Weekend Stock Market Outlook

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Stock Market Outlook For The Week of
May 10th = Uptrend

INDICATORS

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

COMMENTARY

The stock market outlook continues into the second week of May in an uptrend. The ADX and price/volume signals show an uptrend, while Elliott Wave indicates a downtrend.

Technical analysis of daily SPX prices

2020-05-10-SPX Trendline Analysis - Daily

The S&P500 ($SPX) spent last week recovering from the prior week's sell-off. No real change in the ADX or price/volume story. The downward trendline also remains in place, just barely, with the SPX starting the week right on the line.

Technical analysis of daily SPX prices

2020-05-10-SPX Elliott Wave Analysis - Daily

For Elliott wave, the S&P500 is challenging the 61.8% level retracement level again.

Technical analysis of daily SPX prices

2020-05-10-SPX Elliott Wave Analysis - Daily - b-wave

Last week, we discussed the possibility of a flat or triangle creating a shallow price decline rather than a zigzag. If Monday's low was really the end of a subwave, then odds decrease for the plotted zigzag price targets. I'll leave them in for this week, and lets see what market prices have in store for us.

And here's the weekly view, going back to the last recession, for some context.

Technical analysis of daily SPX prices

2020-05-10-SPX Trendline Analysis - Weekly

The April jobs report came and went, showing 20.5 million jobs were lost. Investors reacted with a shrug, seeming to focus more on the fact that 80% of the job losses were reported as temporary layoffs. The disconnect between Main Street and Wall Street seems to grow each day, with job/income losses in stark contrast with rising stock prices and shareholder value. Not to mention the fact that we're at the end of a long-term debt cycle.

That's not a recipe for success...that's a recipe for revolt! Hopefully, cooler heads and leaders prevail.

What remains to be seen is whether the job losses lead to prolong reductions in consumer spending. Shutting down businesses means we CAN'T spend, but opening them back up doesn't mean that we WILL spend. In the U.S., consumer spending makes up 70% of the economy, and will determine the strength of the recovery. The stock market seems to be predicting a strong recovery, with the S&P sitting ~15% off its all time high already!

As always, let price be your guide and respond accordingly.

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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