Weekend Stock Market Outlook

Stock Market Outlook For The Week of
December 30th = Downtrend

INDICATORS

20/50 Day Moving Averages: Downtrend
Price & Volume Action: Downtrend
Objective Elliott Wave Analysis: Downtrend

COMMENTARY

Better late than never? We had to wait until after Christmas, but Santa Claus delivered a rally. Not as much as we would have liked, I'm sure, but better than another sell-off. No change in outlook though. Equities have some work to do before giving the all clear to put your money at risk.

On the bright side, I don't think we're in danger of a 2008-2009 style sell off just yet (see last week's article "Great Recession Revisited"), so your portfolios should recover a bit.

All the indexes are well below their 20, 50, and 200 day moving averages.

2018-12-30 - US Stock Market Averages

The price/volume combo remains in a downtrend as well. There are only a handful of names on my growth stock list that have anything even close to resembling a solid price chart.

OEW still calls for a downtrend, and thinks we could take another run at the lows. But, per their analysis, that could be the end of the downtrend...even the bear market(!).

The S&P ($SPX) found support around 2,350, and looks to have broken the falling trendline in play for most of December. Prices still have to recover ~10% just to get back to the downward trendline and/or 200-day moving average! The ADX reflects the bearish we experienced last week.

2018-12-30 - SPX Technical Analysis - Daily

Switching to a weekly view, the 2395 support level held and prices are resting on the 2480 support/resistance level.

2018-12-30 - SPX Technical Analysis - Weekly

After the bounce back, bulls will say we're a week into a V-shaped recovery. The bears will say we need another test of the lows to truly bottom. Our job is to make money or not to lose a lot if we decide to initiate positions.

We've got another holiday shortened trading week coming up as we celebrate the new year.

Wishing you investing success in 2019!

Happy New Year!

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If you find this research helpful, please tell a friend. If you don't find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has performed as a stand-alone, signal generator using past performance estimates:

• 2015 Performance - Stock Market Outlook
• 2016 Performance - Stock Market Outlook
• 2017 Performance - Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro. Charts provided courtesy of stockcharts.com.

1. Invest-Safely.com
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2. Tracking the Stock Market
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3. Stock Market Outlook for 2018-12-30

Weekend Stock Market Outlook

Stock Market Outlook For The Week of
December 23rd = Downtrend

INDICATORS

20/50 Day Moving Averages: Downtrend
Price & Volume Action: Downtrend
Objective Elliott Wave Analysis: Downtrend

COMMENTARY

Investors say that prices take the stairs on the way up, and the escalator on the way down.  I think the market opted for the elevator this month.  But there's still hope; the Santa Claus rally (sustained increases in the stock market that begin on December 26th and extend through January 2nd) is still on the table.

All the indexes are WAY below their 20, 50, and 200 day moving averages.

2018-12-23 - US Stock Market Averages

The price/volume combo remains in a downtrend as well.  Volume rose during the week, then exploded Friday. The quadruple witching day (market index futures, market index options, stock options and stock futures expired) at the end of the last full trading week in 2018 was the main catalyst.

OEW (downtrend) saw last week expected support level wiped out by falling prices:

There were three Fibonacci retracement levels for support..: (38.2%) 2509, (50.0%) 2376, and (61.8%) 2242. Obviously the first one did not hold. Our worse case support has been around SPX 2400, which is also close to the 50% retracement...

On to some trendlines. Sadly, there was no bounce back to the recent trading range, nor was there a floor at 2580 from early 2018.  The S&P ($SPX) fell to prices we haven't seen in over a year (August 2017).  Now we need to go back almost 2 years to see where we might bottom...elevator indeed.

2018-12-23 - SPX Technical Analysis - Daily

There was support around 2480, which would have been a 16% correction. Next up is 2395 (similar to the OEW viewpoint), then we go down to 2276, and then on to 2184. Those levels represent 19%, 23%, and 26% declines from the all time of 2940, respectively.

2018-12-23 - SPX Technical Analysis - Weekly

Right now, the SPX is ~18% from the September high, which is the largest correction since 2011 (~20%).  Not quite bear market territory, but close...no wonder the twitterverse is losing its collective mind.

To be fair, we haven't seen many corrections since 2009.  And when we did see a drop, it was typically V-shaped with prices rebounding quickly.  So it's rational to think these moves to the downside are abnormal. They're not.

