Weekend Stock Market Outlook

Stock Market Outlook For The Week of
October 13th = Downtrend


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


The stock market outlook flips to a downtrend, again with an asterisk.

The ADX direction indicators improved, but not enough to change the signal. Price and Volume starts the week mixed; price fell below the 50-day moving average mid-week (which would have flipped this signal and the overall outlook to a downtrend) and then recovered by Friday's close (putting the signal back to mixed).

The OEW signal actually flipped to a downtrend last week as well; had I published my post on Monday, the outlook would have been in a downtrend. This week, a similar situation occurred...OEW has yet to post, so the outlook has an asterisk again.

Technical analysis of daily SPX prices

2019-10-13 - SPX Trendline Analysis - Daily

Trendlines in the daily and weekly view received a slight adjustment, reflecting a new "low" in early October, and the downward slopping level of resistance through September's high's.

Technical analysis of weekly SPX prices

2019-10-13 - SPX Trendline Analysis - Weekly

Quite a week. President Donald Trump outlined the first phase of a deal to end a trade war with China on Friday. The key word is "outlined". With nothing written or signed, it's really just a cease-fire in the China trade war.

The phased approach will given everyone involved to kick the can down the road if they don't like the "current" phase. Can't agree on IP protections, that's the next phase. Trump even said that writing Phase 1 could take up to 5 weeks! The hope is that an agreement would be signed at the Asia Pacific Economic Cooperation on Nov. 16.

This basically means nothing is certain until an agreement is signed. For investors, this means a higher probability of price volatility (e.g. whiplash trades).

The U.S. fed also announced it would start growing it's balance sheet again. The last time we saw this, the intent was to lower long-term interest rates and boost the stock market. We called it Quantitative Easing (QE).

This time, the intent is to calm the overnight-lending market, which has made it difficult to control interest rates. Because the intent is different, the Fed doesn't want to call it QE. Call it whatever you want, it's the same "action", and actions always speak louder than words.

It's unlikely that the planned level of QE will have a big impact on market prices. Instead, this move is more about giving large investors confidence that the Fed will act if needed, even if those actions are largely symbolic.

As always, risk management and capital preservation are keys to surviving periods of uncertainty.

Two weekend outlooks with an asterisk highlights an important aspect of any system: data. When you leverage someone else's expertise, there is some risk involved. What happens if they get sick, or change their methods change?

Since this post is just an outlook, describing current market conditions, the risk is low. But this also highlights why it's so important for you to do your own research, your own analysis, and make your own choices.

Or, if you've hired someone to do it for you (an investment advisor), why it's so important for you to "approve" their choices. They are human, just like you, and can make mistakes.

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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