Stock Market Outlook entering the Week of January 3rd = Uptrend
ANALYSIS
The stock market outlook starts 2021 in an uptrend.
All three signals (ADX, Price / Volume, and Elliott Wave) show an uptrend for the S&P500 ($SPX).
Happy New Year and Best to Your 2021!
Stock Market Outlook entering the Week of December 27th = Uptrend
ANALYSIS
The stock market outlook remains in an uptrend heading into the last few days of 2020.
2020-12-27-SPX Trendline Analysis-Daily
All three signals (ADX, Price / Volume, and Elliott Wave) show an uptrend in place for the S&P500 ($SPX), though the uptrend did appear to weaken last week. The ADX almost crossed over, we’ve collected a moderate number of distribution days, and price is still extended from the 200-day moving average (~13%).
COMMENTARY
The U.S. congress passed a relief bill, which now sits in limbo as it awaits the President’s signature (or veto). And a Brexit deal was reached. Vaccinations continue to increase and provide confidence in a return to normalcy, but a new variant of the virus resulted in U.K. travel bans and infections continue to accelerate.
Another shortened trading week on tap, with the U.S. markets closed on Friday on New Years Day.
Best to Your Week!
Stock Market Outlook entering the Week of December 20th = Uptrend
ANALYSIS
The stock market outlook remains in an uptrend to kick-off the week of Christmas.
2020-12-20-SPX Trendline Analysis-Daily
The S&P500 ($SPX) remains in an uptrend, based on all three signals (ADX, price & volume, and Elliott Wave. Price remains very extended from the 200-day moving average (~16% now).
2020-12-20-SPX Elliott Wave Analysis-Daily-Primary1
Elliott Wave hasn’t changed much in the recent weeks; remains in an uptrend.
COMMENTARY
Representatives in the U.S. are trying to finalize the details of a stimulus package. An agreement likely buoys the market in the coming week. But longer term, economic data shows the “recovery” is slowing (e.g. lower retail sales and job growth) as coronavirus cases continue to increase, along with the number of restrictions.
The stock market has largely shrugged off these concerns. It doesn’t hurt that the Fed continues to provide support. Last week, they announced that they’ll continue to buy $100 billion in assets per month and keep interest rates low, until inflation and employment increase.
A shortened trading week on tap, with the U.S. markets closing early on Thursday and remaining closed Friday in observance of Christmas.
Best to Your Week!
Stock Market Outlook entering the Week of December 13th = Uptrend
ANALYSIS
The stock market outlook remains in an uptrend, despite the small sell-off last week.
2020-12-13-SPX Trendline Analysis-Daily
The S&P500 ($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
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
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
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!
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