The Safe Investing Blog

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

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

ANALYSIS
The stock market outlook remains in an uptrend, as the S&P500 ($SPX) accelerated higher the first week in November.  The past 5 trading days added another 2% to the S&P’s already impressive October performance. The index sits ~11% above the 200-day, and 5% above the 50-day. Year to date, the S&P500 is up an impressive 25%.

SPX Price & Volume Chart for the Week of November 07 2021

The ADX shows bullish price action and trend, as does price/volume.

SPX Technical Analysis for the Week of November 07 2021

Elliott Wave still shows an uptrend; the 3rd wave of Minor wave 1 rolls on.

COMMENTARY
As signaled for several months, the U.S. Federal Reserve will start to taper monthly bond purchases, reducing them by $15 billion per month. They’re starting from $120 billion per month, so the program won’t be completely stopped until next June.

But the Fed still sees inflation as transitory, so there’s no rush to raise interest rates. Basically, this means that the Fed will continue to provide stimulus to the economy, just not as much as they have been.

Historically, November and December are positive months for the S&P. Add the better than expected October jobs report, and you’ve got good reason to be bullish heading into 2022.

But don’t blindly chase! The VIX hit 15 mid-week, which has been the low end of it’s price range for some time now. The S&P’s price level, relative to the 200 day, is also extended. So use consolidations and corrections to your advantage, knowing that they have a high probability of being a buy the dip opportunities.

Best to Your Week!

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Stock Market Outlook entering the Week of October 31st = Uptrend

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

ANALYSIS
The stock market outlook remains in an uptrend. Happy Halloween!

SPX Price & Volume Chart for the Week of October 31 2021

The S&P500 ($SPX) continued higher to close out October. The index now sits ~9% above the 200-day, and 3% above the 50-day. Over the past 19 trading days, the S&P rose ~325 pts (~7.5%). If that pace continues over the rest of 2021 (43 trading days left), the S&P would end the year near 5300!

The ADX and price/volume indicators remain bullish, and the index added 1 distribution day last week.

SPX Technical Analysis for the Week of October 31 2021

Elliott Wave still shows an uptrend; appears to be the 3rd wave of a Minor 1 wave. A small divergence developed in the RSI; a short, 4th wave correction isn’t out the question near term.

COMMENTARY
While September and October lived up to their reputation as volatile months, October gave investors a lot more treats than tricks this year. Essentially hitting the low on the first trading day, the S&P rallied higher for most of the month!  Not even the disappointing results from Amazon and Apple or rising treasury yields were enough to slow it’s roll.

A little over half of the S&P500 has reported earnings so far, and Q3 earnings continue to exceed expectations (some big tech names notwithstanding).

The biggest issue facing the economy right now isn’t COVID or infrastructure spending packages. It’s the supply chain; more specifically throughput. There’s either too much supply verses the capacity to move it, or there’s not enough supply to meet demand. Underpinning both are labor issues. And unfortunately, there are no easy fixes…let alone quick ones.

With the S&P at all time highs, last week was an excellent time for some profit taking / asset reallocation. The smart move was to prune your winners and move the profits to other areas that were taking a break. That could have been something like commodities, if that’s part of your portfolio.  Or, if you’re focused on stocks, it could have been something like energy/financial sector ETFs…even the Russell 2000 index.

Happy Halloween and Best to Your Week!

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 are 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 24th = Uptrend

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

ANALYSIS
A strong week of trading put the S&P500 back at all time high’s and all three signals in the green, so the stock market outlook remains in an uptrend to start the last week of October trading.

SPX Price & Volume Chart for the Week of October 24 2021

The S&P500 ($SPX) rallied again last week, putting the index back at all time highs, albeit a bit extended from technical support levels.  The prior support-turned-resistance trendline did little to slow the advance.

The ADX shows a bullish trend in place, and price/volume action remains in an uptrend as well. The Elliott Wave uptrend remains in place too.

SPX Technical Analysis for the Week of October 24 2021

COMMENTARY
S&P500 companies continue to outperform, in terms of Q3 earnings.  According to FactSet, 84% of companies have beaten EPS estimates to date for Q3, which is tied for the 3rd highest percentage since FactSet began tracking this metric in 2008.

Source: FactSet

I expect some volatility is coming our way this week, in terms of individual stocks names, since so many companies are reporting.  Here are some you might be interested in, courtesy of Earnings Whispers:

Source: Earnings Whispers

Now that we’re back at all time highs, please, please, please don’t get complacent. The S&P500 is up 21% year to date and hasn’t seen a proper 10% correction since the pandemic crash in early 2020.  The best time to prune your positions is when they’re profitable.  If you do so, you can buy more shares when the market corrects again.

Best to Your Week!

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 are 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 17th = Uptrend

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

ANALYSIS
Last Thursday’s strong showing put the stock market outlook back into an uptrend, with confirmation from Elliott Wave and price/volume signals.

SPX Price & Volume Chart for the Week of October 17 2021

The S&P500 ($SPX) rallied higher last week, with Thursday’s strong move putting the market back in rally mode. Prices cut through the bearish trendline, and the index closed at it’s 50-day. Trading volume showed a follow-through day as well, putting the price/volume signal back into a uptrend. With a new rally in play, the distribution day count gets reset.

Friday’s close had the ADX directional indicators cross-over by the slimmest of margins. Since they’re essentially equal, the signal shifted to mixed, with the full expectation it will turn into an uptrend shortly.

