Weekend Stock Market Outlook

Stock Market Outlook For The Week of
January 12th = Uptrend

INDICATORS

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

COMMENTARY

The stock market outlook maintains an uptrend after its first full week of trading in 2020; the ADX, price / volume, and OEW remain bullish.

Technical analysis of daily SPX prices

2020-01-12 - SPX Trendline Analysis - Daily

The SPX sits ~4% and ~9% above the 50 and 200 day moving averages, respectively. And we have what looks like a decent price channel in the daily view.

Technical analysis of weekly SPX prices

2020-01-12 - SPX Trendline Analysis - Weekly

If you just watched S&P prices, you'd never know there was a flurry of potentially market moving headlines last week. Middle East tension? What Middle East tension? It's not like there were any missiles flying around...oh wait. Seems like there's a lot of complacency right now, no?

The December jobs report showed that payrolls rose by 145,000 in the month; keeping the unemployment rate at 3.5%. So all is well? Nothing to see here? A lot of experts (10) seem to think so:

Chances of Recession Article from Barrons

If we manage to avoid a recession, that's wonderful news. But remember the whole inverted yield curve discussion last year? Back in August, (the week of August 26th, 2019), the 2 year and 10 year yields briefly inverted. And by briefly, I mean a few days.

Still, that event, no matter how short, has occurred ahead of every recession in the past 40 years. The lag between inversion and the start of a recession ranges from 7 months to 2-3 years, with an average of 14 months. We're about ~4.5 months in. So the risk of recession in 2020 isn't zero, but it does seem unlikely.

Speaking of longer term time frames, you've likely thought about your investing goals for 2020. Since it's the start of a new decade, don't forget to set some "north stars"; some 10 year targets that your annual goals lead up to. One of my favorites is the cross-over point.

Income Expense Crossover Point

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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The S&P 500 Composite Total Return Index (the "S&P") is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor's chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.

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