The S&P500 ($SPX) fell 1.3% last week. As of Friday's close, the index was ~0.5%below the 50-day moving average, and ~7% above the 200 day moving average.
2023-09-10-SPX Trendline Analysis - Daily
The ADX directional indicators swung back to bearish mid-week, but are on the verge of crossing back to bullish as of Friday's close.
Price/volume shifted back to a downtrend, after dropping below the 50-day moving average on increasing volume.
2023-09-10- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)
Elliott Wave analysis remains mixed, although the bullish count required some adjustment after last week's movement. The index dropped below short-term support (4483), increasing the probability of more downside to complete the Minor 4 wave. Short-term resistance is now 4541, while the first level of support is 4335.
2023-09-10- SPX Elliott Wave Analysis - Daily - Primary Y (Bearish)
The bearish count completed its second wave last Friday, after retracing more than 61.8% of the first wave; could be a Minor 2 or a Minor B depending on the length of the downtrend.
Traders returned from summer holiday last week, and found themselves in familiar, albeit uncomfortable, territory.
On the fiscal front, investors in the U.S. will be hearing a lot about government funding (dis)agreements over the next few weeks (just like May/June). This time, rather than a debt ceiling, Congress needs to agree on a continuing resolution, or “CR”, to keep the lights on.
Most federal agencies are funded on an annual basis by appropriations. However, none of the appropriation bills have been enacted for the next fiscal year, which starts October 1. CR's are stopgaps, used to give lawmakers time to enact appropriations for the full year, while avoiding government shutdowns due to lack of funds.
Markets and pundits will digest the latest round of economic data this week, including August CPI (Wednesday), August PPI (Thursday) and retail sales (Thursday). All the while, you'll get to see the latest tea-leaf reading regarding another U.S. FOMC rate hike. Friday is quarterly options expiration, so watch for higher trading volumes if/when institutions shift their positioning for the fourth quarter.
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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