The Safe Investing Blog

Stock Market Outlook entering the Week of May 6th = Downtrend

• 20/50 Day Moving Averages: Mixed
• Price & Volume Action: Mixed
• Objective Elliott Wave Analysis: Downtrend

COMMENTARY
Market prices made some progress last week, finding support near the 200-day moving average.  But the downtrend is still hanging on by a few points. Basically, we’re looking for a weekly close above the 50-day or below the 200-day to confirm which of the technical patterns we’ve been following will win out (mid-term descending triangle or long-term price channel). Since the gap between those two price levels is ~2.5%, we shouldn’t have to wait much longer.

The Nasdaq joins the Russell 2000 above the 50-day moving average, thanks to Friday’s rally.  The other indexes sit just below that level, so it won’t take to change this signal to an uptrend.

2018-05-07 – US Stock Market Averages

While Thursday’s bounce came with higher trading volume (good), Friday’s rally to the 50-day had lower trading volume (bad). So price / volume action remains mixed.  Growth stocks with solid fundamentals have responded positively to earnings strength; what’s not clear is whether those gains will hold (as mentioned last week).

OEW maintains a medium term downtrend, but expects that trend to end soon, and for markets to take another run at all time highs.

The descending triangle pattern remains intact, and continues to narrow, with an upper trendline sitting at ~2,675 (almost the same as the 50-day moving average). The floor remains at 2,581. The ADX indicator is rising ever so slightly, but remains bearish.

2018-05-07 – SPX Technical Analysis – Daily

The longer term price channel has seen a lot of action recently, with prices bouncing off that level for the second straight week and closing near the highs. On the downside, the last two weeks have seen lower closing prices on above average volume.  Today, the lower bound is roughly the same as the 200-day moving average.

2018-05-07 – SPX Technical Analysis – Weekly

If you find this research helpful, please tell a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has tracked the market using past performance estimates:

• 2015 Performance – Stock Market Outlook
• 2016 Performance – Stock Market Outlook
• 2017 Performance – Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.

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

• 20/50 Day Moving Averages: Downtrend
• Price & Volume Action: Mixed
• Objective Elliott Wave Analysis: Downtrend

COMMENTARY
Market prices didn’t make much progress last week, so the environment remains bearish for new positions (i.e. downtrend).

2018-04-29 – US Stock Market Averages

Just like last week, only the Russell 2000 is above the 50-day moving average.

Price and volume action remains mixed.  Growth stocks are having a hard time staying above technical resistance levels (i.e. buy points in price patterns such as flat bases), even though Q1 earnings have been strong.

OEW continues to show a medium term downtrend. The long-term bull market remains in place, with the following caveat:

We see no reason to be concerned unless the SPX loses 2500.

Coincidentally, that’s a handful of points below the floor of the descending triangle pattern we’ve been tracking recently. The upper trendline now rests at ~2,680; the floor remains at 2,581. The ADX indicator hasn’t changed much in April (still bearish), as the S&P works its way through the descending triangle price pattern.

2018-04-29 – SPX Technical Analysis – Daily

The longer term price channel also remains intact, as we saw a bounce off the lower trendline last week. But the week ended with a loss, and trading volumes were higher than last week.

2018-04-29 – SPX Technical Analysis – Weekly

Earnings reports, for the most part, are crushing expectations. You’d think stock prices would react in kind, blasting past resistance levels and other technical sticking points. You’d be wrong. Lot’s of after hours/pre-market gap ups, only to be sold off during the trading day.

For example, Caterpillar (CAT) jumped ~5% after a massive earnings beat, only reverse course during Tuesday trading to close with a 6% loss! Even technology names weren’t immune. Amazon (AMZN) and Intel (INTC) rose 7% and 8% in after-hours trading, respectively, after releasing strong quarterly results. The next day, Amazon shed some of that gain, closing up ~4%, while Intel ended with 0.6% loss! Not exactly a sign of institutional support…

Such is life in a downtrend…which is why it pays to be cautious and avoid initiating new positions until market conditions improve.

If you find this research helpful, please tell a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has tracked the market using past performance estimates:

• 2015 Performance – Stock Market Outlook
• 2016 Performance – Stock Market Outlook
• 2017 Performance – Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.

Stock Market Outlook entering the Week of April 22nd = Downtrend

• 20/50 Day Moving Averages: Downtrend
• Price & Volume Action: Mixed
• Objective Elliott Wave Analysis: Downtrend

COMMENTARY
We kick things off with a downtrend still in place, though there were some positive developments last week.

