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  5. Stock Market Outlook - 2021-06-20

Stock Market Outlook
For The Week Of June 20th = Downtrend


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


The stock market outlook uptrend switches to a downtrend to start the week of June 20th.

The S&P500 ($SPX) finally experiences some price movement last week; unfortunately for the uptrend it was to the downside. The index broke through the support channel, as well as the 50-day moving average, on very high trading volume.

The quadruple witching day didn't do the market any favors either, with more than $800 billion in options expiring.

Technical analysis of daily SPX prices

2021-06-20-SPX Trendline Analysis - Daily

The ADX signal flipped to a downtrend mid-week. The index added 3 distribution days to the count while 2 dropped off. With price closing below the 50-day on Friday and the count at 8, the price/volume signal also flips to a downtrend.

Technical analysis of daily SPX prices

2021-06-20-SPX Elliott Wave Analysis - Daily - Primary 1

Elliott Wave shows a corrective wave in progress. I favor the (ii) wave, verses the start of a the [2] primary wave. Either way, a close below 4061 would end the uptrend unless I've made a mistake in the count somewhere.


Last week, it was the Fed's response (or lack thereof) to the prior weeks inflation data that made the headlines. They still see the current bought of inflation data as transitory, though they did increase their expectations for inflation this year. Pretty middle of the road stuff there, and similar to the views expressed here last week.

The Fed also adjusted their timeline for potential rate hikes, pulling them forward from 2024 to 2023. Plenty of runway for investors to make adjustments. And they avoided talk of "tapering" their asset purchases...probably keeping in mind the "taper tantrum" from 2013.

Touching the 50-day has been a buy the dip opportunity this year, but I'd want to see a couple of "higher lows" before doing so.

Best to Your Week!

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Charts provided courtesy of stockcharts.com.

For historical Elliott Wave Analysis, go to ELLIOTT WAVE lives on by Tony Caldaro. Other interpretations can be found at: Pretzel Logic, and 12345ABCDEWXYZ

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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