Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on January 28. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
What is investors’ worst enemy? Banking crisis? War? Rising interest rates? Inflation?
I don’t think it’s any of the above. We’ve essentially seen all of them in the past year, yet stocks haven’t gone anywhere for 10 months.
Here’s an interesting chart: S&P 500 performance over the past 11 months. The blue lines highlight the monthly closing levels for January (2 month ago), November (4 month ago) and May (10 month ago).
The percentage change, or rate of change (ROC), for the past 2, 4, 10 months has only been 1.20%, 1.28%, 2.53% (as of yesterday’s close). That’s a tiny range over multiple time frames!
When we zoom out, it’s not surprising that this trading range is occurring near the center line of a massive 14-year trend channel and that this – and I’m just eyeballing – is probably one of the biggest – even not the biggest – trading range of the 21st century.
Let’s forget about eyeballing things and look at it purely rules based. Going back to 1957, I was wondering how many other periods showed a similar tiny 2, 4, 10 month rate of change (ROC).
There were only 5 other times, that’s pretty rare. When looking at the S&P 500 forward returns following those 5 precedents, I noticed an interesting pattern.
This pattern was discussed in yesterday’s Profit Radar Report update (you can test drive it here).
If you’ve been reading this newsletter, you know that updates have been sparse with no directional predictions. I even admitted the vague nature of my forecasts due to the conflict among indictors, but I also stated that: “I am fairly certain that any upcoming losses will be erased again.”
That just happened again on a short-term time frame, and it likely still applies to a longer-term time frame.
The media is only interested in capturing your eyeballs and monetizing your clicks … and they will do anything to get your attention (including outrageous headlines), which in turn may result in poor investment decisions.
I simply speak the truth based on the weight of evidence, even if it’s boring and infrequent.
If you see the benefits of this approach and appreciate purely fact based research, sign up for the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 16, 2023. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Three of the biggest US bank failures hit the fan and the popular CNN Fear & Greed Index just fell into ‘extreme fear’ territory.
But, stocks are up today and U.S. Treasury Secretary Janet Yellen assured congress that the banking system remains sound and Americans can feel confident that their deposits will be there when they need it.
Does that bad news – good news combo mean the crisis is over or that it’s time to panic?
We all know that politicians and heads of in trouble companies and institutions never say the full truth. That’s one reason why I pay more attention to charts and indicators than the news.
In the February 5 Profit Radar Report, I stated that: “IWM reached resistance mentioned in last Wednesday’s PRR. That resistance is comprised of the trend channel, trend line, and equality between 2 of the 3 legs coming off the October low. A reaction at this level is normal. A number of recent studies suggest stocks will ultimately work their way higher, but IWM did reach an inflection zone that at minimum allows for a deeper pullback.”
The updated chart below shows IWM (small cap’s) reaction to triple resistance (red circle). Honestly, the pullback from there was deeper than I expected … but three huge bank failures will do that I guess.
Considering those bank failures, the decline has actually been quite orderly. The worst S&P 500 down days since February were -2.00% (Feb 21) and -1.85% (Mar 9).
The VIX, however, soared 70% from its March low to high. During the worst 3-day span (Thursday – Monday), the daily average VIX gain was 11.65%, the daily average S&P 500 loss was ‘only’ 1.15%. Since the inception of the VIX in 1990, something similar has only happened 6 other times.
The chart below highlights when. None of the dates were particularly nefarious.
In addition to this VIX constellation, I also analyzed overall investor sentiment, market breadth, financial and bank sector charts, and the yield curve to ascertain if it’s time to panic (this analysis was published in yesterday’s Profit Radar Report).
Although I follow the weight of evidence of trusted and time tested indicators, I always monitor new developments and re-run scenarios (such as in yesterday’s ‘deep dive’ update) to see if my base line forecast is still supported by the weight of evidence or needs an adjustment.
My baseline, shared in the last Free Market Outlook, remains the same: Although I don’t know how deep this correction will go, I am fairly certain that stocks will come back later this year. The extent and duration of the comeback will be assessed as it develops.
However, I am never foolish enough to think I’ll be right. The weekly S&P 500 chart shows that the S&P 500 is still in limbo. Now back above the green trend line, but still below the red line … and all of this is happen in a year-long trading range.
If price falls back below the green trend line, it’s time to be cautious and allow the down side to develop.