Historically, stocks look really oversold right now. Could they go lower and be more oversold? Of course. Either way, last week's action is a fantastic opportunity to review your buy and sell rules. When the markets are "always" in an uptrend, it's easy to lose discipline and not get burned. Even when the markets move sideways, investors don't want to "trade", so they ignore signals and wait for a rebound.

We're not in a recession just yet, so a v-shaped recovery wouldn't surprise me. Maybe the executive and legislative branches will act like adults, reach an agreement, end the government shutdown, and the Santa Claus rally will come to town.  Now that would be a Christmas miracle.

We have a short, low volume trading week ahead, with partial session Monday (Christmas Eve) and no trading on Tuesday (Christmas Day). A great time to log out of StockTwits, turn off CNBC, and relax!

Warmest wishes and a joy filled holiday week to you and your family.

Merry Christmas!

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If you find this research helpful, please tell a friend. If you don't find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has performed as a stand-alone, signal generator using past performance estimates:

• 2015 Performance - Stock Market Outlook
• 2016 Performance - Stock Market Outlook
• 2017 Performance - Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.  Charts provided courtesy of stockcharts.com.

1. Invest-Safely.com
>>
2. Tracking the Stock Market
>>
3. Stock Market Outlook for 2018-12-23

Weekend Stock Market Outlook

Stock Market Outlook For The Week of
December 16th = Downtrend

INDICATORS

20/50 Day Moving Averages: Downtrend
Price & Volume Action: Downtrend
Objective Elliott Wave Analysis: Downtrend

COMMENTARY

So far, Santa hasn't come to our rescue with his rally yet. Investors are probably rethinking those GI Joe's with the kung-fu grips (if you don't know that line, the movie Trading Spaces would make an excellent last minute gift).

All the indexes are still below their 20, 50, and 200 day moving averages to start this week.

2018-12-16 - US Stock Market Averages

The price/volume combo remains in a downtrend as well. Trading volumes were just about average across the week, but institutions still appear to be in sell mode.

OEW continues with the probable downtrend call, while looking for the SPX to find support at 2577 or even 2550.

The S&P ($SPX) closed at 2599.95 last week, falling below the 2630 support level we've been watching. Friday was also the first time the SPX closed below 2630 since April! A bounce-back on Monday would salvage the sideways trading range, but for now it looks done and dusted.

2018-12-16 - SPX Technical Analysis - Daily

The 2580 support level, which was established way back between February and April, is now in play...which coincides with the OEW target mentioned earlier.

2018-12-16 - SPX Technical Analysis - Weekly

Not much we can do right now on the long side for growth strategies. Fingers crossed and stops tight if you do decide to brave the waters. For income strategies, some utilities have been doing really well recently, but that's about it. The good news is that P/E ratios are beginning to come down. When the market turns around, there will be some solid names for sale.

Participate. Protect. Prepare.

---

If you find this research helpful, please tell a friend. If you don't find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has performed as a stand-alone, signal generator using past performance estimates:

• 2015 Performance - Stock Market Outlook
• 2016 Performance - Stock Market Outlook
• 2017 Performance - Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro. Charts provided courtesy of stockcharts.com.

1. Invest-Safely.com
>>
2. Tracking the Stock Market
>>
3. Stock Market Outlook for 2018-12-16

Weekend Stock Market Outlook

Stock Market Outlook For The Week of
December 9th = Downtrend

INDICATORS

20/50 Day Moving Averages: Downtrend
Price & Volume Action: Downtrend
Objective Elliott Wave Analysis: Downtrend

COMMENTARY

Yikes. Just when things started looking brighter, U.S. equities sold off...hard. One week after the switch to an uptrend, the outlook sours and reverts to a downtrend, with confirmation from all 3 signals.

All the indexes start this week below their 20 day moving averages, sending this signal back to a downtrend. They're all below their 200-day moving averages as well.

2018-12-09 - US Stock Market Averages

In almost a complete 180 from last week, the price/volume signal switches back to a downtrend signal. Last week's losses came on higher trading volume...not the kind of price action that supports an uptrend. Strong fundamental performance didn't provide shelter from the storm either. Lululemon reported Q3 results Thursday, beating top and bottom line estimates and maintaining their future outlook. The result? Opened Friday at $132, closed at $113 and change...down 14% for the week.

OEW switched back to a downtrend. Even Tony commented on the difficulty identifying trends given the current market conditions and gyrations.

The S&P ($SPX) wiped out two trendlines last week; the short term uptrend, and the intermediate downtrend. If you squint and give yourself some wiggle room, it almost looks like the SPX is range-bound between 2810 and 2630. Prices ended the week at 2633.

