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Stock Market Outlook
For The Week Of September 24th = Downtrend


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


The stock market outlook kicks off autumn in a downtrend.

The S&P500 ($SPX) fell 2.9% last week.  As of Friday's close, the index was ~3.5% below the 50-day moving average, and ~3% above the 200 day moving average.

Technical analysis of daily SPX prices

2023-09-24-SPX Trendline Analysis - Daily

The ADX directional indicators made a bearish cross-over last Monday, re-shifting the signal back to an downtrend. More institutional selling last week confirms the downtrend for price/volume signals.

Price/volume remains in a downtrend with the index below the 50-day moving average and a high number of distribution days (8). The SPX hasn't been able to confirm the latest rally attempt with high volume buying, and we're well past the 4-10 day timeframe.  Friday's quarterly option expiration skewed trading volume, but the index sliced through the 50-day nonetheless.

Technical analysis of daily prices

2023-09-24- SPX Elliott Wave Analysis - Daily - Primary Y (Bearish)

No change in Elliott Wave analysis.  Last week's downside risk callout was prescient, as the SPX sliced through the short-term support level at 4430 and generating a bearish crossover in the MACD.   The market enters the week right at the next resistance level (4330), with the oversold RSI(5) suggesting a bullish bounce in the next week.  Near-term resistance is now at the prior support (4430).


The FOMC decided to maintain interest rates at their present levels, reiterating the "higher for longer" message and leaving the door open for future hikes.  The U.S. treasury market increased yields on its own to compensate (2 year through the 30 year).

The shutdown showdown continues in the U.S., as the legislative branch of government showcases its inability to perform basic functions like funding itself.  Watch for signs of U.S. Treasury intervention, which could be used to mitigate short-term market moves.

The United Auto Workers union expanded its labor strike against U.S. automakers.  While the economic impact has been relatively small so far, work stoppages slowly ripple through automotive supply chains (i.e. smaller suppliers), creating damage that lasts well after agreements are reached.

This week brings with it some interesting events, in terms of money flows. It's the last week in September, meaning both month and quarter end for equities; an important date for funds that measure performance in year-to-date terms. It's also year-end for some mutual funds, which may drive some profit taking due to the uncertain economic outlook. And we're entering the black-out period, ahead of Q3 earnings, when companies are not allowed to buy-back their stock.

Last but not least, August PCE data is released Friday pre-market.

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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