Regarding gold, I stated the following in the March 8 Profit Radar Report (along with the chart below):
“Prior to gold’s (and silver’s) February drop, the negative divergence alerted us of lower prices. We now see a potential positive divergence.“
The next day gold started to soar over $100.
If you are considering subscribing to the Profit Radar Report, you may be interested to know that I adhere to what I call intelligent integrity; analyze trusted indicators and interpret them intelligently without bias.
For continued updates and based purely fact based research, sign up for the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on January 28. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Continued updates and factual out-of-the box analysis are available via the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 2, 2023. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
The various indexes are drifting lower ‘drip torture style.’ For the S&P 500, the drift lower started when it broke below wedge support (in blue). Regular readers remember my warning that we should “let the down side develop” if that wedge breaks.
Honestly, I thought that the S&P 500 would at least close the open chart gap at 4,218.70 before pulling back. But that didn’t happen.
The chart below encapsulates the most important chart developments over the past several weeks in one succinct picture (PRR stands for Profit Radar Report).
I know, ‘allowing for down side to develop’ is a vague forecast. If I knew how much lower the S&P would drop, I’d give a target. But I don’t, and I am ok to admit that.
If I put myself into my subscribers’ shoes, I prefer an honest forecast over a misleading forecast (I myself am I subscriber to other services and read many misleading outlooks).
Nevertheless, I am fairly certain that any upcoming losses will be erased again. That’s based on a number of studies and indicators with outstanding track records.
I’ll address some of those in the weeks to come, but here is one for now. The Santa Claus Rally (last 5 days of old and first 2 days of new year), the first 5 days of January, and the month of January all showed positive returns (the table below lists all returns since 1970).
Since 1970, this happened 20 other times. 19 times, the S&P 500 finished the year in positive territory (highlighted in green in table below), once (2018, highlighted in orange) with a loss.
Based on these barometers, there’s a 95% chance the S&P will end 2023 in positive performance territory.
Is this barometer infallible? Certainly not.
Is it better than most of the other (often biased on tunnel vision clouded) analysis out there? I think so.
The above barometer is also in line with the weight of evidence. But, there are also studies with much more bearish outcomes, which leads me to say what nobody wants to hear:
Bullish and bearish indicators may somewhat neutralize each other and cause a prolonged trading range. It’s not exciting, it’s every investor’s worst enemy, but it’s certainly a real possibility (and another reason I’m not as bearish as most).
Gold continued its declined until it starting catching a bid again this week. I would still like to see lower prices. An upcoming bounce, however, may test my thesis.
Below, again, is why I suspected gold prices to turn down in late January:
1) There was the bearish divergence between gold and silver.
2) In terms of Elliott Wave pattern, the gold chart allowed for two diametrically opposed interpretations. Despite being total opposites, they had one thing in common. A sizable short-term drop.
I showed the chart below in the January 22, Profit Radar Report and warned that: “both options have a near-term pullback in common.”
Since then, gold has dropped from 1,975 to 1,810. This may meet the minimum requirement for a wave 2 pullback (green projection).
I personally would like to see still lower prices after this bounce.
Continuous updates for the S&P 500, gold, silver and other assets are available via the Profit Radar Report. You can take a test drive here.
Now is a good time to sign up for the Profit Radar Report, because you will get instant access to the 2023 S&P 500 Forecast.
2023 S&P 500 Forecast
The 2023 S&P 500 is now available! It includes 24 charts and covers the following indicators and topics:
– 2022 Review
– Supply & Demand, Breadth
– Support/Resistance Levels
– Elliott Wave Theory
– Inflation
– Socioeconomic Peace & Prosperity
– Investor Sentiment
– Seasonality & Cycles
– S&P 500 Barometers
– Valuations
– Money Flow
– Risk/Reward Heat Map
– Summary
– 2023 S&P 500 Projection
Some of the discussed indicators come with a 90% and 95% accuracy track record. All indicators and data points are combined into one forward projection (the S&P 500 is tracking it well thus far).
Below is last year’s projection compared to the actual S&P 500 performance.
Below are some of the warning signs mentioned in the 2022 S&P 500 Forecast BEFORE the stock market fell into a pothole:
“The bearish divergence (NY Composite a/d lines) reappeared again at the January 2022 S&P 500 highs. This internal market deterioration is a concern and a warning sign.”
“The 6-month average of Titanic signals exceeded 25. It’s been a good bear market indicator. Although the majority of breadth studies are positive, this is one that should not be ignored.”
