1. Invest-Safely.com
  2. >>
  3. Tracking the Stock Market
  4. >>
  5. Stock Market Outlook - 2021-06-27

Stock Market Outlook
For The Week Of June 27th = Uptrend


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


The stock market outlook flipped again early last week, heading into Monday's session in an uptrend.

The S&P500 ($SPX) bounced off the 50-day moving average last week and rallied back to all time highs.

Technical analysis of daily SPX prices

2021-06-27-SPX Trendline Analysis - Daily

The ADX directional indicators flipped on Monday. The ADX line itself remains far below 20, A few more distribution days dropped off the count, putting the total at 5 and 3 of those will drop off at the end of this week. Combined with a solid rally off the 50-day, the price/volume signal also returns to an uptrend.

Technical analysis of daily SPX prices

2021-06-27-SPX Elliott Wave Analysis - Daily - Primary 1

The S&P made quick work of the question about counts from last week, eliminating the possibility of a completed 5th wave and reaching a new, all-time high.


A lot of positive news on the political and economic front continues to support a "buy the dip" mentality.

The Federal Reserve announced that large banks had all passed the annual "stress test", meaning they are free to restart dividend and/or share repurchase programs.

The Biden administration also reached an agreement on an infrastructure deal, covering ~25% of the "New Jobs Plan". Let's face it: any agreement is a positive step in what passes for political negotiations these days. But major market-impacting issues like corporate tax rates remain up in the air.

June's preliminary Purchasing Managers' Index (PMI) reading shows continued expansion in economic activity, in spite of labor shortages and bottlnecks in the supply chain.

Corporate credit spreads (the difference in yield between corporate debt and government bonds) hit their lowest level since 2008! Typically, spreads will widen sharply (referred to as a blowout) prior to any sharp decline in the stock market. Then again, government bonds don't yield that much in the first place, so the bar is pretty low at this point.

And lets not forget that record low interest rates also allow market participants to use margin more cheaply than ever before...which they are happy to do, and is a great enabler for the current bull market.

Highlight the amount of debt investors are using

Investor Credit vs SP - Source: Advisor Perspectives

So it seems like a majority market participants have decided no one wants to "sell the news". Just remember that markets drop much faster than they rise, so the next major sell-off may feel more like a bungee-jump rather than an elevator ride.

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 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.

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).