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  3. Stock Market Outlook - 2020-12-06

Stock Market Outlook
For The Week Of December 6th = Uptrend

INDICATORS

    ADX Directional Indicators: Uptrend
    Price & Volume Action: Uptrend
    Elliott Wave Analysis: Uptrend

ANALYSIS

The stock market outlook kicks off the last month of 2020 in an uptrend.

Technical analysis of daily SPX prices

2020-12-06-SPX Trendline Analysis - Daily

The S&P500 ($SPX) starts the week at all time highs. The ADX and price/volume both remain in uptrends, though the trend isn’t very strong (ADX) and we’ve picked up some distribution days (price/volume).

The index is also ~14.5% above the 200-day moving average; remaining in extended territory verses historical performance.

Technical analysis of daily SPX prices

2020-12-06-SPX Elliott Wave Analysis-Daily-Primary 1

Elliott Wave remains in an uptrend. The negative divergence mentioned last week was short lived. And the updated monthly view now reflects the Primary 1 count. Interesting to note there are substantial negative divergences in both the RSI and the MACD histogram right now.

Technical analysis of daily SPX prices

2020-12-06-SPX Elliott Wave Analysis-Weekly

The monthly view is updated to reflect the change to a Primary 1. Interesting to note there are substantial negative divergences in both the RSI and the MACD histogram right now, and prices extended above the megaphone pattern mentioned last month.

COMMENTARY

November was a great month for the stock markets, with the S&P gaining 13%. Good news related to the pandemic didn't hurt (coronavirus vaccines allow investors to focus on "when" no "if" the economy reopens).

That's not to say things are all good just yet. The latest unemployment report underwhelmed, thanks to a surge in cases during the month. We still don't have additional fiscal stimulus, but any further weakness will likely force lawmakers to compromise.

December is usually a good month for stocks...I'm sure everyone is looking forward to a Santa Claus rally!

Best to Your Week!

P.S. Great articles on the economy from Steve and John this week on debt, interest rates, and the challenges we face going forward; definitely worth your time.






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Charts provided courtesy of stockcharts.com.

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.

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