Stock Market Outlook
For The Week Of July 11th = Uptrend

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

The S&P500 ($SPX) sits at all time highs, with both the ADX and price/volume signals signaling a bullish environment.

2021-07-11-SPX Trendline Analysis - Daily

On the downside, the ADX is still below 20 (weak trend), and we did pick up another pair of distribution days (bringing the total to 4).

2021-07-11-SPX Elliott Wave Analysis - Daily - Primary 1

Elliott Wave also remains in an uptrend, and looks like a corrective 4th wave took place last week (abc); a pretty consistent 4th wave pattern in this rally. If the 4th wave continues, we'll head lower early next week, with the wave (i) high from mid-June the max decline. If complete, that puts the S&P into the last wave of the Primary 1.

The S&P has had waves extend before, and this count could be wrong, so there’s no guarantee the current uptrend ends anytime soon, 5th wave or not. But the Primary 2 wave will a bear market, whenever it starts, and could retrace the entire pandemic advance! Highly unlikely given all the “support” markets have these days, but still a possibility.

Since the market is up almost 20% for the year, there’s nothing wrong with taking profits and right-sizing your position and portfolio sizes.

COMMENTARY

All eyes were on the 10-year treasury last week, with the yield dropping back to February levels. That's the opposite direction of the core inflation numbers, indicating that the bond market isn't overly concerned about the recent spike in inflation...yet.

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, Daneric's Elliott Waves, 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.

• 2015 Performance - Stock Market Outlook
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• 2020 Performance - Stock Market Outlook

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