1. Invest-Safely.com
  2. >>
  3. Tracking the Stock Market
  4. >>
  5. Stock Market Outlook - 2022-06-05

Stock Market Outlook
For The Week Of June 5th = Downtrend


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


The stock market outlook maintains a downtrend signal, with the S&P500 poised for a repeat of February's price action. The S&P500 ($SPX) fell 1.2% last week, struggling to break through resistance between 4100 and 4200.

Technical analysis of daily SPX prices

2022-06-05-SPX Trendline Analysis - Daily

The ADX remains in downtrend. The index couldn't generate enough upward price movement to shift the directional indicators, though both fell throughout the week.

Not much happened on the price/volume front, with only 1 session of above average trading volume in the past 2 weeks. The lack of a high-volume follow-through day last week lowers the probability of success for the latest rally attempt.

Technical analysis of daily SPX prices

2022-06-05- SPX Elliott Wave Analysis - Daily - Primary Y

Elliott Wave shows 5-waves up and a negative divergence in the RSI, supporting the completion of an Intermediate (A). Intermediate (B) would head back towards the May low, with the MACD putting in a positive divergence (e.g. early March). Then it's back toward the mid-4000s for Intermediate (C) and the final leg of this year's second bear market bounce.


Adding to recent commentary on spending levels and consumer strength, several analysts trotted out wage growth as another sign that the consumer is just fine. Why? Everything else being equal, rising wages correlates to rising spending, which should maintain economy growth. The problem is that "everything else" is definitely not equal right now.

Inflation is running higher than wage growth, which means your costs are increasing faster than your income. You have more money coming in, but more money is going out even though you're not buying more stuff. And THAT is the critical factor most analysts aren't mentioning. The economy grows when consumption of goods and services increases...not necessarily when spending on goods and services increases.

Semantics, they say. Wrong. If you've bought gas this year, you know what I'm talking about. You're buying the same amount of gas, but it costs twice as much as it did last year. So your spending increased, but not your consumption. If anything, you're looking to reduce consumption as much as possible. And that's NOT a recipe for economic growth.

Businesses experience similar issues, so be on the lookout for companies taking down their guidance. Earnings season just ended and companies are already making negative revisions for the next one (e.g. Microsoft)!

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).