Stock Market Outlook
For The Week Of October 1st = Downtrend

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

The S&P500 ($SPX) fell 0.7% last week, breaking a major level of support; a trendline  dating back to the October 2022 low!  A quick recovery is needed this week in order for the trend to remain valid. As of Friday's close, the index was ~3.5% below the 50-day moving average, and ~2% above the 200 day moving average.

2023-10-01-SPX Trendline Analysis - Daily

The ADX directional indicators remain bearish, as does the price/volume indicator.  The SPX did start a rally attempt on Wednesday. and will need to show a follow-through on higher than average volume sometime after Monday.

2023-10-01- SPX Elliott Wave Analysis - Daily - Primary Y (Bearish)

No change in Elliott Wave analysis either.  The index completed a 3rd Minute wave on Wednesday, but we still don't know if the Minor wave is corrective (3 wave pattern) or  impulse (5 wave pattern).

2023-10-01- SPX Elliott Wave Analysis - Daily - Primary 1 (Bullish)

The RSI(5) shows a bullish divergence, and the MACD histogram generated an inflection, increasing the probability of rising prices over the next 2 weeks or so.  Near-term resistance is at 4430, support at 4238.

Looking at the patterns from a longer term (weekly) viewpoint has something for both bulls and bears.  The bullish count shows that the current downtrend should be complete, with an oversold RSI(5), a bounce off the 34 week moving average, and no violation of the Minor 1 high of 4195.

2023-10-01- SPX Elliott Wave Analysis - Weekly - Primary 1 (Bullish)

The bearish count shows the SPX in the middle of the first wave down, with a bearish cross-over in the MACD, an increasing rate of change in the MACD histogram.

2023-10-01- SPX Elliott Wave Analysis - Weekly- Primary Y (Bearish)

COMMENTARY

Last week did not disappoint, in terms of money flow and price action, during the week.  But you'd be forgiven for not noticing, as the index ended the week almost break-even. Headline PCE for August came in at +3.5% y/y, slightly higher than the +3.4% y/y reading in July. Core PCE fell to +3.9% y/y, from +4.3% y/y in July.

After a lot of hand wringing and gnashing of teeth, the U.S. Senate passed a continuing resolution on Saturday, which was then signed into law. The CR keeps the government funded for another 45 more days. Hopefully, the legislative branch can get their act together and finalize funding within that time period.

This week, we get JOLTS and Non-Farm Payroll data, but the main event starts next week with big banks set kick off Q3 earnings season.

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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