1. Invest-Safely.com
  2. >>
  3. Tracking the Stock Market
  4. >>
  5. Stock Market Outlook - 2022-01-23

Stock Market Outlook
For The Week Of January 23rd = Downtrend


    ADX Directional Indicators: Downtrend
    Price & Volume Action: Downtrend
    Elliott Wave Analysis: Mixed


The stock market outlook shifted to a downtrend after significant selling took the SPX down more than 5% last week.

The S&P500 ($SPX) found no technical support last week: not at the two trendlines, not at the 50-day moving average, not even at the 200-day.  The higher lows mentioned last week?  Tuesday took care of that trend too, as well a few other things.

First things first, the ADX directional indicators are solidly bearish and showing a strengthening trend.

Technical analysis of daily SPX prices

2022-01-23-SPX Trendline Analysis - Daily

The price & volume signal moved from mixed to a downtrend on Tuesday, tripping three different alarms.

  1. The index made a new lower low (vs Jan 10)
  2. The index closed below the follow-through day for the uptrend (Dec 15)
  3. The selling came on higher trading volume

The SPX followed that up by closing below the rally starting point (Dec 6), just to make sure traders got the message. Not that investors and traders needed a reminder, given that most individual stocks, especially technology names, have been selling off for some time now.

Technical analysis of daily SPX prices

2022-01-23-SPX Elliott Wave Analysis - Daily - Primary 1

For Elliott Wave, the 3 most bullish counts bit the dust when the SPX fell below 4495 on Thursday.

Technical analysis of daily SPX prices

2022-01-23-SPX Elliott Wave Analysis - Primary 1

That leaves us 1 uptrend and 1 downtrend remaining...a mixed signal if there was one.

Technical analysis of daily SPX prices

2022-01-23-SPX Elliott Wave Analysis - Primary 1 - Minor2

It's possible that Minor 2 is still in progress. If that count is correct, we're in the final leg of the sell-off and the SPX won't get lower than 4279...that's another 2.5% or so.

Technical analysis of daily SPX prices

2022-01-23-SPX Elliott Wave Analysis - Primary 2

Or, if the index can't hold 4279, it's likely that Primary [1] ended January 3rd and we're all "crying Jordan's" in a Primary [2] correction.


The 10-year treasury yield spiked last week to a 2-year high, driving money out of stocks (especially the technology sector), and spiking volatility.  While talking heads express shock at the moves, market action is pretty consistent with the beginning of Fed tightening cycles.  Not to mention the uniqueness of the current cycle, coming off of zero and near-zero interest rate policy.

More than likely you noticed the selling a while ago in individual companies.  The indexes were buoyed by megacap's like Facebook, Amazon, Netflix and Google.

I'm not saying we don't go lower from here; just that the selling isn't abnormal from a long term perspective.  Even crypto!

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.

Invest Safely, LLC is an independent investment research and online financial media company. Use of Invest Safely, LLC and any other products available through invest-safely.com are subject to our Terms of Service and Privacy Policy. Not a recommendation to buy or sell any security.

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.

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).