2020-11-22-SPX Trendline Analysis - Daily
The S&P500 ($SPX) retreated last week, but the ADX and price/volume both remain in uptrends; we haven’t’ seen much high-volume selling either.
Price found support near the 13-day moving average, but the S&P is still extended from the 200-day moving average (~12% which is high historically).
And the EW uptrend signal remains in place.
2020-11-22-SPX Elliott Wave Analysis-Daily-Primary 1
Last week was very similar to the week prior; continuing growth in the number of coronavirus cases and hospitalizations, while Moderna and then Pfizer reported positive results from their late stage trials of a vaccine. But jobless claims were worse than expected, highlighting the fact that the economy still has some work to do to catch up to a market at all time highs.
The focus on a post-pandemic world has also shifted money flows, resulting in sector rotation this month. Energy-related stocks have fared the best, followed by financials (i.e. banks), which have been the two worst performers during the recession. Technology and consumer discretionary (the big winners from the pandemic) have basically been flat.
With markets near all time highs and a vaccine on the horizon, now is a good time to check your allocations. Stocks that have lead the market higher may be dominating your portfolio, whether you hold them outright or as part of an index fund (e.g. Amazon, Target, Google, etc.). As the economy recovers, so called "value" stocks (e.g. utilities, financials) are likely to overperform, so you'll want to ensure you have the best companies across a wide variety of sectors.
Since this will be a shortened trading week in the U.S. due to the Thanksgiving holiday, consider tightening your stops to avoid any unpleasant surprises!
Best to Your Week and Happy Thanksgiving!
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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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