Weekend Stock Market Outlook

Stock Market Outlook For The Week of
March 8th = Downtrend


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


The stock market outlook starts off in a downtrend after another wild week of trading. The ADX, price/volume, and OEW are all indicating a downtrend is in place.

Technical analysis of daily SPX prices

2020-03-08 - SPX Trendline Analysis - Daily

The S&P tried to retake the 200-day moving average last week, ending two trading days above that level. In each case, selling returned and forced prices lower. Looking that the new OEW labeling, this phase of the downtrend could find support 2790-2750, give or take.

Technical analysis of weekly SPX prices

2020-03-08 - SPX Trendline Analysis - Weekly

Another wild ride last week; even an emergency rate cut from the Fed couldn't calm the waters. But that was more of a damned if you do, damned it you don't situation. Lowering interest rates isn't going to fix supply chains impacted by the shutdown in China. Nor will it offset lower demand for things like commodities, business travel, leisure activities (i.e. cruises, restaurants, etc.). It does show that the Fed is willing to do what it can to create a favorable environment for business to recover.

While volatility in the stock market is expected, it's the volatility in the bond market that has some investors spooked. The yield on the 10 year bond in the US fell below 1% for the first time ever. Investors across the globe are looking for investments with some guarantee of a return (i.e. "flight to safety"). U.S. Treasury bonds still have a positive interest rate, so money piles in, which drives the price up and pushes the interest rate down. There is one positive side to all of this: if you have any bond funds, they've probably done quite well this year and will likely continue to do so until the crisis subsides.

Lost in all the noise was February's job's report. The U.S. economy added 273,000 jobs, which was well above expectations. Since the number is pre-crisis, it reflects hiring that occurred before the coronavirus got a footing in the U.S., so it can't be used to estimate future conditions. On the bright side, the same will hold true when the crisis passes and we get a bad jobs report.

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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