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  5. Stock Market Outlook - 2023-03-19

Stock Market Outlook
For The Week Of March 26th = Downtrend


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


The start market outlook remains in a downtrend heading into the final week of March.

The S&P500 ($SPX) rose 1.4% last week, same as the week prior, with prices bouncing between the 50-day and 200-day moving averages. Trading volume receded to average levels.

Technical analysis of daily SPX prices

2023-03-26-SPX Trendline Analysis - Daily

No change in the ADX or price/volume signals this week.  Elliott Wave remains mixed; key levels are 3765 and 4196.

Technical analysis of daily prices

2023-03-26- SPX Elliott Wave Analysis - Daily - Primary Y (Bearish)

The bearish wave count shows a completed Minor 1.  The ongoing Minor 2 likely takes the SPX back toward 4196.

The bullish wave count shows a completed Minor 2.  At this point, the Minor 3 pattern isn't very clear, thanks to all overlapping highs and lows in the price action.

Technical analysis of daily prices

2023-03-26- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)

This week's MACD cross-over confirmed upward price momentum, but didn't leave much of a buffer. The neutral reading from the RSI(5) doesn't provide much insight, direction-wise, either.


You checked your account balances and position sizes made sure they're all good, yes?

After all the will they, won't they, UBS "acquired" Credit Suisse after the Swiss government engineered the transaction.  Now it's Deutsche Bank's turn to twist in the wind, only this time it's not a bank run.  Instead, the cost of credit default swaps (i.e. CDS) drove stock price volatility. CDS's insure bondholders against the bank defaulting on its debt.

Across the pond, the U.S. Federal Reserve increased rates by 0.25% and acknowledged that tighter credit conditions will have a similar impact as a rate hike.  It's likely that "rate hikes" are largely behind us now, in which case the U.S. enters the "for longer" part of the Fed's "higher for longer" script.

The next Fed meeting is in May...ample time for financial media to make their case for future Fed policy.  While wading your way through it all, remember that two week ago, a 0.5% rate hike was certain.  One week ago, a pause (at least) was certain.  Neither were true.

And we're about to enter the blackout period for corporate buybacks (the quiet period ahead of the next earnings season), so the market will need to find fuel from other areas.

Data releases this week include inventories (Tuesday), housing (Tuesday & Wednesday), and PCE data (Friday).

Best To Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don't, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics

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