1. Invest-Safely.com
  2. >>
  3. Tracking the Stock Market
  4. >>
  5. Stock Market Outlook - 2022-03-20

Stock Market Outlook
For The Week Of March 20th = Uptrend


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


Yes, you read that correctly.  The stock market outlook shifted to an uptrend after a vicious bear market rally.

The S&P500 ($SPX) soared 6.2% last week, breaking through a downward trendline and recapturing the 50-day moving average.  The index starts this week just below the 200-day moving average, since the 50 & 200 crossed the week prior.

Technical analysis of daily SPX prices

2022-03-20-SPX Trendline Analysis - Daily

The ADX directional indicators flipped on Friday, so the ADX signal switches to bullish.

Price and volume moves back to an uptrend, after reclaiming the 50-day moving average on massive volume.  Granted, that volume came on massive options expiration ($3.5 trillion), but the signal is the signal. This time around, the case for an uptrend was supported by leading stocks breaking out of proper price patterns.

Technical analysis of daily SPX prices

2022-03-20- SPX Elliott Wave Analysis - Daily - Primary 2

For Elliott Wave, last week’s rally broke through resistance at 4415 and invalidates the prior wave count as well as several other potential bearish counts.

After a lot of back and forth, I’m not sure what the count is at the moment. There are bearish counts that show the SPX is "correcting" higher in the overall bear market.  There’s a bullish count showing the entire Primary 2 correction is over.  It’s possible, but not probable, given the current headwinds facing stocks. The jump in RSI reading shows a shift in price action,and the signal turns to an uptrend heading into this week.

It's not clear if the worst has past or if this is just the eye of the storm, so to speak.  Best hypothesis is that we're in the eye of the storm. In terms of Fibonacci levels, a B-wave (if that’s what we’re in) typically retraces 38% to 79% of Wave A.  Key levels to watch are 4550-4600 for resistance and 4158 for support.


As mentioned last week and the week prior, the 0.25% rate hike announced by the U.S. Fed was totally expected. The fact that we did not get any surprises (i.e. 0.5% rate hike, more than a hike a meeting) was seen positively by market participants.

Shorter term, ~3.5 trillion dollars worth of options expired last week (weekly, monthly, and quarterly expiration).  This is probably the main driver of last week's melt-up in stocks (versus the rate hike or any geopolitical news).

Even though the signal switched to an uptrend, keep an eye on your holdings.  If you haven't done so already, use the current strength to your advantage and rebalance your holdings.  Q2 earnings season is going to be difficult for many companies, particularly technology-related names.

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 (InvestSafely),LinkedIn (Invest-Safely), 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 commentary and analysis, go to ELLIOTT WAVE lives on by Tony Caldaro. Current counts 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).