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Stock Market Outlook
For The Week Of April 16th = Downtrend


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


The stock market outlook still shows a downtrend in place, despite the upward price movement since mid-March.  Below average trading volume continues to haunt the latest rally attempt.

The S&P500 ($SPX) rose 0.8% last week, and remains above the 50 and 200-day moving averages.  The index ended the week above a trendline of lower highs, but has a track record of retreating shortly thereafter in 2023.

Technical analysis of daily SPX prices

2023-04-16-SPX Trendline Analysis - Daily

The ADX signal remains bullish and shows the initial signs of a strengthening trend, although the overall reading remains below 20 (i.e. weak trend).

Price and volume is still mixed, because the index still lacks a true follow-through day.  Thursday's rally looking promising, but trading volume was too low.  Some readers pointed to March 31 as the follow-through, even though trading volume was below average.  But even that action would come with an asterisk, since the move occurred 11 days after the rally attempt (just outside the 4-10 day window).

Technical analysis of daily prices

2023-04-16- SPX Elliott Wave Analysis - Daily - Primary Y (Bearish)

No change in Elliott Wave entering the week. There's a negative divergence in the RSI(5), raising the probability that the Minuttewave pattern has ended.  Attention now turns to the MACD; look for a cross-over to confirm the bearish count.  Key levels carry over from last week:  resistance between 4150 – 4196, and support at 4050.

Technical analysis of daily prices

2023-04-16- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)


March inflation metrics were inline with estimates; CPI came in at 5% y-o-y, versus 8.5% at this time last year, while Core CPI rose 5.6% y/y.  For consumers, inflation is headed in the right direction; prices are still rising, but not as much as last March.  PPI came in at 2.7% y-o-y, versus 11.7% a year ago (!), while core PPI was up 3.6% versus 7.1% last March.  This was the first reading below 3% since January 2021.

Big banks showed up and showed out last week, particularly JP Morgan.  When was a last time you saw a bank stock rally 8% in a day?  In the past few weeks, it's been in the other direction!  But before you break out the party hats, consider what Hedgeye's Financial Analyst, Josh Steiner, had to say a few week's ago:  "Banks are supposed to be boring.  When they're not, it's usually not a good thing".

Earnings season kicks into high gear this week, with several widely held companies reporting ($TSLA, $NLFX, $JNJ, $TSMC, etc.).


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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