The S&P500 ($SPX) rose 0.5% last week, after finding support at the 200-day moving average. As of Friday's close, the index was ~2.5% below the 50-day moving average, and ~2% above the 200 day moving average.
2023-10-08-SPX Trendline Analysis - Daily
The ADX directional indicators remain bearish.
Price/volume switched to mixed after a big up day on Friday, which came on Day 7 of the latest rally attempt. That said, the latest attempt isn't without issues, and those issues are why the signal's not an outright uptrend.
2023-10-08- SPX Elliott Wave Analysis - Daily - Primary Y (Bearish)
As noted above, the index remains below the 50-day moving average. Also, Tuesday's close was lower than the start point of the rally. Both of those data points make the price action favor a an oversold bounce, rather than the start of a new bull market. In either case, watch for follow-on strength or weakness in prices to confirm direction.
No change in Elliott Wave analysis, though the charts suggest the latest, downward wave has completed. However, the SPX's proximity to the August 18th low creates a bit of uncertainty in that statement, so more price action is needed.
2023-10-08- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)
Near-term resistance is the August 18th low (4335), and the support level is last week's low of 4216.
Discussing personal finance and investing seems surreal in light of the brutal start of a second ground war, this time in Israel. The geographic scope is limited today, but it's easy to imagine a much larger conflict unfolding, given the alliances within the region, which would impact global markets.
While I'm not an expert on Middle Eastern diplomacy, I am a student of history and geopolitics, with excellent reading comprehension skills. Most of the online commentary takes a page from the current "engage and enrage" playbook now prominent on social media. The loudest "voices" provide political finger pointing; weak attempts to blame political opponents or identify singular/simple causes. Real solutions won't come in the form of short-form soundbites or clever one-liners about whose at fault for what.
Back in the U.S., politicians struggle to find real solutions to simpler problems, with the legislative branch of government snatching defeat from the jaws of victory last week. After passing a stop-gap CR to fund the government for another 45 days, Republicans ousted the Speaker of the House. Passing another budget within 45 days was already a difficult task. Now, the House of Representatives must elect a new speaker AND THEN pass their version of a budget. Odds of that happening are low.
Last week's employment data was mixed heading into Friday's NFP release, with JOLTS showing higher job openings, but ADP showing lower payrolls versus expectations. Friday's Non-Farm Payroll data blew away estimates, which caught equity and bond markets off guard and lead to a very volatile trading session. The latest consumer price index (CPI) and producer price index (PPI) data is set for release this week, and major banks kick off Q3 earnings season.
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
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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