2018-04-22 – US Stock Market Averages

All the indexes were above their 50-day moving averages by Wednesday, only to relinquish that level by Friday’s close.  Again, only the Russell 2000 is in positive territory using this indicator.  So we start the week in downtrend territory, with the prospect of an uptrend signal just ahead.

Price and volume action really is mixed.  On the positive side, the markets rose above their 50-day moving average, and it has been 11 weeks since the downtrend started.  This means that stocks have had a chance to form good price patterns and should be ready to breakout.  On the negative side, only 4 weeks have past since the second major sell-off in the latest downtrend, so some price patterns likely need another two weeks before their ready to go.  Also, all of the higher than average trading volume has occurred when prices have fallen.

Friday’s price action put OEW back in downtrend mode, removing the possibility that the latest moves were the beginning of a new rally.

2018-04-22 – SPX Technical Analysis – Daily

The ADX indicator is unchanged from last week; the DI- remains higher than the DI+ (bearish), and the ADX line is flat.

S&P prices tested the upper trendline of the descending triangle, but were unable to breakthrough.  For comparison, the Dow Jones broke through the upper trend line of its own descending triangle last week; a good sign if you were trading that index.

2018-04-22 – SPX Technical Analysis – Weekly

Right now, the upper trendline sits just above 2,700, while the patterns floor remains at 2,581. At this point, the S&P would have to violate the longer-term trend (the rising price channel) in order to reach the floor; that lower trendline sits at ~2,600.

Earnings season has started up again and we’ve grown accustom to companies crushing analyst expectations. Anything less is now cause for panic sell-offs, so it’s a good time to review watch lists AND current holdings.

For growth stocks, I’m on the lookout for double-bottom price patterns. For income stocks, make sure the payout ratios remain within acceptable limits (i.e. less than 60%).

If you find this research helpful, please tell a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has tracked the market using past performance estimates:

• 2015 Performance – Stock Market Outlook
• 2016 Performance – Stock Market Outlook
• 2017 Performance – Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.

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

• 20/50 Day Moving Averages: Downtrend
• Price & Volume Action: Downtrend
• Objective Elliott Wave Analysis: Downtrend

COMMENTARY
U.S. markets contended with the threat of an escalation in the Syrian War last week.  As of Saturday, threats of missile strikes turned into actual missile strikes.  We’ll see how markets respond on Monday.  For now, we’re still in a downtrend, but price action did improve last week.

2018-04-15 – US Stock Market Averages

For now, all the indexes regained their 20-day moving averages, but most are below their 50 day moving averages.  The only exception is the Russell 2000, which begins the week above it’s 50 day moving average.

Price and volume action remains downtrend territory. We didn’t add any distribution days to the count, but trading volume declined as prices rose (not a good sign).

OEW analysis continues to indicate that the current downtrend may have bottomed, but price action remains choppy and hasn’t given the all clear yet.

From a technical standpoint, the S&P starts this week on better footing than last week. The S&P found support at the bottom of the descending triangle pattern, and is now looking to cross the 50-day moving average.

2018-04-15 – SPX Technical Analysis – Daily

The pattern’s floor remains at 2581; the upper trendline now sits at 2725, give or take.  The ADX indicator is basically unchanged from last week; the DI- remains higher than the DI+ (bearish), and the ADX line is flat.

2018-04-15 – SPX Technical Analysis – Weekly

Moving to the weekly view, the S&P500 bounced off the price channels lower trendline during the week.

If you find this research helpful, please tell a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has tracked the market using past performance estimates:

• 2015 Performance – Stock Market Outlook
• 2016 Performance – Stock Market Outlook
• 2017 Performance – Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.

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

• 20/50 Day Moving Averages: Downtrend
• Price & Volume Action: Downtrend
• Objective Elliott Wave Analysis: Downtrend

COMMENTARY
Last week’s market agitator came in the form of tit-for-tat tariff announcements between the U.S. and China.  What this week has in store is anyone’s guess.

All the indexes remain below their 20 and 50 day moving averages.  Prices continue to find support near the 200 day moving average, which is a good sign.

2018-04-08 – US Stock Market Averages

Price and volume action remains downtrend territory.  A look at the weekly chart (below) shows higher trading volume on down weeks versus up weeks since the start of 2018; definitely a sign of price weakness and institutional selling.

OEW analysis indicates that the current downtrend may have bottomed, but we still need to see an confirmation of the uptrend before changing the signal.

Revisiting the technical analysis from last week, in the daily view we can see a descending triangle pattern. This pattern is usually bearish, but let the price dictate your actions.

2018-04-08 – SPX Technical Analysis – Daily

The pattern’s floor is the 2581.00 price level; watch for a high volume close below that level. Last Monday, prices actually dipped below 2581, but recovered by the end of the day to close at 2158.88 (whoa, that was close)! Alternatively, a close above the upper trendline (~2740 to start the week) would be very bullish.

