Fairly flat week for the S&P500 ($SPX) with the index hitting resistance at the upper channel line twice. It currently sits just off all time highs, ~3% above the 50-day moving average, and more than 10% above the 200-day moving average.
2021-08-01-SPX Trendline Analysis - Daily
The ADX remains bullish, but the overall trend is weaken again.
The S&P also picked up 2 distribution days, coincidentally after testing the upper channel. At first glance, it appears to have added 3 distribution days, but 1 didn't meet the price movement criteria. Wednesday’s close (vs. Tuesday’s close) dropped less than 0.2%. Either way, the count remains elevated, so the signal stays at “mixed” with price above the 50-day.
2021-08-01-SPX Elliott Wave Analysis - Daily - Primary 1
The uptrend signal from Elliott Wave rolls into another week...If wave i peaked on Thursday, wave ii could drop as low as 4225 before running back to all time highs.
We haven’t checked the longer-term view in a while. The chart on the left aligns with the chart above, showing the 5th wave extension we’ve discussed a few times in the past. The chart on the right is an alternative view, proposed by a reader, asking what the count looks like if the Primary 1 wave ended with August’s sell-off. In both cases, it appears a correction is closer than it is farther away.
2021-08-01-SPX Elliott Wave Analysis - Weekly - Cycle 2
Earnings season started off pretty well, though some well known technology companies sold off surprisingly hard after reporting. But it's next quarter's earnings when we'll begin to see post-COVID performance become the baseline for y-o-y comparisons.
A nothing-burger from the Fed last week; appears that they will continue to think about when to start thinking about telling us their thinking about normalizing financial policy.
Best to Your Week!
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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