1. Invest-Safely.com
  2. >>
  3. Tracking the Stock Market
  4. >>
  5. Stock Market Outlook - 2021-07-18

Stock Market Outlook
For The Week Of July 18th = Uptrend

INDICATORS

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

ANALYSIS

The stock market outlook continues in an uptrend this week,but it's not without some headwinds (and tailwinds for that matter) .

The S&P500 ($SPX) had an off week…if you can call something like a 2% decline an off week. And the ADX and price/volume signals remain bullish.

Technical analysis of daily SPX prices

2021-07-18-SPX Trendline Analysis - Daily

So we’re all good, right? Not so fast. Over the past two weeks, the S&P collected a cluster of distribution days (4 of the past 9 sessions). One of those days (last Wednesday) was something typical of market tops.

Technical analysis of daily SPX prices

2021-07-18-SPX Elliott Wave Analysis - Daily - Primary 1

Even though the index closed higher than the prior day, it was actually a rare type of distribution day, “stalling”. Stalling days indicate selling into strength, verses buying it. Stalling occurs when:

  1. The closing price is in the lower half of the days trading range
  2. The closing price is higher than the prior day’s close
  3. Trading volume is higher than the prior day

Combined with the fact that many stocks with really good fundamentals are experiencing technical / chart breakdowns, we have reasons to be cautious.

Elliott Wave is at an inflection point. We may have just seen the end of the 5th wave or the end of the first part of the 5th wave. If the 5th wave is still alive, then the S&P should remain above the wave iv low (just under 4300), assuming the Minute wave count is correct. As mentioned last week, the S&P has had waves extend several times previously, and there’s a lot of liquidity available to keep things moving.

COMMENTARY

The Fed repeated its stance that the current inflation readings are transitory, and while the recent recovery is progressing well, the central bank is still not to the point of withdrawing support. China seems to support that notion, announcing its own version of QE last week.

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, 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.

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.
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).