Weekend Stock Market Outlook

Stock Market Outlook For The Week of
March 22nd = Downtrend


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


Carbon copy of last week; the stock market outlook remains in a downtrend; no change in the ADX, price/volume, or Elliott Wave.

Technical analysis of daily SPX prices

2020-03-22 - SPX Trendline Analysis - Daily

The S&P500 ($SPX) charts show we're way below the moving averages and the trendlines, but that doesn't mean we can't go lower.

Given the speed and size of the decline, we need to expand the timing for our weekly charts. You can see the S&P has retraced all the gains from 2019. There are some former lows near 2100 and 2000 that could provide support. Otherwise, the 2016 low at 1810 is next major level.

Technical analysis of weekly SPX prices

2020-03-22 - SPX Trendline Analysis - Weekly

And if we go even further back, we can see the latest price move in relation to the end of the Great Recession, along with some trendlines and Fibonacci levels.

Technical analysis of weekly SPX prices

2020-03-22 - SPX Trendline Analysis - Annual

Lots of aid packages were announced last week. The U.S. is pushing for $1.2 trillion in stimulus, the EU is working on $1 trillion in new fiscal spending, and the Fed U.S. rates by a 1% and restarted its bond-buying program. These programs will soften the impact from shutdowns and social distancing. But there will still be an impact. Layoffs (full and temporary) are starting, and will continue to grow.

Stock are no longer overvalued. While I personally don't think the selling is over just yet, there is and will be opportunity to purchase great companies at a discount soon.

If you do decide to put some money to work, consider some form of downside protection. That could be options, smaller position sizes, tighter stop loss orders. Now, more than ever, it's critical to know how much you're willing to lose before exiting a trade. And yes, that even applies to buy and hold; there is a real risk of bankruptcies and restructuring, which could render your shares worthless. Just ask people who owned GM shares back in 2007.

The news will sound dire, especially in the U.S. since our testing capabilities lagged the outbreak. Social media will be worse, so practice social distancing from those things too. There are many, many talented people the world over working on solutions in just about every part of our economy. Each day we get closer to the back side of this crisis.

Check on your neighbors and friends. Even the most introverted of us are having to change our routines. Combined with threats to our basic needs (food, shelter, water) and forced isolation, I'm sure they'll be glad to hear from you.

For those of you working in our hospitals, urgent care centers, doctor's offices, thank you.

For those of you working in our grocery stores and food supply chains, thank you.

Best to your week!

P.S. This weeks On My Radar from Steve Blumenthal is excellent. Take a moment to give it a read.

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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