2018-12-09 - SPX Technical Analysis - Daily

Longer term, 2600 (give or take a couple percentage points) has served as the floor of support most of 2018. If it doesn't hold, look for a new downward price channel to develop. Since the stock markets were closed on Wednesday, we didn't add another week of high volume selling.

2018-12-09 - SPX Technical Analysis - Weekly

You may have heard about the yield curve inversion last week. Normally, more uncertainty exists over longer time periods, which brings higher risk, which requires higher yield to compensate. An inversion means an expectation of higher risk in the short term.

Yield Curve Examples - 2018-12-09

In this case, the short end of the yield curve (3 and 5 year yields) inverted slightly, meaning the yield on the 3 year was higher than the 5 year. Before you head for the hills, true inversion, the kind that preceded every recession in the past 60 years or so, occurs when the short end (1 year) is higher than the long end (10+ year). Even then, a recession starts anytime from 6 to 24 months after an inversion event. And here's a silver lining. Per The Fat Pitch:

"SPX normally gains over the next 3 and 9 months after the first 5-3 inversion of the cycle (from Troy Bombardia; note that 1973 was the year of the oil embargo)."

So you've got some time to get things in order. It's pretty typical bear market price action actually, but that means admitting and accepting we're in one. One thing we can all agree on...it's a traders market.

Participate. Protect. Prepare.

---

If you find this research helpful, please tell a friend. If you don't find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has performed as a stand-alone, signal generator using past performance estimates:

• 2015 Performance - Stock Market Outlook
• 2016 Performance - Stock Market Outlook
• 2017 Performance - Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro. Charts provided courtesy of stockcharts.com.

1. Invest-Safely.com
>>
2. Tracking the Stock Market
>>
3. Stock Market Outlook for 2018-12-09

Weekend Stock Market Outlook

Stock Market Outlook For The Week of
December 2nd = Uptrend

INDICATORS

20/50 Day Moving Averages: Mixed
Price & Volume Action: Uptrend
Objective Elliott Wave Analysis: Uptrend

COMMENTARY

A change in language from Fed chair Powell put big investors back in buy mode, and the market rallied from there. At the G-20 summit this weekend, the U.S. and China agreed to start negotiations and ease trade tensions, with the U.S. postponing plans to increase tariffs on Chinese goods. A solid week of trading, the perception of a more accommodating Fed, and a temporary reprieve from tariffs puts the markets back in an uptrend, just in time for the annual Santa Claus rally.

All the indexes start this week above their 20 day moving averages. And their all fairly close to, if not right above, their 50 day moving averages. So this signal moves from downtrend to mixed.

2018-12-02 - US Stock Market Averages

The price/volume signal switches back to an uptrend signal, with last week's gains coming on higher trading volume. Growth stocks have had 6-8 weeks to build new bases, so this is about the time you'd want to see new breakouts from names that held up well during the sell-off. Time to check those buy lists!

OEW switched to an uptrend. It appears they ~2 weeks early in the call for an uptrend...a common issue when trying to call a trend change.

The S&P ($SPX) found its footing, looks set to give us that Santa Claus rally to close out the year. Prices broke through the second leg down (after failing to do so on the 19th. The index also closed just above the October/November downtrend, another positive sign in line with the uptrend generated by the signals above. The ADX isn't quite there yet, but is trending in the right direction (DI- coming down, DI+ rising, and the weakening bearish trend).

2018-12-02 - SPX Technical Analysis - Daily

Looking back of the past few weeks, you can see the back and forth between uptrends and downtrends in each of the signals. This is one reason to use more than one signal in your trading process. It's not perfect, but the odds of success are higher...or the odds of being wrong and losing money are lower, if you have your safe investing hat on.

Participate. Protect. Prepare.

---

If you find this research helpful, please tell a friend. If you don't find it helpful, tell an enemy. I share articles and other news of interest via Twitter; you can follow me @investsafely. The weekly market outlook is also posted on Facebook and Linkedin.

You can check out how well (or poorly) the outlook has performed as a stand-alone, signal generator using past performance estimates:

• 2015 Performance - Stock Market Outlook
• 2016 Performance - Stock Market Outlook
• 2017 Performance - Stock Market Outlook

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro. Charts provided courtesy of stockcharts.com.

1. Invest-Safely.com
>>
2. Tracking the Stock Market
>>
3. Stock Market Outlook for 2018-12-02