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Stock Market Outlook
For The Week Of April 4th = Downtrend

INDICATORS

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

ANALYSIS

The stock market outlook remains in a downtrend, even though last week's price moves were impressive (i.e. another signal needs to indicate an uptrend before the overall outlook changes).

The S&P500 ($SPX) rose 3.5% for the week, rallying past the 50-day moving average, and breaking the trend of lower highs since early February.  Trading volume fell to below average levels.  The index closed out the first quarter up 7%, with that entire gain coming within the past 3 weeks.

Technical analysis of daily SPX prices

2023-04-02-SPX Trendline Analysis - Daily

The ADX directional indicators flipped to bullish on Wednesday, though the overall trend remains weak with reading near 12.

Price/volume moved to mixed on Wednesday; price closed above the 50-day moving average, but trading volume was below average.  Thursday and Friday's price gains also occurred on low volume, indicating those moves weren't supported by institutional buying. Look for a gain of 1.5% or more on above average trade volume to signal a confirmation of an uptrend.

Elliott Wave remains mixed, with 3765 and 4196 still the proverbial lines in the sand.  Last week’s analysis bore out, with the SPX rising towards 4200. This week, the MACD remains bullish but the RSI(5) is overbought.  This suggests a drop in the days ahead; probably back to the 4000 level. Updates to the monthly charts are at the end of the post.

Technical analysis of daily prices

2023-04-02- SPX Elliott Wave Analysis - Daily - Primary Y (Bearish)

In the bearish count, the index closed within the typical completion zone (61.8%+) for a second and suggests March's bear market rally is nearly complete.

Technical analysis of daily prices

2023-04-02- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)

The bullish wave count suggests that a move to the downside will be short-lived.

COMMENTARY

Last week's data releases maintained the trend of "mixed bag" reports; overall unemployment remains low, while inflation continues to rise, albeit not as much verses the prior month / year.

Short trading week ahead, with U.S. stock markets closed for Good Friday on the 7th.  Earnings season kicks off the following week, with reports from JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C).

With mixed signals, mixed bag datasets, and corporate quite periods ahead of earnings, capital flows (i.e. momentum) will be the name of the game.  So watch out for reversals and whipsaws over the next two weeks.

Best To Your Week!

P.S. If you find this research helpful, please tell a friend.
If you don't, tell an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics


Long-term Elliott Wave Count Updates

Technical analysis of daily prices

2023-04-02- SPX Elliott Wave Analysis - Weekly - Primary Y (Bearish)

Technical analysis of daily prices

2023-04-02- SPX Elliott Wave Analysis - Weekly - Primary 1 (Bullish)


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Charts provided courtesy of stockcharts.com.

For historical Elliott Wave commentary and analysis, go to ELLIOTT WAVE lives on by Tony Caldaro. Current counts can be found at: Pretzel Logic, and 12345ABCDEWXYZ

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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