Weekend Stock Market Outlook

Stock Market Outlook For The Week of
October 6th = Uptrend


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


After deluge of data and a volatile week of trading, the stock market outlook is in an uptrend, with an asterisk.

The ADX continues to show a bearish trend. Price and Volume shows high-levels of institutional selling. But prices are above the 50-day as of this weekend, so the signal is mixed. OEW has not posted yet, so I carried over last week's signal (uptrend).

Technical analysis of daily SPX prices

2019-10-06 - SPX Trendline Analysis - Daily

Last Tuesday, the S&P closed below the 50-day moving average, which shifted the price/volume signal to a downtrend, as well as the overall outlook. The Institute for Supply Management (ISM) survey of manufacturing activity hit 47.8 for September. A reading below 50 is considered a sign of contraction. 47.8 represents the lowest reading in the past 10 years.

On Wednesday, ADP payrolls for September showed a gain of 135,000 jobs, which was lower than August. And the ISM services index came in below expectations. Some investors took that as a sign that Friday's jobs report would be below expectations, and prices violated the June-August trendline.

On Thursday, prices swung dramatically, and ended the day above the trendline. As the weak data sunk in, odds of an October rate cut increased, and that seemed to lighten the mood.

Friday's close put prices back above the 50 day. Payrolls increased by 136,000 in September; strong enough to say the U.S. economy is not tanking, but weak enough to keep hopes for an October rate cut alive. Trading volume was well below average.

Technical analysis of weekly SPX prices

2019-10-06 - SPX Trendline Analysis - Weekly

The weekly view highlights the volatility seen during the week, as we started above the 110-week moving average, fell to the 40-week moving average, and then rebounded to close back above the 10-week.

Without a full day below the trendline, or even a weekly close, and a recovery of the 50-day moving average, the overall uptrend remains in place for another week. Like Friday's payroll data, price action was strong enough to keep hope alive, but weak enough to make me feel otherwise. Look for a gain on 1% or more early next week, on higher than average trading volume, to confirm the uptrend has more room to run.

My screen of fundamentally stocks shows lots of technically weak price action; prices dropping below their 50-day moving averages, as well as other types of sell signals. This could signal a few more weeks of weak market performance, which would fit with the ascending triangle pattern mentioned in previous posts.

Best to your week!

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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