2020-10-25-SPX Trendline Analysis - Daily
The ADX flipped to a bearish trend ever so slightly (+DI = 24.11 / -DI = 24.73). That’s not enough to change the signal to a downtrend, but mixed is fair game. And it's definitely something to watch early next week.
Price/volume is still green, and the recent declines haven't been accompanied by distribution days. And a day or two of price increases on higher than average trading volume couldn't hurt. Many technology stocks have good looking technical set-ups (think cups w/ handles), so it is a possibility.
Bearish and bullish Elliott Wave charts below. We'll stick with the prevailing trend until one or there other is invalidated.
2020-10-25-SPX Trendline Analysis - Primary C
2020-10-25-SPX Trendline Analysis - Primary 1
With just over a week until elections in the U.S., the stage is set for a lot of volatility. On tap this week are earnings for almost 40% of the S&P 500, ongoing stimulus talks, and ever present coronavirus issues.
Global coronavirus cases continue to rise, with many countries hitting daily records. While that's partly a result of more testing, the percentage of positive results also increased as have hospitalizations. Failure to pass a stimulus package (or a passing something that’s poorly received) and COVID shutdowns would be catalysts to the downside.
From a market perspective, there are fewer unknowns in terms of business and earnings impact versus February. We have better procedures and treatments in place, with several vaccine candidates in final stage trials. Passing a good package, a manageable case count, or positive vaccine trials should push the markets back to new highs.
Even though the signals are relatively bullish, it wouldn't take much price movement for the outlook to get really bearish. So be prepared for volatility, and adjust your expectations accordingly. It's unlikely we'll know the results of the election on election night, but prices will tell you want to do.
Best to your week!
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.
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.
IMPORTANT DISCLOSURE INFORMATION
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.
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).