ADX Directional Indicators: Uptrend
Price & Volume Action: Uptrend
Elliott Wave Analysis: Downtrend
The stock market outlook flipped to an uptrend last week (Monday) with another change in the ADX signal. Price/volume remained in an uptrend, while the Elliott Wave downtrend remains in place...it's just a REALLY shallow one.
2020-05-24-SPX Trendline Analysis - Daily
The S&P500 ($SPX) sits ~8% above the 50-day moving average, and just below the 200-day moving average (~3,000). The directional indicators flipped again, but the overall ADX still shows a VERY weak trend, as it has been for the entire month.
The downward trendline fell to last Monday's strong advance, so there's a new uptrend traced off the recent lows. But prices didn't make much progress the rest of the week.
2020-05-24-SPX Elliott Wave Analysis - Daily
For Elliott Wave, the S&P500 has been working through an intermediate B wave for all of May. A B-wave is expected to retrace a lot of the A-wave. So far, that hasn't really happened. I've seen three potential counts:
Scenario 1 would mean a new uptrend (C-wave), with the first level of resistance near the 3140 price level (79% retracement). Scenarios 2 and 3 mean the S&P could start the next leg of the downtrend at any time...maybe hit ~3,000 first (coincidentally the 200 day moving average). Odds favor the B-wave is still in place, so this signal is still in a downtrend for now.
Stocks jumped on reopening activities and positive news related to COVID19 vaccine trials. Not to be outdone, the U.S. Senate grabbed headlines by introducing a bill that could require Chinese companies to delist from U.S. stock exchanges.
The Strategic Investment Conference wrapped up last week, and the final sessions did not disappoint. I've got a lot of listening/watching to do; so much information! If even half of the opinions turn out to be true, we're in for a very interesting period in history!
Short week coming up, with U.S. exchanges closed for Memorial Day.
Best to your week!
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:
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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