Weekend Stock Market Outlook

Stock Market Outlook For The Week of
October 13th = Downtrend

INDICATORS

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

COMMENTARY

The stock market outlook flips to a downtrend, again with an asterisk.

The ADX direction indicators improved, but not enough to change the signal. Price and Volume starts the week mixed; price fell below the 50-day moving average mid-week (which would have flipped this signal and the overall outlook to a downtrend) and then recovered by Friday's close (putting the signal back to mixed).

The OEW signal actually flipped to a downtrend last week as well; had I published my post on Monday, the outlook would have been in a downtrend. This week, a similar situation occurred...OEW has yet to post, so the outlook has an asterisk again.

Technical analysis of daily SPX prices

2019-10-13 - SPX Trendline Analysis - Daily

Trendlines in the daily and weekly view received a slight adjustment, reflecting a new "low" in early October, and the downward slopping level of resistance through September's high's.

Technical analysis of weekly SPX prices

2019-10-13 - SPX Trendline Analysis - Weekly

Quite a week. President Donald Trump outlined the first phase of a deal to end a trade war with China on Friday. The key word is "outlined". With nothing written or signed, it's really just a cease-fire in the China trade war.

The phased approach will given everyone involved to kick the can down the road if they don't like the "current" phase. Can't agree on IP protections, that's the next phase. Trump even said that writing Phase 1 could take up to 5 weeks! The hope is that an agreement would be signed at the Asia Pacific Economic Cooperation on Nov. 16.

This basically means nothing is certain until an agreement is signed. For investors, this means a higher probability of price volatility (e.g. whiplash trades).

The U.S. fed also announced it would start growing it's balance sheet again. The last time we saw this, the intent was to lower long-term interest rates and boost the stock market. We called it Quantitative Easing (QE).

This time, the intent is to calm the overnight-lending market, which has made it difficult to control interest rates. Because the intent is different, the Fed doesn't want to call it QE. Call it whatever you want, it's the same "action", and actions always speak louder than words.

It's unlikely that the planned level of QE will have a big impact on market prices. Instead, this move is more about giving large investors confidence that the Fed will act if needed, even if those actions are largely symbolic.

As always, risk management and capital preservation are keys to surviving periods of uncertainty.

Two weekend outlooks with an asterisk highlights an important aspect of any system: data. When you leverage someone else's expertise, there is some risk involved. What happens if they get sick, or change their methods change?

Since this post is just an outlook, describing current market conditions, the risk is low. But this also highlights why it's so important for you to do your own research, your own analysis, and make your own choices.

Or, if you've hired someone to do it for you (an investment advisor), why it's so important for you to "approve" their choices. They are human, just like you, and can make mistakes.

Best to your week!


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.

Charts provided courtesy of stockcharts.com.

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 on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad. It's one of my favorites.

For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.

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.

IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
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.

Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).