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  5. Stock Market Outlook - 2021-10-31

Stock Market Outlook
For The Week Of October 31st = Uptrend


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


The stock market outlook remains in an uptrend. Happy Halloween!

Technical analysis of daily SPX prices

2021-10-31-SPX Trendline Analysis - Daily

The S&P500 ($SPX) continued higher to close out October. The index now sits ~9% above the 200-day, and 3% above the 50-day. Over the past 19 trading days, the S&P rose ~325 pts (~7.5%). If that pace continues over the rest of 2021 (43 trading days left), the S&P would end the year near 5300!

The ADX and price/volume indicators remain bullish, and the index added 1 distribution day last week.

Technical analysis of daily SPX prices

2021-10-31-SPX Elliott Wave Analysis - Daily - Primary 1

Elliott Wave still shows an uptrend; appears to be the 3rd wave of a Minor 1 wave. A small divergence developed in the RSI; a short, 4th wave correction isn’t out the question near term.


While September and October lived up to their reputation as volatile months, October gave investors a lot more treats than tricks this year. Essentially hitting the low on the first trading day, the S&P rallied higher for most of the month! Not even the disappointing results from Amazon and Apple or rising treasury yields were enough to slow it's roll.

A little over half of the S&P500 has reported earnings so far, and Q3 earnings continue to exceed expectations (some big tech names notwithstanding).

The biggest issue facing the economy right now isn't COVID or infrastructure spending packages. It's the supply chain; more specifically throughput. There's either too much supply verses the capacity to move it, or there's not enough supply to meet demand. Underpinning both are labor issues. And unfortunately, there are no easy fixes...let alone quick ones.

With the S&P at all time highs, last week was an excellent time for some profit taking / asset reallocation. The smart move was to prune your winners and move the profits to other areas that were taking a break. That could have been something like commodities, if that's part of your portfolio. Or, if you're focused on stocks, it could have been something like energy/financial sector ETFs...even the Russell 2000 index.

Happy Halloween and 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, 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.

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