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Stock Market Outlook
For The Week Of June 18th = Uptrend

INDICATORS

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

ANALYSIS

The stock market outlook starts the week in an uptrend, on the back of lower than expected inflation, no Fed rate hike, and the largest option expiration on record.

The S&P500 ($SPX) rallied 2.6% last week.  The index is up ~15% since the start of the year, up ~26% from the bear market low (Oct 2022), and down ~9% from the high of the last bull market (Feb 2022).

Technical analysis of daily SPX prices

2023-06-18-SPX Trendline Analysis - Daily

No change in signal from the ADX, but both directional indicators (DI+/ DI-) sit at extreme levels. The last time the ADX set-up like this was at end of August, 2020. A 10% correction occurred during the next month.

Price/volume also shows an uptrend in place.  Even the Innovator IBD 50 ETF ($FFTY) fund joined the action, rising past prior resistance levels.

Technical analysis of daily prices

2023-06-18- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)

Believe it or not, there's no change in Elliott Wave counts.  Both the bullish and bearish views allowed for last week's move within their respective 5th waves.  As mentioned last week, watch for a bearish MACD cross-over in the daily charts to confirm the end of the rally.

COMMENTARY

An impressive rally in U.S. stocks last week, with economic data showing the effect of higher interest rates.

The headline number for May consumer inflation data (CPI) came in at +4.0% Y/Y, which is down 0.9%. Core CPI also declined +5.3% Y/Y, which is a deceleration of 0.2%. The Producer Price Index (PPI) declined 0.3 percent in May, showing +1.1% Y/Y.

In response to slowing inflation, the U.S. FOMC announced a pause or "skip" in interest rate increases.

Retail sales were slightly better than expected, rising 1.6% Y/Y, showing that the consumer is still willing to spend.  However, initial jobless claims appear to be bottoming, highlighting that producers remain cautious when it comes to labor costs.

And after a week of "dovish" data, market participants used Friday's quadruple witching day to book some gains.

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



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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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