Weekend Stock Market Outlook

Stock Market Outlook For The Week of
September 8th = Uptrend


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


The stock market outlook shifts gears this week. All three signals (ADX, Price & Volume, and OEW) show a new uptrend underway.

Stock prices shrugged off the September 1st tariffs, instead responding positively to news that China and the U.S. would resume trade talks in October. Seemingly lost in the background, the drama that is Brexit. Thursday's gap up came on relatively higher volume, pushing the all the signals back into rally mode.

Technical analysis of daily SPX prices

2019-09-08 - SPX Trendline Analysis - Daily

The S&P500 ($SPX) broke through the its 50-day moving average, and the recent resistance level (2,940), on decent volume. Now, last week's ceiling becomes this week's floor of support. The next resistance level is the all time high. Looking at the trendlines, the new uptrend is not very steep. If we do see a meaningful rally now, it won't be a great indicator in the short-term. Instead, you could expect any future test of this trendline will come after a large sell-off, percentage-wise.

Technical analysis of weekly SPX prices

2019-09-08- SPX Trendline Analysis - Weekly

The weekly view shows the S&P500 trading volume is still anemic and has yet to recover from summer vacation.

Most sources I follow are saying the same 2 things:

1) Macroeconomic data remains bullish for the near-term

  • Employment, high yield spreads, retails sales, real estate track current spending and investment
  • Reflect the results of plans that were made last year
  • Currently "positive", and typically turn within a 6 months of a recession
2) The probability of a recession continues to rise, making the long-term outlook bearish
  • An inverted yield curve (across several different definitions) and protectionism (tariffs) increase prices, leading to lower global demand, then lower investment, and eventually economic contraction
  • Reflect the conditions that drive future spending and investment
  • Currently "negative", laying the groundwork for weak macro data 7-19 months in the future

Now is not the time to panic, but it is the time to prepare. A trade deal between the U.S. and China would be MASSIVELY bullish for both the near and long term. Navigating a recession will be tricky in the two sides can't come to terms, since interest rates near zero, and debt levels are the stratosphere. The first step to take is researching the types of assets that perform well in a low interest rate, high debt type of environment.

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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