The S&P500 ($SPX) continues notching all time highs day after day, but on relatively small price movements. It's hugging the upper bound of a channel; if that technical pattern continues to hold as it has over the past few months, the probability of a downward move (or at least limited upside) is high.
2021-08-15-SPX Trendline Analysis - Daily
The index starts another week ~3% above the 50-day moving average and >10% above the 200-day moving average.
The ADX uptrend signal continues, with price action beginning to strengthen, similar to late June and early April. For price/volume, 2 days dropped off the count. With another 4 scheduled to drop out after this week, this signal likely returns to an uptrend in next week’s update.
2021-08-15-SPX Elliott Wave Analysis - Daily - Primary 1
The uptrend signal from Elliott Wave remains in place.
In the U.S., CPI and PPI numbers came out last week, with both measures showing an increase in prices. The consumer price index came in a bit below expectations, bolstering the narrative that inflation is transitory. The product price index came in a bit above expectations, bolstering the narrative that inflation isn't transitory.
More than likely, we've got two types of inflation at play. The first is waning (i.e. consumer price increases), as reopening is well underway and product shortages from the first pandemic shutdowns have largely been addressed. The second (producer price increases) is just getting started, reflecting the higher cost of doing business post-pandemic.
And lets not forget the U.S. Senate passed the trillion dollar infrastructure bill last week. It's sorely needed, and shows that bipartisan support is possible, even if it's not probable most of the time.
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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