Weekend Stock Market Outlook

Stock Market Outlook For The Week of
April 26th = Uptrend


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


The stock market outlook remains in an uptrend to start the week. The ADX and price/volume signals are bullish, while Elliott Wave still indicates a downtrend.

Technical analysis of daily SPX prices

2020-04-26-SPX Trendline Analysis - Daily

The S&P500 ($SPX) rode the 50-day moving average last week, and starts this week just above that level. The distance between the ADX directional indicators is small, so even a small decline could be enough to change that signal. That said, the overall ADX is below 25, so any trend is really weak. The current rally only has two distribution days (weak ones because trading volume was below average), so I don't expect that signal to switch over unless we see massive selling this week.

Price broke the upward trendline on the 20th, so we now have a new downward trendline from the March high as resistance.

Technical analysis of daily SPX prices

2020-04-26-SPX Elliott Wave Analysis - Daily

For Elliott wave, the S&P500 continues to fight the 50% retracement level (~2792). From a wave count perspective, we're still in the final leg (c-wave) of the current counter-rally (B wave), for those of us who assume we're in a bear market.

Price reached a high of 2879 two weeks ago; coupled with the decline in RSI, some traders think the B-wave, counter-rally has ended. For now, the 2897, 2919, and 3175 price targets remain in place. I'm also watching 2725. Falling below that price level confirms the end of the B-wave, and the beginning of the next leg down (C-Wave).

Technical analysis of daily SPX prices

2020-04-26-SPX Elliott Wave Analysis - Daily - Part 2

Oil prices were the story of the week, with the price for May oil futures going negative for the first time ever. Basically, a negative price means that people trying to sell oil had to pay someone to take it off their hands; the markets version of "I wouldn't buy that unless you paid me".

The U.S. government signed another coronavirus relief bill, aimed at replenishing the Paycheck Protection Program, which seemed to calm the markets somewhat. The first Paycheck Protection Program allocated $350 billion to help business owners secure low-interest loans, but the funds ran out within 2 weeks. In the meantime, initial jobless claims rose another 4.4 million last week, meaning at least 26 million people have filed for unemployment in the last 5 weeks. Regardless of the recent rally on Wall Street, getting everyone from Main Street back to work is going to take a while.

Earnings season is in full swing, with many big names reporting this week. Expect price volatility and limited forward guidance. The best you can do is look for companies with strong balance sheets and high demand for their products in a "stay at home" economy.

Best to your week!

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Charts provided courtesy of stockcharts.com.

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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