The Safe Investing Blog

Stock Market Outlook entering the Week of April 18th = Uptrend

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

ANALYSIS
The stock market outlook shows an uptrend remains in place to start the week of April 18th.

2021-04-18-SPX Trendline Analysis-Daily

The S&P500 ($SPX) continued higher last week, and sits ~14% above the 200 day moving average…again. It sits 5% above the 50-day, which is roughly the distance to the lower trendline as well.

The ADX rose above 20 for the first time this year, showing a strong bullish trend in place. A few distribution days still fall within the 5 week window, and even those remaining days don’t really reflect the recent bullishness.

2021-04-18-SPX Elliott Wave Analysis-Daily-Primary1

The S&P in the third wave of a Minor 5 according to Elliott Wave counts. A negative divergence in the RSI popped up on Friday’s all time high.

COMMENTARY
Much like a shot of adrenaline running through our veins, the impact of stimulus checks has shown up in economic measures like retail sales, earnings, and inflation. We’re likely to see extraordinarily positive earnings this quarter (since Q2 2020 was so poor), and retail sales will also rise as the economy re-opens this summer, both of which are supporting of a rising stock market.

But inflation is also likely to spike, and the U.S. Fed has already stated that any near-term increase will be transitory. meaning they won’t do much of anything unless something really crazy happens (e.g. hyperinflation).

All these factors continue support further gains from the stock market this quarter, but don’t be surprised if we see some profit taking and/or sector rotation as investments hit overbought and oversold levels.

Best to Your Week!

Stock Market Outlook entering the Week of April 11th = Uptrend

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

ANALYSIS
The stock market outlook shows an uptrend remains in place to start the week of April 11th.

2021-04-11-SPX Trendline Analysis-Daily

A strong showing for the S&P500 ($SPX) last week. The ADX shows a strengthening, bullish trend taking shape, and a few more distribution days fell outside of the 5 week window, improving the count.

In the minus column, trading volume hasn’t accompanied the rally higher, it’s trended lower. The S&P looks extended from the 200day again, but not from other technical trendlines. The old upper channel becomes relevant again would support additional headroom.

2021-04-11-SPX Elliott Wave Analysis-Daily-Primary1

The Elliott Wave count remains the same as the past couple of weeks, showing the S&P in the third wave of a Minor 5.

COMMENTARY
Friday’s rally into the close put the Dow Jones Industrial Average, S&P 500 and Nasdaq 100 at all time highs. Word on the street is that lots of funds were shorting the market (because, you know, it hit 4000, a round number), and had to cover. Monthly options expire this Friday, so we could see an uptick in volatility in the very short-term. Longer term, market volatility continues to drop, seemingly supported by a buy the dip mentality.

Earnings season begins this week with some big financial firms releasing their Q1 numbers (e.g. JP Morgan, Goldman Sachs, etc.).

Best to Your Week!

Stock Market Outlook entering the Week of April 4th = Uptrend

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

ANALYSIS
The stock market outlook shows an uptrend in place to start the week of April 4th.

2021-04-04-SPX Trendline Analysis-Daily

The S&P500 ($SPX) ended the shortened trading week higher, crossing 4000 for the first time ever. The ADX finally joined the other signals in bullish territory, and 3 more distribution days fell off the count.

2021-04-04-SPX Elliott Wave Analysis-Daily-Primary1

The Elliott Wave count remains the same as last week, showing the S&P in the third wave of a Minor 5.

COMMENTARY
Last week, the Biden administration unveiled the “American Jobs Plan”, proposing $2+ trillion in new spending over the next 8 years, including:

• $620 billion for transportation infrastructure (roads, bridges, transit, electric vehicles)
• $400 billion for domestic manufacturing and workforce development
• $400 billion for disability/elderly care programs
• $300 billion for housing
• $200 billion for expanded broadband and electrical grid improvements
• $180 billion in research and development focused on clean energy

Our infrastructure could use the help for sure, so this package could do a lot of good if handled correctly (i.e. real improvements are made rather than pork barrel spending and pet projects).

The goal is to make the spending “revenue-neutral”, which is another way of saying tax hikes. Right now, that would be increased corporate taxes. Not quite as high as they were prior to the Trump administrations tax cuts, and still near all time lows, but an increase either way. The last round of cuts were largely absorbed via increased dividends and share buy-backs, so it’s not clear how the increases will be addressed.

Best to Your Week!

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.

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.

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!