“We’ll focus on the commonality of all 3 (Elliott Wave Theory) scenarios: Up side is limited and down side risk is increasing.”
“Trend line resistance is around 4,915. We do not expect the S&P to break above this trend line in 2022.”
“Short-term, the January 10, 2022 low at 4,582 is important. Failure to hold above this level would be a warning signal with the potential for a quick drop into the 4,200 – 4,300 range. If the 4,200 – 4,300 support zone fails, a test of the 4,000 zone (as low as 3,700) is possible.”
“2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.”
“Since the Fed is planning to unwind and reduce purchases (and shrink its balance sheet) in 2022, the risk of a more serious correction this year is much greater than in 2021.”
To receive the 2023 S&P 500 Forecast and for continued updates and purely fact based research, sign up for the Profit Radar Report and become the best-informed investor you know.
By the way, although the free Market Outlook e-mails arrive in your inbox no more than once every week (or two), Profit Radar Report updates are posted every Wednesday and Sunday afternoon.
Continued updates and factual out-of-the box analysis are available via the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”&P 500
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on February 16, 2023. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
The last Market Outlook discussed the S&P 500 breakout, which was good for 200 points … before fizzling. What happened?
Via the February 1, Profit Radar Report, I pointed out a wedge (purple lines) and that a break below the wedge would caution the rally is due to pause.
The chart below shows the longer-term breakout above the green trend line. The chart insert zooms in on the wedge following the breakout.
In short, the potential for a bearish wedge conflicted with the breakout follow through.
As the chart (especially insert) shows, the S&P 500 broke below the purple wedge on February 9. What does that mean?
“The S&P 500 broke below wedge support, which allows for lower prices. The weight of evidence suggests an eventual rebound, but as long as below 4,160 it’s prudent to allow down side to develop” (February 12, Profit Radar Report).
The situation becomes clearer when looking at the IWM (Russell 2000 Index of small cap stocks) chart.
Resistance at 197.60 and 200 was mentioned in the February 1 and 5, Profit Radar Reports along with this comment:
“That resistance is comprised of the trend channel, trend line, and equality between 2 of the 3 legs coming off the October low. A reaction at this level is normal. A number of recent studies suggest stocks will ultimately work their way higher, but IWM did reach an inflection zone that at minimum allows for a deeper pullback.”
Summary: The S&P 500 is below support, which allows for lower prices. However, a majority of my studies and indicators suggest higher prices (two studies conducted last week have a historic success rate of 100%). Unless there’s a break below support, higher prices deserve the benefit of doubt.
Gold and silver were taken behind the woodshed for a beating. Hopefully that wasn’t a surprise for you.
Silver’s refusal to confirm gold’s January high suggested risk for both metals.
I published the chart below in the January 25, Profit Radar Report and warned: “Gold continues to grind higher as silver moves sideways without taking out its prior highs. While above 1,905 gold can continue to grind higher, but risk appears elevated, especially while silver stays below its prior reaction high.“
In terms of Elliott Wave pattern, the gold chart allowed for two diametrically opposed interpretations. Despite being total opposites, they had one thing in common. A sizable short-term drop.
I showed the chart below in the January 22, Profit Radar Report and warned that: “both options have a near-term pullback in common.”
Since then, gold has dropped from 1,975 to 1,836. This may meet the minimum requirement for a wave 2 pullback (green projection), but cycles and seasonality suggest that we should see further weakness.
Not convinced yet? Now is a good time to find out what’s ahead for 2023.
2023 S&P 500 Forecast
The 2023 S&P 500 is now available! It includes 24 charts and covers the following indicators and topics:
– 2022 Review
– Supply & Demand, Breadth
– Support/Resistance Levels
– Elliott Wave Theory
– Inflation
– Socioeconomic Peace & Prosperity
– Investor Sentiment
– Seasonality & Cycles
– S&P 500 Barometers
– Valuations
– Money Flow
– Risk/Reward Heat Map
– Summary
– 2023 S&P 500 Projection
Some of the discussed indicators come with a 90% and 95% accuracy track record. All indicators and data points are combined into one forward projection (the S&P 500 is tracking it well thus far).
Below is last year’s projection compared to the actual S&P 500 performance.
