1. Invest-Safely.com
  2. >>
  3. Tracking the Stock Market
  4. >>
  5. Stock Market Outlook - 2020-06-21

Stock Market Outlook
For The Week Of June 21st = Uptrend


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


The stock market outlook remains in an uptrend this week, but is the current rally running out of steam?

Technical analysis of daily SPX prices

2020-06-21-SPX Trendline Analysis - Daily

The S&P ($SPX) rallied Monday and Tuesday, but price drifted lower afterwards. We briefly dipped below the upward trendline on Monday as well, but no enough to call it off.

The ADX Directional indicators crossed-over again, back into bullish territory, but the strength we saw two weeks back is gone. Institutional selling, in the form of distribution days, isn’t elevated yet, and price action in growth stocks remains strong. Friday's massive volume was thanks, in part, to option expiration.

Technical analysis of daily SPX prices

2020-06-21-SPX Elliott Wave Analysis - Daily - Intermediate A

For Elliott Wave, I checked other possible retracement levels, and found 85.4%...interestingly, it overlaps the recent high on June 8th. That kicked off several discussions about the current count, the lack of divergence in the RSI/MACD, etc.

The uptrend signal remains in place to start the week, but let price be your guide. I've seen a bullish count that put price targets for a 5th wave above 3393 (which would invalidate the Primary A wave count), and bearish counts that already have the S&P in the next leg of a downtrend (which would invalidate the Intermediate A wave).

Near-term, watch the June 8th high and the the June 15th low.


The big news last week came from the U.S. Fed, as they announced plans to purchase individual corporate bonds (versus their ETF purchases thus far) to provide more liquidity to the credit markets.

The drawback? The risk/reward relationship for bonds is screwed up. The Fed isn't buying because they bonds are a good investment. They're buying bonds precisely because those bonds are bad investments.

Yes, this does continue to support "zombie" companies, but at the moment, employment is the more important concern. But at some point, there will be consequences, and those consequences will impact people who can least afford it (i.e. people who rely on fixed income investments).

Best to your week!

If you find this research helpful, please tell a friend. If you don't find it helpful, tell an enemy.

I regularly share articles and other news of interest via on Twitter (@investsafely), Facebook, Linkedin, and Instagram (@investsafely)

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.

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.

This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the "S&P") is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor's chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.

Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).