Weekend Stock Market Outlook

Stock Market Outlook For The Week of
July 14th = Uptrend


ADX Directional Indicators: Uptrend
Price & Volume Action: Uptrend
Objective Elliott Wave Analysis: Uptrend


Signals remain unchanged; the ADX is bullish, price/volume is subdued, and OEW shows an uptrend. Fed Chairman Powell testified in front of Congress and seemed to indicated that a rate cut is very likely.

Technical analysis of daily SPX prices

2019-07-14 - SPX Trendline Analysis - Daily

Technical analysis of weekly SPX prices

2019-07-14 - SPX Trendline Analysis - Weekly

The daily and weekly charts show the S&P 500 ($SPX) grinding higher on lower than average trading volume. Ideally you want to see new high prices on high trading volume, but an uptrend is an uptrend.

While it seems like there "should" be a correction any day now (pick your reasoning, there is plenty to choose from), let prices tell you what to do. And don't fight the Fed!

An interesting set of charts from this week's On My Radar from Steve Blumenthal at CMG. It's one of his favorite valuation measures: S&P 500 Total Return Index vs U.S. Household Stock Allocation. It's the second chart (in the Concluding Thoughts – What Might The Endgame Look Like? Section)

Basically, it compares how much money individual investors have put into U.S. equities at a given point in time, with average annual return from the S&P500 over the next 10-years for that same point in time. Typically, individual investors are heavily invested in stocks at market tops, and that's when forward returns are their lowest.

The bad news: Your starting point matters quite a bit. 2019 will represent a peak in 10-year rolling returns until at least 2029. Why? Because money invested in 2009 occurred at a bear market low and right now we have an all time high in the S&P. Every year afterwards (2010, 2011, etc.) the starting price is higher, so the rolling return will decline at little.

The good news: 10-year rolling returns are almost always positive, even when investors are "all in". And since we know there will be another bear market, and another "low", you can prepare yourself now to go against the grain and buy, setting yourself up for great 10-year returns.

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.

Charts provided courtesy of stockcharts.com.

If you're interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad. It's one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.

Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.

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