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  3. Stock Market Outlook - 2021-01-24

Stock Market Outlook
For The Week Of January 24th = Uptrend

INDICATORS

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

ANALYSIS

The stock market outlook remains in an uptrend and recovered a bit of strength last week.

Technical analysis of daily SPX prices

2021-01-24-SPX Trendline Analysis - Daily

The S&P500, ($SPX) sits in the middle of a rising price channel, maintaining a fairly constant gap to the 50 and 200 day moving averages since November.

The ADX reading is on the rise (a bullish sign), although the absolute value remains below the threshold for strong trends...not surprising considering the narrow price channel in place.

Technical analysis of daily SPX prices

2021-01-24-SPX Elliott Wave Analysis - Daily - Primary 1

Elliott Wave remains in an uptrend; the next correction likely takes the S&P back to the 3550-3600 support levels. By the time that happens, I’d guess the support trendline and the 200-day moving average will be near that level as well.

COMMENTARY

Another week, another round of quarterly earnings reports; a little over 20% of the S&P500 to be inexact. Good or bad, market prices are at historical extremes. Check out this chart from John Mauldin, courtesy of Doug Kass:

S&P500 Valuations
https://ggc-mauldin-images.s3.amazonaws.com/uploads/newsletters/Image_5_20210122_TFTF.png

That's not to say prices can't go higher...just that the hamburgers are expensive, to reference a Buffett euphemism. For me, it means great trading opportunities are ahead, but relatively poor investing opportunities.

Be ruthless when pruning your money tree; now is definitely NOT the time to be in love with your holdings (not that there is ever a good time for that).

Best to Your Week!



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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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