Stock Market Outlook
For The Week Of November 3rd =
Uptrend

ADX Directional Indicators: Downtrend
On Balance Volume Indicator: Uptrend
Institutional Activity (Price & Volume): Mixed

ANALYSIS

The stock market outlook remains in an uptrend, but is on the verge of a trend change after another week of poor performance.

The S&P500 ( $SPX ) fell 1.4%.  The index sits ~0.5% above the 50-day moving average and ~7% above the 200-day moving average.

SPX Technical Analysis - November 03 2024

The ADX ( Average Directional Index ) flipped to bearish on Thursday, as the market continued its recent trend of lower highs and lower lows.  An ADX reading greater than 25 (currently 23) would confirm the signal.

OBV ( On-Balance Volume ) remains bullish, sitting just above the 3-month moving average.

Institutional Activity moved to mixed, as increased selling pushed the index down to the 50-day moving average and the distribution day count up to 7.

Bias took a negative shift last week, with several sectors moving to a bearish ($XLP, $XLE, $XLV, and $XLRE), while Materials and Utilities are now neutral.  The Communication Services sector ( $XLC ) outperformed, largely due to Google's ( $GOOG/$GOOGL ) performance.  Rate sensitive sectors, like Real estate ( $XLRE ) and Utilities ( $XLU ), were the weakest sectors, in response to rising Treasury yields.

Low Beta, Small Cap Value, Quality and High Dividend sector styles moved to a Neutral bias.  Small Cap Growth ( $IWO ) was one of two styles able to eek out a gain last week, while High Beta ( $SPHB ) led to the downside.

As expected, oil ( $USO ) retained the bearish bias that developed last Sunday evening, and went on to end the week as the worst asset class.  Bitcoin was the best class ( $IBIT ).  

COMMENTARY

ISM Manufacturing PMI continues to show a contraction in the sector, with demand weakening month over month.

September JOLTS was below expectations and fell from a negatively revised August number, indicating a cooling labor market. October NFP figures were far below expectations, but likely impacted by the strikes at Boeing and recent hurricanes. More concerning were the negative revisions to August AND September figures.

The "advance" Q3 GDP estimate showed an increase of 2.8%,  slightly lower than Q2, but well below the 4.4% seen last year.

Headline PCE for September showed inflation dropped slightly from a positively revised August figure, while core was flat.

This week we get ISM Services PMI ( Tuesday ), and the FOMC's verdict on another rate cut ( Thursday ).  U.S. elections are on Tuesday, so don't be surprised by volatility on Tuesday and Wednesday.

You don't need to wait for those events to protect yourself from volatility. When trades shift to bearish bias, it's time to lower exposure anyway. Even neutral bias is a sign to look elsewhere. Instead, put your money to work in areas that are showing signs of strength.

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

If you're interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link:

How to Make Money in Stocks: A Winning System in Good Times and Bad.

It's one of my favorites.

IMPORTANT DISCLOSURE INFORMATION
This material is for general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose. Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. Invest Safely, LLC is not a law firm, certified public accounting firm, or registered investment advisor and no portion of its content should be construed as legal, accounting, or investment advice.
The material is not to be construed as an offer or a recommendation to buy or sell a security nor is it to be construed as investment advice. Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person.
Hypothetical Presentations:
Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
The author and/or any reader may have experienced materially different performance based upon various factors during the corresponding time periods. To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including:
Model results do not reflect the results of actual trading using assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight
Back-tested performance may not reflect the impact that any material market or economic factors might have had on the use of a trading model if the model had been used during the period to actually manage assets
Actual investment results during the corresponding time periods may have been materially different from those portrayed in the model
Past performance may not be indicative of future results. Therefore, no one should assume that future performance will be profitable, or equal to any corresponding historical index.
The S&P 500 Composite Total Return Index (the "S&P") is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor's chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.

Investing involves risk (even the “safe” kind)! Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of underlying risk. Therefore, do not assume that future performance of any specific investment or investment strategy be suitable for your portfolio or individual situation, will be profitable, equal any historical performance level(s), or prove successful (including the investments and/or investment strategies describe on this site).

Investing Process Links