The ADX indicator is basically unchanged from last week; the DI- remains higher than the DI+ (bearish), and the ADX line is flat.

2018-04-08 – SPX Technical Analysis – Weekly

Moving to the weekly view, the S&P500 crossed below the price channels lower trendline during the week. Thanks to a late-date on Friday, price closed above the lower channel, so the current bull market lives to see another day.

If you find this research helpful, please tell a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has tracked the market using past performance estimates:

• 2015 Performance – Stock Market Outlook
• 2016 Performance – Stock Market Outlook
• 2017 Performance – Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.

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

• 20/50 Day Moving Averages: Downtrend
• Price & Volume Action: Downtrend
• Objective Elliott Wave Analysis: Downtrend

COMMENTARY
No April Fools joke here; data privacy continued to roil the markets last week.  While there was some positive movement on Monday and Friday, those gains weren’t enough to change the outlook heading into this week.

2018-04-01 – US Stock Market Averages

All the indexes remain below their 20 and 50 day moving averages to start the first week of April. The 200 day moving average provided some technical support, but the indexes have more work to do to recover from recent price declines.

Price and volume action remains downtrend territory as well.  Last week’s gains came on lower trading volume, relative to the losing days

No update from OEW this week; the downtrend signal remains in place.

2018-04-01 – SPX Technical Analysis – Daily

ADX price action moderated a little bit over the past week.  The DI- is still higher than DI+ (downtrend), but the ADX isn’t rising as sharply (weakening).

2018-04-01 – SPX Technical Analysis – Weekly

Taking a longer-term look, you can see the S&P500 break the upper channel of a long term trend as we started 2018.  This is typically a sell signal, or at the very least an indication that it’s time to take some profits.  True to form, the markets sold off, and are now testing the lower channel.  On the plus side, the index found support at the lower level 3 times this year, which indicates strong support at those prices.  On the downside, last week’s test came on lower than average volume.  Think of this as another data point on the current market conditions as you consider your investing strategy.

Best wishes to you on this Easter weekend.

If you find this research helpful, please tell a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has tracked the market using past performance estimates:

• 2015 Performance – Stock Market Outlook
• 2016 Performance – Stock Market Outlook
• 2017 Performance – Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.

Stock Market Outlook entering the Week of March 25th = Downtrend

• 20/50 Day Moving Averages: Downtrend
• Price & Volume Action: Downtrend
• Objective Elliott Wave Analysis: Downtrend

COMMENTARY
Another quarter-point rate hike from the Fed paled in comparison to Thursday’s announcement of U.S. plans for intellectual property tariffs on up to $60 billion of high-tech goods from China. There’s a good chance the tariffs are a negotiating ploy, but that won’t stop knee-jerk reactions in the stock market. Technology stocks also faced selling pressure, associated with Facebook’s recent data privacy issues. For the week, the indexes lost between 5% and 6%, give or take.

All the indexes start this week below their 20 and 50 day moving averages, putting the moving average signal back into downtrend territory. The S&P rests on its 200 day moving average, with the other indexes within striking distance. Prior to this year, the S&P500 hasn’t touched the 200 day since the US election in 2016.

2018-03-25 – US Stock Market Averages

Price and volume action also fell back into downtrend territory due to high volume selling during the week and prices dropping below the 50-day moving average.

OEW updated the wave count to reflect the sell off last week, putting the current signal back into downtrend territory.

It appears that the previous “uptrend” was really just a corrective “rally” in an ongoing downtrend.  As I mentioned last week, this type of whipsaw action is one of the reasons I’m looking for another indicator that is more accurate during periods of volatility.

2018-03-25 – SPX Technical Analysis

Last week, the ADX was showing a weakening bearish trend (DI- was higher than DI+ but the ADX was declining).  This week, we have a strengthening bearish trend (DI- higher than DI+ and the ADX is rising). Combined with a break below the 50 day moving average on higher volume (Monday’s price action), and a sell signal would have been generated on Monday.

After a week of selling, markets are usually considered “oversold”.  That’s not an invitation to buy, because markets can continue to sell off.  But be on the lookout for high volume buying when institutional investors cover their short positions and/or buy the dip. Until then, check your stops, cut your losses, and update your watch list with stocks that are resisting the current weakness.

If you find this research helpful, please tell a friend. If you don’t find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has tracked the market using past performance estimates:

• 2015 Performance – Stock Market Outlook
• 2016 Performance – Stock Market Outlook
• 2017 Performance – Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.