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Stock Market Outlook: February 8th =
Downtrend


The stock market outlook shifted to a downtrend on Thursday, but many bullish biases remain intact.  A continuation from Friday's reversal will make the change short lived.

Gold, Consumer Staples, and Mid-Cap Value outperformed; Oil/bitcoin, Communications, and Large-Cap growth lagged. Macro data was mixed, and non-farm payroll data was delayed until this week, joining retail sales, and CPI.

TREND ANALYSIS

The S&P500 ( $SPX ) fell 0.1% last week, as price traded to and through key levels:
  • ~1% above the 50-day moving average
  • ~7% above the 200-day moving average
Last week's volatility whipped around the technical indicators; 2 of 3 were bearish as of Thursday's close, moving the outlook to a downtrend.  Institutional activity recovered Friday; one more signal change is needed.

ADX Directional Index: Bearish

  • ADX direction indicators remained bearish all week
Institutional Activity: Bullish
  • Price broke the 50 dma on elevated trading volume Thursday, moving the signal to bearish and shifting the outlook
  • Price recovered bullishly Friday morning, flipping the indicator back to bullish.
On Balance Volume: Neutral
  • On-balance volume moved to neutral on Tuesday, testing it's trendline for the first time since August

Technical analysis chart of $SPX showing 6 months of candlesticks with 21-day, 50-day, and 200-day moving averages, volume with EMA(50), ADX(14) with +DI and -DI, and OBV with MA(62) through 2026-02-08.

Technical Analysis – $SPX – 2026-02-08

PERFORMANCE HIGHLIGHTS & COMPARISONS

S&P500 Sectors

Consumer Staples ( $XLP ) outperformed, though several sectors kept pace.  Communications ( $XLC ) underperformed.  Consumer Discretionary and Technology ( $XLY, $XLK ) fell to bearish bias.  Communications and Utilities ( $XLC, $XLU ) moved to neutral, and Financials ( $XLF ) moved back up to bullish.

Performance comparison of S&P500 sector ETFs ($XLC, $XLY, $XLP, $XLE, $XLF, $XLV, $XLI, $XLB, $XLRE, $XLK, $XLU, $SPY) showing 1-week, 4-week, and bias-shift returns.

S&P500 Sector Performance – 2026-02-08

S&P500 Investing Styles

Mid-cap growth ( $IJH ) led upside performance, and Large Cap Growth ( $IWF ) was the worst style. Last week's bias changes reversed:  Mega Cap Growth ( $OEF ) returned to neutral bias, and Defensives ( $POWA ) to bullish.

Performance comparison of investment style ETFs ($SPHB, $SPLV, $IWO, $IJH, $IWF, $OEF, $IWN, $IJJ, $IWX, $MTUM, $QUAL, $SPHD, $POWA, $SPY) showing 1-week, 4-week, and bias-shift returns.

Style Performance vs. S&P500 – 2026-02-08

Asset Classes

Gold ( $GLD ) led asset class returns. Oil reversed course from last week's gains, but Bitcoin ( $IBIT ) was the biggest loser again.  DM bonds ( $BNDX ) moved up to neutral bias, and EM bonds ( $PCY ) retreated to neutral.

Performance comparison of major asset class ETFs ($USO, $IBIT, $GLD, $SPY, $VEA, $EEM, $IEF, $BNDX, $PCY, $DXY) showing 1-week, 4-week, and bias-shift returns relative to the U.S. Dollar.

Asset Class Performance vs. U.S. Dollar – 2026-02-08

COMMENTARY

Markets

Institutions were selling, but selectively.  Index prices fell below key levels, then recovered.  The S&P500 trend indicators flipped to bearish, but the $SPY bias is back to bullish.  Some names broke out, some broke down.  Talk about mixed messages.

  • Traders sold large cap growth ( $IWF ) and technology stocks ( $XLC, $XLY, $XLK ).
  • Traders bought Staples, Energy, Industrials, Materials ( $XLP, $XLE, $XLI, $XLB ) and value stocks ( $IWN, $IJJ, $IWX ).

Tech companies are the largest weights in general indexes, like the S&P500 and the Nasdaq 100, so their capital flows have an oversized impact on index price movement.  Check out the equal weight version of the S&P500 ( $RSP ): price broke out to new highs on Friday!

Price chart of $RSP showing 2 months of candlesticks with 20-day and 50-day moving averages and volume through 2026-02-08.

$RSP Price & Volume Chart - 2026-02-08

I'd say the market is mixed, the goal of these weekly exercises is preserving captial and reducing losses, so erring on the side of caution is the correct course of action.  There is always another trade, but you have to have capital to participate.

Macroeconomic Data and Policy

January ISM Manufacturing PMI improved to 52.6%, representing the first expansion in 12 months. ISM Services PMI remained steady at 53.8%.

Job openings (JOLTs) fell year over year, signaling softer labor demand.  And consumer sentiment was better than expected, but well below last year's levels.

Non-farm payrolls were delayed a week due to the government shutdown.

Geopolitics

According to a U.S. trade representative, the U.S. is developing plans with Mexico, the European Union and Japan to implement minimum prices for critical, rare-earth minerals, triggering a sell-off in the sector.

The partial U.S. government shutdown ended last week.

EYES ON THE HORIZON

This week brings several important data releases:
  • Monday: --
  • Tuesday: Retail Sales
  • Wednesday: Rescheduled NFP
  • Thursday: Existing Home Sales
  • Friday: CPI

Best to Your Week!

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Content Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis (FRED), Hedgeye, StockCharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics.
Price and Volume charts provided courtesy of stockcharts.com.

Performance Methodology: All sector performance data is sourced from ThinkorSwim and reflects price‑only returns calculated using end‑of‑week closing data. Bias classifications follow a proprietary Invest Safely, LLC model and update only when trend conditions meet predefined thresholds. All calculations are consistent across every chart on this page.

Disclaimer: Invest Safely, LLC is an independent investment research and online financial media company. Use of Invest Safely, LLC and any products available through Invest‑Safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Looking for more information on the Stock Market Outlook Signals? You'll find it here:



If you're interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book via the following Amazon affiliate link:

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In the past, I reviewed 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.

For historical Elliott Wave commentary and analysis, go to ELLIOTT WAVE lives on by Tony Caldaro.

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The S&P 500 Composite Total Return Index (the "S&P") is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor's chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.

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