Weekend Market Outlook: More Near-Term Downside For Stocks?

The S&P 500 (SPY) finished lower for the second day in a row starting a near-term (blue line) pullback as the intermediate line (green line) is crossing above the chart’s midpoint.

This sets up the possibility for a 1-3 month run that matches the seasonal trend into the end of the year before weakness hits in January.

We are looking for a move into the 2750 area on the S&P 500. The NASDAQ (QQQ) and Russell 2000 (IWM) relative weakness suggest there is more downside to occur in the short term.

The S&P 500 is looking at a move similar to late February-early March where bullish intermediate run off extreme lows did not reach new highs.

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The S&P 500 finished above the 200-day MA two weeks after closing sharply below it. As well, the S&P closed above the highs of the past two weeks.

The Dow Industrials finished back above its 50-day MA. And the close on the Russell 2000 is forming a death cross, which has actually been bullish for the small-cap index in the past.

Weekend Market Outlook Video – November 10:

Below are additional bullet points of market items discussed in this weekend’s video. Learn more about our service over at Market Scholars.

  • Sharp convergences to zero on the MACD usually don’t follow with upward divergence to extreme highs. Look for a pullback first to a smaller low below the chart’s midpoint.
  • The S&P 500 down from a new 4-week high from yesterday – less than 2 weeks after forming an extreme 4-week low. S&P closed above last week’s high, this week’s Heikin Ashi open and the four-week midpoint.
  • Volatility is trending lower but still not at moderating levels yet. This keeps the door open for bigger pullbacks in short term
  • Safe haven moves today but not extremes with strong performance in long-term bonds. In fact, biggest losers today were the biggest winners since the rally began
  • Weakness in crude oil can be attributed to strength in dollar since April that was never felt in the commodity price until the past two months.
  • During the run in the greenback, Energy, Industrials and Materials lagged. They have been bouncing strongly the past two weeks but have given up some of their gains today.

stock market indexes trading analysis trends chart_week november 12


Twitter:  @davidsettle42  and  @Market_Scholars

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.