Below are some of the warning signs mentioned in the 2022 S&P 500 Forecast BEFORE the stock market fell into a pothole:
– “The bearish divergence (NY Composite a/d lines) reappeared again at the January 2022 S&P 500 highs. This internal market deterioration is a concern and a warning sign.”
– “The 6-month average of Titanic signals exceeded 25. It’s been a good bear market indicator. Although the majority of breadth studies are positive, this is one that should not be ignored.”
– “We’ll focus on the commonality of all 3 (Elliott Wave Theory) scenarios: Up side is limited and down side risk is increasing.”
– “Trend line resistance is around 4,915. We do not expect the S&P to break above this trend line in 2022.”
– “Short-term, the January 10, 2022 low at 4,582 is important. Failure to hold above this level would be a warning signal with the potential for a quick drop into the 4,200 – 4,300 range. If the 4,200 – 4,300 support zone fails, a test of the 4,000 zone (as low as 3,700) is possible.”
– “2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.”
– “Since the Fed is planning to unwind and reduce purchases (and shrink its balance sheet) in 2022, the risk of a more serious correction this year is much greater than in 2021.”
To receive the 2023 S&P 500 Forecast and for continued updates and purely fact based research, sign up for the
Continued updates and factual out-of-the box analysis are available via the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on February 2, 2023. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
What last week’s Market Outlook suggested is now official. The S&P 500 broke out. The weekly chart below shows the breakout and target (open chart gap, dashed purple line).
People don’t give chart gaps enough credit (I love it, because little known indicators are the most effective ones).
Back in August, I wrote via the Profit Radar Report: “The S&P 500 reacted to the purple diagonal resistance and gapped lower. Regardless of how much lower the S&P goes immediately, we can almost be certain that the open gap at 4,218.70 will be closed.”
Last week’s free Market Outlook also stated: “Perhaps more important is the dashed purple line. It’s an open chart gap left by the 8/19/22 drop. Ever since then I’ve been talking about that chart gap being closed (most recently here: 2023 S&P 500 Forecast).”
In terms of Elliott Wave Theory, the break above the purple line (which coincided with the black trend channel, see chart below) was important. Why?
The January 22 Profit Radar Report wrote that: “It looks like the wheat will be separated from the chaff rather soon (this or next week). Wheat and chaff, in this case, represents a bullish (green labels and arrow) or bearish (red labels and arrow) Elliott Wave Theory (EWT) option (see chart below). The bullish option (move above 4,016) would keep the pressure to the up side for the next weeks, perhaps longer.”
I’ve been a big critic of Elliott Waves, because many tunnel vision analysts have solely focused on their dangerous uber-bearish EWT interpretation and mislead investors.
But in that case, EWT allowed us to pinpoint an inflection point to separate the ‘wheat from the chaff’ (bullish from bearish path), and it worked beautifully. EWT is a great tool if used responsibly. The next inflection zone is the open chart gap and August high (4,218 – 4,325).
2023 S&P 500 Forecast
The 2023 S&P 500 is now available! It includes 24 charts and covers the following indicators and topics:
– 2022 Review
– Supply & Demand, Breadth
– Support/Resistance Levels
– Elliott Wave Theory
– Inflation
– Socioeconomic Peace & Prosperity
– Investor Sentiment
– Seasonality & Cycles
– S&P 500 Barometers
– Valuations
– Money Flow
– Risk/Reward Heat Map
– Summary
– 2023 S&P 500 Projection
Some of the discussed indicators come with a 90% and 95% accuracy track record. All indicators and data points are combined into one forward projection (the S&P 500 is tracking it well thus far).
Below is last year’s projection compared to the actual S&P 500 performance.
Below are some of the warning signs mentioned in the 2022 S&P 500 Forecast BEFORE the stock market fell into a pothole:
– “The bearish divergence (NY Composite a/d lines) reappeared again at the January 2022 S&P 500 highs. This internal market deterioration is a concern and a warning sign.”
– “The 6-month average of Titanic signals exceeded 25. It’s been a good bear market indicator. Although the majority of breadth studies are positive, this is one that should not be ignored.”
– “We’ll focus on the commonality of all 3 (Elliott Wave Theory) scenarios: Up side is limited and down side risk is increasing.”
– “Trend line resistance is around 4,915. We do not expect the S&P to break above this trend line in 2022.”
– “Short-term, the January 10, 2022 low at 4,582 is important. Failure to hold above this level would be a warning signal with the potential for a quick drop into the 4,200 – 4,300 range. If the 4,200 – 4,300 support zone fails, a test of the 4,000 zone (as low as 3,700) is possible.”
