The Safe Investing Blog

Stock Market Outlook entering the Week of December 13th = Uptrend

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

ANALYSIS

The stock market outlook remains in an uptrend, despite the small sell-off last week.

2020-12-13-SPX Trendline Analysis-Daily

The S&P500 ($SPX) is still extended from the 200-day moving average (~13%). But uptrend signals remain in place for both ADX directional indicators and price/volume action.

2020-12-13-SPX Elliott Wave Analysis-Daily-Primary1

Elliott Wave remains in an uptrend.

COMMENTARY

In the U.S., elected officials can’t find common ground for another round of fiscal stimulus, and the unemployment situation is deteriorating as coronavirus cases spike. The E.U., Brexit talks continue, but both sides have hedged, stating that a no-deal Brexit is likely.

And the overall stock market remains very over-valued (CMG blog), on both a Price to Earnings and Market Cap to GDP basis.

None of that has stopped the markets as they march higher, led by small capitalization stocks. Typically, small caps don’t lead markets higher during bear markets, or even late stage bull markets. And cyclical companies, like energy and financials, have also performed well, signaling an expectation of further economic recovery.

Keep working your plan, raise your sell stops to protect against a sudden drawdown, and try to enjoy the holidays.  We’ve all earned it!

Best to Your Week!

Stock Market Outlook entering the Week of December 6th = Uptrend

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

ANALYSIS

The stock market outlook kicks off the last month of 2020 in an uptrend.

2020-12-06-SPX Trendline Analysis-Daily

The S&P500 ($SPX) starts the week at all time highs. The ADX and price/volume both remain in uptrends, though the trend isn’t very strong (ADX) and we’ve picked up some distribution days (price/volume).

The index is also ~14.5% above the 200-day moving average; remaining in extended territory verses historical performance.

2020-12-06-SPX Elliott Wave Analysis-Daily-Primary1

Elliott Wave remains in an uptrend. The negative divergence mentioned last week was short lived. And the updated monthly view now reflects the Primary 1 count. Interesting to note there are substantial negative divergences in both the RSI and the MACD histogram right now.

2020-12-06-SPX Trendline Analysis-Weekly

The monthly view is updated to reflect the change to a Primary 1.  Interesting to note there are substantial negative divergences in both the RSI and the MACD histogram right now, and prices extended above the megaphone pattern mentioned last month.

COMMENTARY
November was a great month for the stock markets, with the S&P gaining 13%.  Good news related to the pandemic didn’t hurt (coronavirus vaccines allow investors to focus on “when” no “if” the economy reopens).

That’s not to say things are all good just yet.  The latest unemployment report underwhelmed, thanks to a surge in cases during the month.  We still don’t have additional fiscal stimulus, but any further weakness will likely force lawmakers to compromise.

December is usually a good month for stocks…I’m sure everyone is looking forward to a Santa Claus rally!

Best to Your Week!

P.S. Great articles on the economy from Steve and John this week on debt, interest rates, and the challenges we face going forward; definitely worth your time.

What do we do now? – https://www.cmgwealth.com/ri/on-my-radar-what-do-we-do-now/
Elites on the Edge – https://www.mauldineconomics.com/frontlinethoughts/elites-on-the-edge

Stock Market Outlook entering the Week of November 29th = Uptrend

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

ANALYSIS

The stock market outlook shows the uptrend remains in place to start this week.

2020-11-29-SPX Trendline Analysis-Daily

The S&P500 ($SPX) rallied last week, ended just shy of all time highs. The ADX and price/volume both remain in uptrends, but the S&P is STILL extended from the 200-day moving average (~13.5%).

2020-11-29-SPX Elliott Wave Analysis-Daily-Primary1

Elliott Wave remains in an uptrend, but we’ve got a negative divergence in the RSI and the MACD weakened.

Even though the signals are still green, there’s more downside risk than upside potential at this point. That doesn’t mean the S&P couldn’t go higher before another sell-off, only that now is a good time to take profits!

COMMENTARY
More positive news on the vaccine front last week, coupled with holiday trading volumes, gave the markets a push.  The Dow Jones hit 30,000, which is impressive considering where it was in March.

It looks like travel also increased in the U.S. last week; unfortunately, that also means we’re likely to see another surge in coronavirus cases over the next 10 days or so.

Best to Your Week!

