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Stock Market Outlook
For The Week Of
November 19th = Uptrend

INDICATORS

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

ANALYSIS

The stock market outlook heads into the third week of the current uptrend.  There's STILL no shortage of volatility within the stock market, despite the volatility index ($VIX) showing a low volatility environment.

The S&P500 ($SPX) gained 2.2% last week. The index starts this week 4% above the 50-day moving average, and ~6% above the 200-day moving average.

Technical analysis of daily SPX prices

2023-11-19-SPX Trendline Analysis - Daily

The ADX directional indicators remain bullish, as well as price/volume.

No change in Elliott Wave analysis versus last week, continuing to show a corrective-wave rally in progress.  The negative divergence in the RSI(5), noted last week, was a false signal.  Several wave counts are still possible.

Technical analysis of daily prices

2023-11-19- SPX Elliott Wave Analysis - Daily - Primary C (Bearish)

COMMENTARY

October headline CPI came in slightly below expectations, and well below last year, fueling a jump in the indexes on Tuesday.

  • Headline (Y/Y) : +3.2% vs. +3.7% last year vs. +3.3% expected
  • Core (Y/Y): +4.0% vs. +4.1% last year vs. +4.1% expected

October PPI performed similarly to CPI:

  • Headline (Y/Y) : +1.3% vs. +2.2% last year vs. +1.9% expected
  • Core (Y/Y): +2.4% vs. +2.7% last year vs. +2.7% expected

Last week's price movement definitely fell into the "high volatility" category.  But that can mean downside AND upside moves.  For example, Target ($TGT) gapped up ~14% after their earnings report, then added another ~3.5% intraday.  Walmart ($WMT), on the other hand gapped down 6.5% before market open on Thursday, then lost another 1.7% intraday.  Those types of moves suggest both stocks were mispriced, either in the days prior to the earnings report, or afterwards.

And while you can find examples of up and downside volatility within many asset classes, the "magnificent seven" (i.e. $AAPL, $AMZN, $GOOG/$GOOGL, $META, $MSFT, $NVDA, $TSLA) drive equity index performance right now, although $TSLA hasn't been pulling its weight this month.

A short trading week coming up, with U.S. markets closed on Thursday for the Thanksgiving holiday and an early end to Friday's session (1pm EST).  There's a 20-year treasury bond auction Monday afternoon (1pm).  If the previous longer-term bond auctions are any indication, this one will be lousy, send rates higher and equities lower.  Tuesday afternoon, we get a 10-year TIPS auction and release of the latest FOMC meeting minutes.

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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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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