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HomeBusinessWeekend Inventory Market Outlook – Could 21 2023 Receive US

Weekend Inventory Market Outlook – Could 21 2023 Receive US

Inventory Market Outlook getting into the Week of Could twenty first = Uptrend

      • ADX Directional Indicators: Uptrend
      • Worth & Quantity Indicators: Uptrend
      • Elliott Wave Evaluation: Combined

ANALYSIS
The inventory market outlook shifted to an uptrend final week, with the S&P rallying on speak of a U.S. debt ceiling decision and dovish feedback from the Fed chairman.

The S&P500 ($SPX) ended the week up 1.6%, after reaching a brand new excessive for the yr at ~4213. Cycle to this point (i.e. for the reason that bear market started in January 2022), the index is:

    • -13% for the reason that cycle peak (Jan 2022)
    • +20% from the cycle low (Oct 2022)

SPX Worth & Quantity Chart for the Week of Could 21 2023

The ADX is bullish to begin the week, with some indicators of strengthening development from the primary indicator.  Don’t learn into that an excessive amount of, because it’s coming off cycle lows, in addition to lows for the yr, and hasn’t surpassed April ranges despite the fact that the index is greater (destructive divergence).

Worth/quantity shifted to an uptrend because of Wednesday’s rally on “above-average” buying and selling quantity.  The FFTY index continues to lag, struggling to maneuver past the 50-day shifting common.

Technical analysis of daily SPX prices

SPX Elliott Wave Evaluation for the Week of Could 21 2023 – Bullish Depend

Elliott Wave stays blended, however not for lack of buying and selling motion. The SPX broke the 4196 resistance stage by just a few factors, invalidating the prior bearish depend. And the MACD reveals a bullish cross-over occurred mid-week. That will sometimes be sufficient to shift the sign. Nevertheless, the current consolidation / wave extensions pressured updates to each the bullish and bearish counts, and neither has an edge. Even with out changes, there’s a possible destructive divergence within the MACD histogram regardless of the bullish cross-over, in addition to the RSI(5).  So the sign stays blended.

COMMENTARY
The market alerts FINALLY picked a aspect! Let’s see how lengthy it lasts. The most important concern for the inventory market outlook is the index itself; particularly growing focus threat (i.e. just a few actually massive corporations accounting for the entire worth motion).

Trying on the efficiency of the FFTY index (50 greatest “innovation”/”development” corporations) reveals that corporations main the market greater aren’t the standard “main” shares (i.e. small cap corporations with leading edge / modern know-how).  That is mirrored in a common sense by the relative underperformance of a small cap index (i.e. Russell 2000) versus a big cap index (i.e. S&P500).

However even inside massive cap indexes just like the S&P500, worth motion is pushed by a handful of shares, ensuing from more and more lopsided market cap weightings.

As an example, final week’s good points had been pushed by shares throughout the Know-how ($XLK), Communications ($XLC), and Shopper Discretionary ($XLY) sectors.

Price charts for S&P500 sectors

S&P Sector Worth Charts for the Week of Could 21 2023

Per Hedgeye, the 2 largest market cap shares (Apple & Microsoft) account for 14% of $SPX’s weighting.  To not point out that Apple’s market capitalization is now better than all the Russell 2000 index!

And which sector is dwelling to Apple and Microsoft? Know-how ($XLK)…one of the best performer.  In truth, 8 of the ten largest corporations within the $SPX drive efficiency in these 3 sectors:

  • Know-how ($XLK)
    • Apple, Microsoft, & Nvidia ($AAPL, $MSFT, $NVDA)
    • ~54% of the sector ETF
  • Communications ($XLC)
    • Google & Meta ($GOOG , $GOOGL, $META)
    • ~51% of the sector ETF
  • Shopper Discretionary ($XLY)
    • Amazon & Tesla ($AMZN, $TSLA)
    • ~40% of the sector ETF

In the meantime the Vitality ($XLE) and Industrial ($XLI) sectors have underperformed, price-wise, despite the fact that they’ve generated a majority of the $SPX earnings development this yr. Shopper discretionary is pulling it’s personal weight up to now.

However know-how and communications?  They’re firmly in an earnings contraction, and are the place a majority of current layoffs have been centered.  Not precisely the “development” engine you’d anticipate for a brand new bull market…

Finest to Your Week!

P.S. For those who discover this analysis useful, please inform a good friend.
For those who don’t, inform an enemy.

Sources: Bloomberg, CNBC, Federal Reserve Financial institution of St. Louis, Hedgeye, T1 Alpha, U.S. Bureau of Financial Evaluation, U.S. Bureau of Labor Statistics

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Not a suggestion to purchase or promote any safety.

#Weekend #Inventory #Market #Outlook

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