Weekend Stock Market Outlook

Stock Market Outlook For The Week of
September 23rd = Uptrend


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


Another week, another uptrend signal...although this time there are some storm clouds on the horizon that indicate it's time to be cautious.

Most of the indexes start the week above their 20 and 50 day moving averages, but there's a divergence between those averages. The Dow and the NYSE look extended at the moment; they sit well above their 20 day moving averages. On the other hand, the Nasdaq and Russell 2k are struggling to move past that same moving average. Since the Russell 2K and the Nasdaq are home to a majority of growth stocks, the fact that they're lagging industrials and a more "worldwide" index isn't a sign of strength.

Price charts for $SPX,$COMPQ,$INDU,$NYA,$RUT,$VIX,$TNX,$USD,$CRB,$GOLD

2018-09-23 - US Stock Market Averages

The trading environment still looks good from a price/volume perspective (no new distribution days; Friday's option expiration doesn't count). Many leading stocks are testing support levels or have been unable to make much progress after breaking out...another reason to be careful.

OEW remains in an uptrend to start the week. The market averages tracked by OEW ticked a major checkbox last week; all reached new price highs. So they reassessed the situation. No immediate issues to address, but there are some technical indicators that are flashing yellow. (e.g. relative strength, sector strength, # of stocks above their 200 day moving average, etc.). Therefore, OEW feels it's time to get cautious.

By last Friday, the S&P ($SPX) rallied to the upper trendline of the price channel we're tracking, but was again rebuffed. Each time we've reached the upper bound (or nearly reached) since April, we encountered at least a week of selling. The S&P sits 2-3% above the 50 day / lower price channel trendline, so I won't be concerned until we break below that level.

2018-09-23 - $SPX Technical Analysis - Daily

2018-09-23 - SPX Technical Analysis - Daily

The ADX turned up as a result of last week's strength, with bullish price movement in control. But again, the ADX sits well below 20, meaning it isn't providing the most reliable signals; better to stick with momentum indicators for now. The longer-term view remains the same and supports the case for an uptrend; trading volume returning and the January high supporting.

2018-09-23 - $SPX Technical Analysis - Weekly

2018-09-23 - SPX Technical Analysis - Weekly

Based on the above, I expect a sell-off takes us to back to the January high (just below 2900 for the S&P) and wouldn't be surprised if we tested support at the 50-day/lower price channel. That said, you know the saying about opinions, so the best way for you to prepare, participate, and protect is to form your own opinion based on your own investing process and then take action.

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 performed as a stand-alone, signal generator using past performance estimates:

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