– “2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.”
– “Since the Fed is planning to unwind and reduce purchases (and shrink its balance sheet) in 2022, the risk of a more serious correction this year is much greater than in 2021.”
To receive the 2023 S&P 500 Forecast and for continued updates and purely fact based research, sign up for the
Continued updates and factual out-of-the box analysis are available via the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on January 26, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Stock market bears are getting squeezed again this week as the S&P 500 grinds higher. And, for the first time in a year, the S&P closed above the descending trend line. The color of that trend line is now green, because it’s support. As long as this support holds, price can continue higher.
This week’s push above last week’s high eliminated the most bearish of Elliott Wave patterns (a nested wave 3 decline proclaimed by a number of Elliotticians). The red lines show other highs. Every time one of those highs is eclipsed, bears’ hopes sink.
Perhaps more important is the dashed purple line. It’s an open chart gap left by the 9/13/22 drop. Ever since then I’ve been talking about that chart gap being closed (most recently here: 2023 S&P 500 Forecast).
Unlike the S&P, the recent IWM peaks are all clustered in the 189.50 neighborhood. IWM needs to break above this zone – confirmed by RSI-35 – to allow the S&P to move higher as well. Without IWMs support, risk of a pullback remains present.
I stated in the December 28 Profit Radar Report that: “TSLA has been in crash mode, with the December meltdown likely being part of a wave 3. The long-term chart shows there’s no significant support near current price. Perhaps a temporary bounce and eventual drop to 100 +/- could set up a more sustainable bounce.”
Shortly thereafter, TSLA fell as low as 101.81 and is up over 50% since. While this bounce could be only a wave 4, it’s likely a larger degree bounce with higher targets (as long as price stays above the green support line).
2023 S&P 500 Forecast
This is the time of year where I’m working on the full year S&P 500 Forecast. This forecast includes the most pertinent facts and indicators and an actual price projection based on those indicators.
The proof is in the pudding and the chart below plots my 2022 S&P 500 projection (yellow line) against the actual price action (you can see the original projection at the bottom of this page).
Below are some of the warning signs mentioned in the 2022 S&P 500 Forecast BEFORE the stock market fell into a pothole:
– “The bearish divergence (NY Composite a/d lines) reappeared again at the January 2022 S&P 500 highs. This internal market deterioration is a concern and a warning sign.”
– “The 6-month average of Titanic signals exceeded 25. It’s been a good bear market indicator. Although the majority of breadth studies are positive, this is one that should not be ignored.”
– “We’ll focus on the commonality of all 3 (Elliott Wave Theory) scenarios: Up side is limited and down side risk is increasing.”
– “Trend line resistance is around 4,915. We do not expect the S&P to break above this trend line in 2022.”
– “Short-term, the January 10, 2022 low at 4,582 is important. Failure to hold above this level would be a warning signal with the potential for a quick drop into the 4,200 – 4,300 range. If the 4,200 – 4,300 support zone fails, a test of the 4,000 zone (as low as 3,700) is possible.”
– “2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.”
– “Since the Fed is planning to unwind and reduce purchases (and shrink its balance sheet) in 2022, the risk of a more serious correction this year is much greater than in 2021.”
To receive the 2023 S&P 500 Forecast and for continued updates and purely fact based research, sign up for the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”tock
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on January 12, 2023. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
I’d like to ask you to participate in a brief mental exercise as you read these lines:
How often have you read or heard the words or phrases recession, economic contraction, stock market crash, inflation is bad for stocks, etc. in the last few weeks? Ok, think about it for just a moment …
Now, did stocks perform as you thought based on the news you heard?
The simple chart shows that the S&P 500 today is trading exactly where it was on May 9, 2022. Nine months with progress (or crash).
We live in a world where boring doesn’t sell, and the media wants to capture your eyeballs at all cost. The most effective way to do that is with sensationalistic headlines. Truth and analytic integrity are at best secondary considerations.
Unnecessary sensationalistic stock market analysis irks me to the core. That’s why my Profit Radar Report is different. You read what I see, and I haven’t had to stray from the BORING assessment shared in the November 13 Profit Radar Report, which was:
“Chart gaps at 4,083.67 and 4,218.70 remain open. The next serious resistance zone is around 4,100. Short-term support is around 3,900. A pullback can happen any moment and price action may well be choppy in coming days/weeks, but odds of further gains following pullbacks are good.”
