Weekend Stock Market Outlook

Stock Market Outlook For The Week of
January 6th = Downtrend


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


Happy New Year! With payrolls coming in WAY above estimates (73%), and a Fed speech promising "to adjust policy quickly and flexibly" if needed, the markets were in a festive mood last week.

The NYSE and Russell 2000 start the first full week of trading in 2019 above their 20 day moving averages, while the S&P, NASDAQ, and DJIA sit just below that mark. All of them are still below their 50 day (and 200 for that matter), so no change in the signal.

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

2019-01-06 - US Stock Market Averages

The price/volume combo shifts to mixed to start the week. Price action has been constructive, and Friday appears to give us a follow-though day. But trading volume wasn't great, few growth stocks are ready to break-out, and prices need to recover their 50-day moving average for a sustainable uptrend to take hold.

OEW continues to signal a downtrend. Tony still thinks we need to take another run at the lows before calling a bottom and declaring an end to our 3 month bear market. But that doesn't mean we can't or won't have a small rally first.

After finding support around 2,350, the S&P ($SPX) found another floor near 2,450. Trading volume wasn't great, but holiday weeks tend to be that way. The ADX still shows a bearish trend.

2019-01-06 - $SPX Technical Analysis - Daily

2019-01-06 - SPX Technical Analysis - Daily

Switching to a weekly view, prices have some work to do before reaching their next resistance level.

2019-01-06 - $SPX Technical Analysis - Weekly

2019-01-06 - SPX Technical Analysis - Weekly

It seems that all the pundits have jumped ship and are saying 2019 will be challenging for investors...I guess that means we shouldn't be surprised to see a massive rally! Either way, now is a great time to review your trading in 2018 and make improvements to ensure that 2019 will be a profitable year (the "Adjust" part of my process).

For example, in 2017's performance review, I mentioned that the market outlook may need an upgrade. The moving average and price/volume signals were very similar, and I was also looking for a way to decrease the impact on "whipsaws" (quick price changes that generate false or bad signals) on trading system performance.

And at the start of Q2, you may have noticed that some trendline analysis, along with the ADX indicator, was added to the market outlook. The goal was to proactively vet new signals, real-time, during 2018. I'll publish a comparison as part of the upcoming 2018 performance review. And, if there's an improvement, look for some changes in the weekly posts.

How did your process fair during 2018? Was it robust enough to handle changes? What improvements will you be making in 2019?

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.