Stock Market Outlook entering the Week of November 22nd = Uptrend

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

ANALYSIS

The stock market outlook continues to show an uptrend in place to start this week.

2020-11-22-SPX Trendline Analysis-Daily

The S&P500 ($SPX) retreated last week, but the ADX and price/volume both remain in uptrends; we haven’t’ seen much high-volume selling either.

Price found support near the 13-day moving average, but the S&P is still extended from the 200-day moving average (~12% which is high historically).

And the EW uptrend signal remains in place.

2020-11-22-SPX Elliott Wave Analysis-Daily-Primary1

COMMENTARY
Last week was very similar to the week prior; continuing growth in the number of coronavirus cases and hospitalizations, while Moderna and then Pfizer reported positive results from their late stage trials of a vaccine. But jobless claims were worse than expected, highlighting the fact that the economy still has some work to do to catch up to a market at all time highs.

The focus on a post-pandemic world has also shifted money flows, resulting in sector rotation this month. Energy-related stocks have fared the best, followed by financials (i.e. banks), which have been the two worst performers during the recession. Technology and consumer discretionary (the big winners from the pandemic) have basically been flat.

With markets near all time highs and a vaccine on the horizon, now is a good time to check your allocations. Stocks that have lead the market higher may be dominating your portfolio, whether you hold them outright or as part of an index fund (e.g. Amazon, Target, Google, etc.). As the economy recovers, so called “value” stocks (e.g. utilities, financials) are likely to overperform, so you’ll want to ensure you have the best companies across a wide variety of sectors.

Since this will be a shortened trading week in the U.S. due to the Thanksgiving holiday, consider tightening your stops to avoid any unpleasant surprises!

Best to Your Week and Happy Thanksgiving!

Stock Market Outlook entering the Week of November 15th = Uptrend

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

ANALYSIS

The stock market outlook continues in a uptrend to start this week.

2020-11-15-SPX Trendline Analysis-Daily

The S&P500 ($SPX) gapped up to all time highs again last week (Monday), taking out the resistance trendline too.  Even though the gap filled and actually closed lower than the open (bearish), prices still managed to rise during the week.

It’s not to say there aren’t some concerns.  The S&P also sits ~12% above the 200-day moving average, which typically means we’re in for another correction.

And the EW uptrend signal remains in place.

COMMENTARY
Positive news on the COVID vaccine front supported U.S. stocks last week, as investors chose to focus on the end of the pandemic, rather than the current explosion of cases and hospitalizations.  This shift was reflected in sector rotation, as money flowed out of the “stay-at-home” technology names, and into cyclical and value stocks.

Best to Your Week!

Stock Market Outlook entering the Week of November 8th = Uptrend

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

ANALYSIS

The stock market outlook flipped back to an uptrend last week…may you live in interesting times indeed!  And the S&P500 ($SPX) is knocking on the door of all time highs again.

2020-11-08-SPX Trendline Analysis-Daily

Prices rose during the week, breaking through the 50-day moving average on higher than average trading volume.  Both  the ADX  and price/volume signals flipped to a bullish signal Wednesday.

That said, they’ve paused at the resistance trendline…something to watch this week, as price has bounced between resistance and support since September. The whipsaw price action may not be over just yet.

2020-11-08-SPX Elliott Wave Analysis-Daily-PrimaryC

In the bear camp, the count is back on life support.  Any more upside, and it’s over…again. In the bullish camp, the EW count looks a lot better…we could be in triangle pattern for the 4th wave, or already be in the 5th wave (Minor 3).  If price push higher, that would invalidate the triangle pattern.

2020-11-08-SPX Elliott Wave Analysis-Daily-Primary1

COMMENTARY
Unless you live under a rock, you know that Joe Biden (D) appears to have won the Presidential election in the United States, while Republicans remain in control of the Senate.

On the upside, markets typically perform well when there is gridlock in the U.S. government (meaning opposing parties control Congress and the Presidency), and at the moment, that’s what appears to be the result of the election.  Why?  Because a split usually reduces the likelihood of higher taxes and regulations.

On the downside, recounts are almost a given in states with close races, and the current administration is launching multiple lawsuits to investigate vote counting processes.  This type of uncertainty works against equities.  And we still have a pandemic to deal with, which is bad for business.

Best to Your Week!