You may recall that I added the following in my last free Market Outlook (from December 16, 2022):
“I’d like to point out that support around 3,900 has become quite obvious, which makes a seesaw across it more likely, and today’s drop created another chart gap at 3,965.65 which should be closed in the not so distant future.”
As anticipated, the S&P seesawed across 3,900 (multiple times), moved back above it, and closed the open chart gat at 3,965.65 (dashed purple line) yesterday.
A word of caution: The fledgling 2023 rally has pushed the S&P 500 into the next resistance cluster. I consider this an inflection zone that needs to be watched carefully.
2023 S&P 500 Forecast
This is the time of year where I’m working on the full year S&P 500 Forecast. This forecast includes the most pertinent facts and indicators and an actual price projection based on those indicators.
The proof is in the pudding and the chart below plots my 2022 S&P 500 projection (yellow line) against the actual price action (you can see the original projection at the bottom of this page).
Below are some of the warning signs mentioned in the 2022 S&P 500 Forecast BEFORE the stock market fell into a pothole:
– “The bearish divergence (NY Composite a/d lines) reappeared again at the January 2022 S&P 500 highs. This internal market
deterioration is a concern and a warning sign.”
– “The 6-month average of Titanic signals exceeded 25. It’s been a good bear market indicator. Although the majority of breadth studies are positive, this is one that should not be ignored.”
– “We’ll focus on the commonality of all 3 (Elliott Wave Theory) scenarios: Up side is limited and down side risk is increasing.”
– “Trend line resistance is around 4,915. We do not expect the S&P to break above this trend line in 2022.”
– “Short-term, the January 10, 2022 low at 4,582 is important. Failure to hold above this level would be a warning signal with the potential for a quick drop into the 4,200 – 4,300 range. If the 4,200 – 4,300 support zone fails, a test of the 4,000 zone (as low as 3,700) is possible.”
– “2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.”
– “Since the Fed is planning to unwind and reduce purchases (and shrink its balance sheet) in 2022, the risk of a more serious correction this year is much greater than in 2021.”
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Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on December 15, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Which 5-letter word grabs investors’ attention like no other?
Crash!
There’ve been a lot of crash warnings lately. Here is just a small sampling of headlines:
– This bear market rally could prompt a 2001-style crash
– As the reality of recession sinks in, prepare for market to crash
– Stock market crash: S&P 500 has 19% further downside
– Stock market crash warnings grow
– Stock market crash is coming even if US economy avoids recession
Most of the above headlines are already a few weeks old. Will today’s drop finally usher in the much anticipated crash?
Over the past few weeks I’ve been pointing out 3 things:
– There’s resistance (acting as inflection zone) around 4,100
– Support is around 3,900
– Market action could be choppy, but pullbacks should recover
You may recall my exact words from the November 13 Profit Radar Report:
“Chart gaps at 4,083.67 and 4,218.70 remain open. The next serious resistance zone is around 4,100. Short-term support is around 3,900. A pullback can happen any moment and price action may well be choppy in coming days/weeks, but odds of further gains following pullbacks are good.”
As the weekly chart shows, the S&P 500 tested resistance around 4,100 twice and is now – for the first time since November 10 – testing support around 3,900.
I’d like to point out that support around 3,900 has become quite obvious, which makes a seesaw across it more likely, and today’s drop created another chart gap at 3,965.65 which should be closed in the not so distant future.
To sum up: The S&P 500 met resistance around 4,100 and reacted (first step of a reversal). The S&P is now testing support around 3,900 (potential second step of confirming reversal).
Although price is currently just below 3,900, I wouldn’t consider this as second step to confirming a bearish reversal yet (due to seesaw risk).
Nevertheless, any potentially bullish patterns (or “odds of further gains”) are on hold and more down side is possible as long as price stays below 3,900.
At this point, the decline from Tuesday’s high looks like 3 waves. According to Elliott Wave Theory a 5-wave decline is needed to start confirming a trend change.
Continued updates and purely fact based research are available via the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on December 1, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
It’s been a while since the last Free Market update, but no updates were required as the market continues to follow my ‘keep it simple’ blueprint (almost like painting by numbers).
The complexity of current world events confuses many analysts and investors. I try to ‘de-confuse’ and simplify this incredibly complex environment … and the market is allowing me to do this (it’s not always this way).
