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  3. Stock Market Outlook - 2022-04-10

Stock Market Outlook
For The Week Of April 10th = Uptrend

INDICATORS

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

ANALYSIS

The stock market outlook remains in an uptrend while we wait for confirmation of its next move. The signal could go either way based on market action this week.

The S&P500 ($SPX) fell 1.3% for the week. The index remains above the 50-day moving average, but did break the 200-day before coming to rest at that level to end the week.

Technical analysis of daily SPX prices

2022-04-10-SPX Trendline Analysis - Daily

The ADX fell below 20, meaning the market is no longer trending. The directional indicators crossed over mid-week, and remained bearish by a few tenths of a point.

Price and volume wasn't much help either. The index is still above the 50-day while 2 distribution days popped up.

Technical analysis of daily SPX prices

2022-04-10- SPX Elliott Wave Analysis - Daily - Primary 2

Elliott Wave is still mixed, since the SPX is still between confirmation levels. 4650–4670 to the upside and 4300 to the downside, though a close below 4416 would probably be enough.

COMMENTARY

The U.S. Federal Reserve released minutes from their March meeting last week. There's nothing really "new"; instead, the minutes show the likely path the Fed will take to try and lower inflation.

In addition to 0.5% rate hikes, which are now more probable rather than just a possibility, Fed members are in agreement on reducing the Fed's balance sheet (so-called Quantitative Tightening). Per Bloomberg, the treasury market is pricing in ~9 rate quarter-point rate hikes by the end of 2022! Seems unlikely, but stranger things have happened...

Markets are closed for Good Friday, making this a shorter trading week. But that doesn't mean there aren't opportunities for fireworks. March CPI data will be released Tuesday before market open, and retail sales come out on Thursday. And members of the Fed have speeches almost every day! So the stock market gets a few chances to show us what's already being priced in versus what still needs to be digested.

Q1 earnings season also kicks off this week, with several major banks reporting on Wednesday and Thursday).

And finally, the third Friday in April is options expiration, so monthly/weekly option expiration will shift to Thursday due to the market closure.

Best To Your Week!


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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.

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