SPX Technical Analysis for the Week of October 17 2021

For Elliott Wave, market action confirmed the bullish story told by technical indicators last week. The S&P might encounter some resistance as it tests a former support trendline, so it’s still possible that the S&P500 retests something close to 4300.

Longer-term, initial expectations are for Intermediate Waves 1 and 5 to be similar. Intermediate Wave (1) rose 1396 points over 13 weeks. If Intermediate Wave (5) is similar, then we’re looking for a ~1400 pt move from the Wave (4) low over the remainder of 2021. I admit that kind of pattern is hard to imagine right now, as it corresponds to a rally of 27%% from Friday’s close by the beginning of next year (5674 by the first week in January 2022 to be specific)!

COMMENTARY
Banks kicked off the Q3 earnings season with a strong showing. And September retail sales numbers came in strong last week, with a ~14% increase in retail spending over last September.

On the consumer side, inflation is still running above target…not that you needed a report for that info. You see it everyday whenever you spend your money! But it’s even having a large impact on the cost-of-living adjustment for Social Security now, and that hasn’t happened in a long time. The 2022 increase will be almost 6%, and that’s the highest adjustment 1982!

Best to Your Week!

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 are 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 10th = Downtrend

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

ANALYSIS
The stock market outlook remains in a downtrend, as we await confirmation of a new rally.  The S&P500 ($SPX) tried to break a bearish trendline last week, but was unable to do so.

The ADX shows that downtrend strength peaked last week.  That’s good news for bullish investors, even though the signal remains in a downtrend.

SPX Price & Volume Chart for the Week of October 10 2021

From a price and volume perspective, the signal remains mixed.  The S&P picked up another distribution day last week, and price remains below the 50-day moving average.

The total count of distribution days stands at 6, which is a bit elevated, but not too severe.  Of more concern is the cluster of 4 showing high levels of institutional selling the last week of September.  Since we’re testing the bearish trendline again, another burst of high volume selling would indicate the correction isn’t over.

SPX Technical Analysis Chart for the Week of October 10 2021

For Elliott Wave, the ABC corrective pattern appears to be complete, and along with it Intermediate (4).   The technical indicators support this hypothesis; a positive divergence** in the RSI  and a cross-over of the MACD histogram (both circled in green).

I’m watching for a break above the Wave B high or a test of the Wave C low before a signal change.  If the correction is over, the S&P won’t drop below that low, and the S&P500 has moved into Intermediate (5), which could last ~5 months if it mirrors Intermediate (1).

**A positive divergence is a higher low on the RSI, with a corresponding lower low in price, which suggests that traders weren’t as eager to sell at the lower price level.

COMMENTARY
Commodities, particularly energy, are in the news lately, as the price of oil, natural gas, and coal rocket higher. But if you take a peak below the surface, these trends have been in a place for a while…they just haven’t been dramatic enough to reach headline status!

Price chart for Natural Gas | Source: https://tradingeconomics.com/commodity/natural-gas

In the case of natural gas, the price began trending higher back in June of 2020, and really began accelerating in June of this year.

Likewise, coal began it’s uptrend early in 2020, but really began moving in September of that year. The move over the past two months looks like a blow-off top. The move in coal could be over, and you’re just hearing about it now.

Price chart for Coal | Source: https://tradingeconomics.com/commodity/coal

Obviously, neither of these trends are sustainable. But both of them highlight the need to do your own research, rather than wait for headline news.  There’s a reason traders say “Buy the rumor, sell the news”.

On the political front, the U.S. Congress agreed to a temporary deal that raises the debt ceiling and avoiding default. The next round of posturing will pickup again in a month or so. It’s hard to know what the next Fed meeting will bring; will they or won’t they begin to taper their quantitative easing. Inflation is running hot, while labor shortages and supply chain issues continue to stress the economy.

And lets not overlook the recent sabre rattling in the sky over Taiwan. A small misstep could have global implications and render most of our current narrative moot.

10 weeks until Christmas! Given the current environment, now might be a great time to start shopping!

Best to Your Week!

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 are 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 3rd = Downtrend

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

ANALYSIS
The stock market outlook kicks off the week in a downtrend, as 2 signals finally turned bearish at the same time during last week’s trading sessions.

SPX Price Chart for the Week of October 03 2021

The S&P500 ($SPX) opened last week at the 50-day moving average, but it’s actually the 34-day moving average that provided resistance.

The ADX shows a strengthening bearish trend, keeping that signal in a downtrend. Price and volume signal moves from an uptrend back to mixed, as price was unable to hold the 50-day moving average after last Monday. Distribution days are still relatively low.

SPX Price Chart for the Week of October 03 2021

For Elliott Wave, the market took the second option from last week’s post:

Wave [a] of Wave 4 completed, we’re in Wave [b], and Wave [c] will retest the 4300 low to complete the correction near 4246.

The correction appears to be Minor waves (rather than Minute), so I made a few changes to the wave count.

COMMENTARY
Concerns over interest rates and inflation are scapegoats for the recent sell-off. Rising rates tend to put a dent in large cap tech stocks, so we may see indexes like the NASDAQ lag small caps. It’s no surprise that the S&P500 struggled lately as well, given that 20% of that index is Apple, Amazon, Google, Microsoft and Facebook.

Timing-wise, the last time we had a ~5% correction was? Last September! It’s possible that we have a similar October in the works too, which would entail a rally back near the all time highs, then a sell-off back to the September low. None of that would be a surprise, given October’s historical volatility.

Best to Your Week!