The S&P500 ($SPX) opens this week ~3% above the 50-day moving average and ~10% above the 200-day moving average...stop me if you’ve heard this before. The index is riding the upper limit of the bullish price channel we've been tracking.
2021-09-05-SPX Trendline Analysis - Daily
All three signals remain green. The ADX is bullish and shows a strengthening trend. The price vs. volume action is stable. 2 distribution days fell off the count, leaving a total of 4 that are evenly distributed over the past 5 weeks.
2021-09-05-SPX Elliott Wave Analysis - Daily - Primary 1
The Elliott Wave remains in the iii-wave uptrend, as does the negative divergence in the RSI. The MACD isn’t giving away any hints on market direction.
This week's post is a bit late; appreciate your patience. We've got a shortened trading week on tap, with U.S. stock exchanges closed on Monday for the Labor day holiday.
Typically, September is the S&P500's worst month in terms of performance, with the second highest level of volatility (October takes that honor). So even if the S&P500 ends on a positive note, it's probably isn't going to take the straightest path to get there. Prepare yourself accordingly!
Last Friday, the monthly job data came in WAY below expectations, and a lot of ink was spilled about what that "means". But a few weeks back, we touched on the concept of stagflation, and what to watch instead of unemployment:
The more interesting, less widely publicized news from Friday was the NY Fed's decision to "suspend" it's GDP model due to "data irregularities". Hopefully those issues are contained to just the New York branch of the Fed, and don't spill over to other models. The final Q3 GDP numbers, and the initial Q4 numbers, scheduled for release at the end of October (10/27 and 10/29). Remember that July's retail sales declined 1.1%, worse than the expected drop of 0.3%.
With the S&P500 up 20% or so, year to date, there's nothing wrong with taking some of that profit and putting it into inflation/stagflation hedges.
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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