Weekend Stock Market Outlook

Stock Market Outlook For The Week of
July 1st = Uptrend

INDICATORS

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

COMMENTARY

U.S. stocks ended Q2 with a whimper, succumbing to selling pressure last week. The market averages gaped down, and then spent the remainder of the week struggling to recover. We start Q3 with the uptrend technically intact (i.e. no outright downtrend signals), although all the signals changed to "mixed". Good arguments could be made for switching them to downtrends, so monitor the markets this week and adjust. As of today, we're not quite there, but be prepared.

The first week in July starts with both the Dow and the NYSE below their respective 20 and 50 day moving averages. Those 2 indexes also sit below their 200-day moving average; a bearish signal. The NASDAQ and S&P500 are below their 20-day moving averages and above their 50 day moving averages (just barely). So the signal changes to mixed, though you could make a decent case for changing it to a downtrend.

Price charts for $SPX,$COMPQ,$INDU,$NYA,$RUT,$VIX,$TNX,$USD,$CRB,$GOLD

2018-07-01 - US Stock Market Averages

Price/volume action also weakened further last week. As mentioned above, the S&P is still above its 50 day moving average, but distribution days have increased. Quality growth stocks are extended, sitting well above their proper buy points, leaving the market averages in search of leadership to drive prices higher. Again, the signal changes to mixed, with the strong scent of a downtrend in the air.

OEW indicates a downtrend may be underway, with our next support level somewhere below ~2650.

For the S&P500 ($SPX), the ADX now sits at 20, with the bearish directional indicator (DI-) rising sharping after the cross over two weeks ago, highlight an increasingly strong bearish trend.

2018-07-01 - $SPX Technical Analysis - Daily

2018-07-01 - SPX Technical Analysis - Daily

The 2740 price level offered no support last week and the S&P closed below the lower channel and the 50-day on the 27th. The positive news in this otherwise downbeat update? The S&P recovered, and starts this week above both of those support areas. Similar to early May, but not quite as strong.

2018-07-01 - $SPX Technical Analysis - Weekly

2018-07-01 - SPX Technical Analysis - Weekly

From a weekly perspective, prices also found support at the long-term lower channel from early 2016.

If all those support areas around 2700 don't hold, the next support level is in the 2650's (per OEW and the 200-day/40-week moving averages). And after that we head back to the lowest closing price in February (2581). On the upside, 2787 is still the target for confirming a move higher.

A short trading week is on tap, with U.S. markets closed for Independence Day celebrations on July 4th. Hopefully you're looking forward to some vacation time in the near future as well!

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:

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