Weekend Stock Market Outlook

Stock Market Outlook For The Week of
September 29th = Uptrend

INDICATORS

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

COMMENTARY

The stock market outlook remains in an uptrend, albeit a weakening one.

As mentioned last Sunday, the ADX was already showing the uptrend was weakening. With the DMI crossover, the trend turned bearish. Prices found support at the 50-day moving average during the week, but picked up a pair of distribution days in the process. OEW hasn't been updated for this week. Last week's post mentioned the possibility of a weakening uptrend, but nothing was confirmed.

Technical analysis of daily SPX prices

2019-09-29 - SPX Trendline Analysis - Daily

A break below the 50-day would put two signals into the red and shift the market outlook. If that were to happen, the next level of support for the S&P500 ($SPX) would be the trendline from June's low (~2900 or ~2%), and then the August lows (~2840 or ~4%). And then on to the June low in the 2740s (~8%).

With a crossover of the DMIs and weakening price action, I'm not expecting the S&P to make a run at new highs in the short-term. But prices aren't extended from support levels, so any downtrend could be short-lived as well.

Technical analysis of weekly SPX prices

2019-09-29 - SPX Trendline Analysis - Weekly

Liquidity and impeachment and trade wars, oh my. There's been no shortage of headline risk over the past few weeks and macroeconomic data continues to weaken; consumer confidence and spending, capital goods orders and spending were all below expectations.

Don't forget the possibility of something coming out of left field. Friday's news that the Trump Administration was considering limitations on U.S. investments in Chinese companies...even removing them from U.S. markets entirely...was a shock to many investors.

And the hits keep coming. This week features the September manufacturing survey, construction spending, private sector payrolls, and unemployment.

Market prices have been incredibly resilient, but one has to wonder how long that will last. Peak beneath the hood and you'll see that "high-growth" stocks (internet companies) aren't performing as well as their "low-growth" peers (dividend stocks).

More rate cuts by the fed could continue to provide a floor for the market as investors pile into dividend stocks in a search for yield. Case in point: utilities have been on fire.

Best to your week!


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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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