The November 13, Profit Radar Report outlined our most recent ‘keep it simple’ blueprint:
“Chart gaps at 4,083.67 and 4,218.70 remain open. The next serious resistance zone is around 4,100. Short-term support is around 3,900. A pullback can happen any moment and price action may well be choppy in coming days/weeks, but odds of further gains following pullbacks are good.”
The blue box pinpoints the price action since November 13. Within a choppy environment, the S&P 500 first tested support around 3,900 and today closed the open chart gap (dashed purple line) at 4,083.67. Resistance around 4,100 is just ahead.
What caused this rally to 4,100? “Seasonality and the weight of evidence favor higher prices, which is our base assumption,” is what I told subscribers weeks ago.
There was also an absolute investor sentiment oddity, which I first pointed out in the November 9, Profit Radar Report: “According to the CBOE, the equity put/call ratio soared to 1.30 yesterday, which is an absolute panic reading that even exceeds the COVID extreme. If this data is correct, it should be a positive for price.”
The fifth graph in the chart below shows the bullish (for stocks) put/call ratio extreme, which means that option traders panicked more in the second half of November than at the 2020 meltdown low. Hard to believe, but that’s the CBOE data. The spike in the CBOE SKEW (blue graph) sent a similar message.
What’s next though?
The weight of evidence and seasonality are still supportive of higher prices, but something changed: The S&P 500 has now reached an important resistance and inflection zone.
This is a price zone where risk management takes on a more important role and prudent investors should consider reducing exposure or setting stop-losses below support.
Inflection zones are like traffic lights, they don’t have to be red, but if a car is going to have to stop, it’s likely at a traffic light.
King dollar … de-crowned?
Since September 28, when the US Dollar Index hit a 20+ year high, the USD dropped from 114.7 to 105. On that day, September 28, I happened to share the following chart and warning via the Profit Radar Report:
“The US Dollar Index has been on a tear, rising almost vertically. Normally I would draw ‘bowl’ support (previously used to predict major drops for TSLA and Bitcoin, see January 10, 2021 PRR), but currencies are prone to trend longer than equities. For this reason, the USD should be given a longer leash, but the parabolic rise combined with trend channel resistance suggests that at minimum a temporary pause and/or pullback is getting close and chasing the USD carries a fair amount of risk.”
Price got repelled by one trend channel and is now also trading below the other trend channel (currently at 107.5). This is now resistance and as long as price stays below resistance it can continue to work lower.
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Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on November 3, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
The Dow Jones Industrial Average (DJIA) has been on a tear, gaining 15.38% from October low to high, outperforming all major indexes.
This DJIA pop came seemingly out of nowhere, and yet it didn’t. Via the October 12 Profit Radar Report (one day before DJIA started taking off), I shared a bullish divergence and stated that: “For the first time since the January highs, DJIA is diverging from the S&P 500 at the low.”
The chart below, published on October 12, shows the divergence.
This spirited DJIA rally carried price towards major resistance outlined below.
I published a chart very similar to the above in the October 30 Profit Radar Report along with the following commentary:
“RSI-2 is over-bought and the trajectory of the advance is obviously not sustainable. Major resistance is coming into play around 33,200. Now is not the time to chase DJIA.”
The pullback from resistance was pretty obvious, the big question is what happens next.
Since 1970, DJIA rallied more than 12% in a span of 13 trading days only 32 other times. Looking at those times, which of course I did (see November 2, Profit Radar Report), provides some helpful clues.
There is also a huge mega trend affecting blue chip stocks in play. I plan to share this trend even via the free newsletter soon.
While the benefits of the above DJIA study are long-term in nature, below is the expected short-term S&P 500 trajectory (published in the October 30, Profit Radar Report).
The S&P 500 appears to have completed an up side pattern in the 3,900 zone, which should cause a corrective pullback (now underway).
Based on seasonality and some other factors, the pullback should be corrective, but the S&P pattern (and major DJIA resistance) allows for a more bearish turning point as well.
Although I’m leaning towards more gains once the pullback is over, I’m watching this decline very carefully for red flags that’d suggest otherwise.
Continuous updates are available via the Profit Radar Report. If you want to be the best-informed investor you know, and have access to always relevant and purely fact-based research, sign up for the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on January 28. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Continued updates and factual out-of-the box analysis are available via the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
iSpyETF 