The Safe Investing Blog

Market Outlook entering the Week of August 23rd = Downtrend

MOVING AVERAGES

• Short-term (20 DMA): Downtrend
  All major stock market averages remained below their 20-day moving averages.

• Intermediate (50 DMA): Downtrend
  All the major stock market averages remained below their 50-day moving averages.

• Long-term (200 DMA): Sell Signal / Downtrend
  All of the major stock market averages remained or fell below their 200-day moving averages.

COMMENTARY
The bottom of our range-bound market action finally fell out, and took prices with it. Over the span of three days (Wednesday, Thursday, and Friday), the S&P500 managed to take out 2 of the 3 support levels mentioned last week:

• 2040 = 2.4% decline (~4% decline from 2131 high)
• 2019 = 3.4% decline (~5% decline from 2131 high)
• 1820 = 13% decline (~15% correction from 2131 high)

So the price action was awful.  But what about trading volume?  Any silver lining?  No.  As prices declined, trading volumes increased, confirming that market makers were selling.

Tony C. added OEW commentary this week, saying that “a Primary IV correction would suggest a decline back to the October 2014 lows around SPX 1821”, which also happens to be the only support level the SP500 hasn’t breached.

The technical support and resistance levels for the S&P are:

• Resistance:  1,973 / 2,019
• Support:  1,929 / 1,956

Regardless of duration, the markets are clearly in a downtrend, so now is the time to get defensive (i.e. do not buy large positions, expect large percentage price swings, and be patient).

Should buyers step in next week and halt the slide, check your positions and make sure your profits don’t turn into loses!

2015-08-23 – US Stock Market Averages

Sources:

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  For price/volume data, head to stockcharts.com.

Moving Average Signals:

• Uptrend=Market indexes remained above their moving average during the trading week
• Downtrend=Market indexes remained below their moving average during the trading week
• Buy signal=Market indexes fell below their moving averages during the trading week
• Sell signal=Market indexes rose above their moving averages during the trading week

Market Outlook entering the Week of August 16th = Downtrend

MOVING AVERAGES

• Short-term (20 DMA): Downtrend
  All major stock market averages remained below their 20-day moving averages.

• Intermediate (50 DMA): Downtrend
  All the major stock market averages remained below their 50-day moving averages.

• Long-term (200 DMA): Mixed 
  2 of the 5 major stock market averages remained above their 200-day moving averages.  The Russell 2000, NYSE and DJIA remained below.

COMMENTARY
A lot of price action last week, but we’re basically back to where we started last week, so the downward market outlook remains unchanged from last week.

That said, we’re still range-bound and not a lot has happened with regard to technical support and resistance levels:

• Resistance:  2,085 / 2,131
• Support:  2,019 / 2,070

Tony C. used the S&P500 and calculated 3 potential price-levels for resolving the current market weakness:  2040, 2019, and 1820.

Dropping to the 1820 price level would qualify as the long-awaited correction, while bouncing off the 2019 and 2040 levels would just kick the correction down the road.  In other words, we’ll still run into a meaningful correction at some point, you’ll just have some more time to prepare.

With Friday’s close of 2091 and change, here’s the potential, short-term damage from each scenario:

• 2040 = 2.4% decline (~4% decline from 2131 high)
• 2019 = 3.4% decline (~5% decline from 2131 high)
• 1820 = 13% decline (~15% correction from 2131 high)

2015-08-16 – US Stock Market Averages

Sources:

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  For price/volume data, head to stockcharts.com.

Moving Average Signals:

• Uptrend=Market indexes remained above their moving average during the trading week
• Downtrend=Market indexes remained below their moving average during the trading week
• Buy signal=Market indexes fell below their moving averages during the trading week
• Sell signal=Market indexes rose above their moving averages during the trading week

Market Outlook entering the Week of August 9th = Downtrend

MOVING AVERAGES

• Short-term (20 DMA): Downtrend / Sell Signal
  All major stock market averages fell or remained below their 20-day moving averages.

• Intermediate (50 DMA): Downtrend / Sell Signal
  All the major stock market averages fell or remained below their 50-day moving averages.

• Long-term (200 DMA): Downtrend / Sell Signal
  2 of the 5 major stock market averages remained above their 200-day moving averages.  The Russell 2000 fell below, and the NYSE and DJIA remained below.

COMMENTARY
Now that all the stock indexes are below their 20 and 50 day moving averages, and a majority (3/5) are below the 200 day, the market outlook shifted to downtrend territory.

We dropped through one of last week’s support levels, so intermediate support/resistance levels from Objective Elliott Wave analysis also fell a notch:

• Resistance:  2,085 / 2,131
• Support:  2,019 / 2,070

The S&P500 needs to take out 2,040-2,045 support level before we can truly say we’re in a correction, but that label will come after the fact.  Let your stock prices do the talking and don’t profits turn into losses.  The last stock on my watch list got hammered last week, so it’s back to the drawing board.

2015-08-09 – US Stock Market Averages

Sources:

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  For price/volume data, head to stockcharts.com.

Moving Average Signals:

• Uptrend=Market indexes remained above their moving average during the trading week
• Downtrend=Market indexes remained below their moving average during the trading week
• Buy signal=Market indexes fell below their moving averages during the trading week
• Sell signal=Market indexes rose above their moving averages during the trading week