The S&P500 ($SPX) rose 2.3% last week; rallying into month and quarter end. The index currently sits 5% and 10% above the 50 and 200-day moving averages, respectively.
2023-07-02-SPX Trendline Analysis - Daily
No change in signal for the ADX or price/volume. Market leadership, as represented in the IBD Top 50 Innovators ETF ($FFTY), showed signs of accumulation last week.
2023-07-02- SPX Elliott Wave Analysis - Daily - Primary Y (Bearish)
Elliott Wave remains in a downtrend, even with last week's rally. Last weekend's signal shift appears to be early at first glance, but the bounce wasn't a surprise considering the prior rallies in late November 2022 and mid-February 2023, which also occurred after a MACD crossover. That said, further upside would be surprising based on the wave counts and likely shifts the signal.
2023-07-02- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)
Last weekend's Russian drama fizzled out as quickly as it started, with minimal impact on financial markets. Unfortunately, civil unrest in France this weekend renews the potential for volatility heading into a typically underwhelming week of trading activity.
As for last week's economic data, durable goods orders rose slightly and housing data was mixed. U.S. consumer confidence was better than expected, hitting the highest headline number since January 2022.
As expected, Personal Consumption Expenditure (PCE) for May showed inflation remaining high, but not as high as last month or last year's reading. The headline number came in at +3.8% y/y (vs. 3.8% estimate), while Core PCE was +4.6% y/y (vs. estimate of 4.7%).
The answer last week's closing question was A) Month & Quarter end mark-up. Based on the chart, profits were taken the prior week, with traders content to run things up before heading out of town for the long weekend.
U.S. markets have a shortened trading session on Monday and no trading session Tuesday, in observance of Independence Day on July 4th.
Best to Your Week!
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Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics
Charts provided courtesy of stockcharts.com.
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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