Despite last week's volatility, the stock market outlook is still in an uptrend. The ADX starts bearishly, price/volume is mixed, and Elliott Wave shows an uptrend.
2020-09-13-SPX Trendline Analysis - Daily
We can’t say the sell off was a surprise, given how much the S&P500 ($SPX) was extended from the 200-day moving average. The technology sector took the brunt of the selling, with the Nasdaq dropping ~10% from it's all time high in 6 days of market action.
The ADX flip flopped during the week, ending up back where it started: showing a bearish environment.
The S&P added a few distribution days in succession, while price remained above the 50-day moving average. Another 2 or 3 days of heavy selling, coupled with a break of the 50-day, will put this signal into the red.
2020-09-13-SPX Elliott Wave Analysis - Daily - Intermediate C
For the Elliott Wave signal, price stayed above 3279 (the end of the first wave in the summer uptrend), so the current count remains in place.
It remains to be seen if all the damage is done, or if there’s more to come. Throughout the uptrend, sell-offs have been over quickly, so the 4th wave could be over already! But September isn’t a good month for stocks, so a quick recovery may not be in the cards either.
This week, I'm going to send you over to Cumberland Advisors and David R. Kotok. He provides access to a fascinating perspective from Brent Donnelly at HSBC, showing the similarities between today's environment and 1968.
On September 3, Brent penned “Echoes of ’68,” a thought-provoking comparison of the years 1968 (remember that doozy?) and 2020. Did you know that ’68 included a global pandemic that killed 4 million, including 100,000 Americans? The similarities between the two years in the economy and markets are striking, too.
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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