bulls and bears.  The bullish count shows that the current downtrend should be complete, with an oversold RSI(5), a bounce off the 34 week moving average, and no violation of the Minor 1 high of 4195.

SPX Elliott Wave Analysis for the Week of Oct 01 2023 – Bullish Count

The bearish count shows the SPX in the middle of the first wave down, with a bearish cross-over in the MACD, an increasing rate of change in the MACD histogram.

SPX Elliott Wave Analysis for the Week of Oct 01 2023 – Bearish Count

COMMENTARY
Last week did not disappoint, in terms of money flow and price action, during the week.  But you’d be forgiven for not noticing, as the index ended the week almost break-even. Headline PCE for August came in at +3.5% y/y, slightly higher than the +3.4% y/y reading in July. Core PCE fell to +3.9% y/y, from +4.3% y/y in July.

After a lot of hand wringing and gnashing of teeth, the U.S. Senate passed a continuing resolution on Saturday, which was then signed into law. The CR keeps the government funded for another 45 more days. Hopefully, the legislative branch can get their act together and finalize funding within that time period.

This week, we get JOLTS and Non-Farm Payroll data, but the main event starts next week with big banks set kick off Q3 earnings season.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

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

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

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!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

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

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Stock Market Outlook entering the Week of September 17th = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend, heading into the week with a mix of signals.

The S&P500 ($SPX) fell 0.2% last week.  As of Friday’s close, the index was ~1%below the 50-day moving average, and ~6% above the 200 day moving average.

SPX Price & Volume Chart for the Week of Sept 17 2023

The ADX directional indicators created a bullish cross-over last Monday, shifting the signal back to an Uptrend.  But, just like last week, they’re on the verge of crossing back as of Friday’s close; this time to a downtrend or bearish signal.

Price/volume remains in a downtrend with the index below the 50-day moving average and a high number of distribution days (8). The SPX hasn’t been able to confirm the latest rally attempt with high volume buying, and we’re well past the 4-10 day timeframe.  Friday’s quarterly option expiration skewed trading volume, but the index sliced through the 50-day nonetheless.

Elliott Wave analysis remains mixed, but both potential counts show higher risk to the downside.

SPX Elliott Wave Analysis for the Week of Sept 17 2023 – Bullish Count

The current bullish view shows a Minor C in its 3rd wave, with the possibility of either a 3 or 5 Minute wave downtrend.

The bearish count has several possible wave combinations for the current 3-wave or 5-wave down pattern (Minor 3 or Minor C).  For the Minor C wave, a 3 or 5 wave Minute pattern is also possible, aligning with the bullish count above.

Short-term resistance in both cases remains at 4541; first level of support is 4430.

SPX Elliott Wave Analysis for the Week of Sept 17 2023 – Bearish Count

COMMENTARY
Per last months CPI data, consumers are still experiencing the impact of high inflation, thanks to higher energy prices.  Producer prices (PPI) are feeling similar effects.

• August CPI(y/y)
  • Headline: +3.7% vs. +3.2% in July
  • Core: +4.3% vs. +4.7% in July
• August PPI (y/y)
  • Headline: +1.6% vs. +0.8% in July
  • Core: +2.2% vs +2.4% in July

Retail sales made headlines last week, showing an increase month over month. But the real story came in the form of year over year data, at +2.5% Y/Y, which is slightly lower than the +2.6% reading in July. If you were to adjust for inflation retail sales actually fell ~2% Y/Y.

These data points will feed into the Fed decision on whether or not to raise interest rates, ahead of the FOMC meeting on Wednesday. The price behavior of the bond market (as well as “Fed Futures” data) says the Fed won’t hike rates. The price behavior of the U.S. dollar shows a bit more skepticism.

Best to Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don’t, tell an enemy.

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

Invest Safely, LLC is an independent investment research and online financial media company.  Use of Invest Safely, LLC and any other products available through invest-safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.