In last month's stock market outlook for October 2017, we mentioned that the major indices will experience a nice bull run. November is also a very good month for stocks and since the major indices are still in an uptrend, we can expect more gains in the stock market. Therefore, we need to have an open mind and continue to have a bullish bias.
As usual, we will be using time tested technical analysis and trend following methods and also historical data to help us come to a conclusion on where the stock market is likely to gp. Let's take at some of the evidence below.
The chart above is the daily chart of the S&P 500 index. As you can see the index is above its rising 20 MA, 50 MA and 200 MA. This is a picture of a powerful bull market and as long as it stays above the rising 20 MA and 50 MA, we should have reason to believe that the bull market will continue to run.
I have shaded the month of October 2017 in green. The seasonality chart for October is really very good with it closing higher most of the time. So far, in October, the S&P 500 has followed the script and shoot higher. When seasonality and trend are in sync we can be pretty sure that the S&P 500 will move higher.
November is also a very very good month for the S&P 500 index. In fact, it has gone up (closed higher from the open) 100% of the time in this month for the past 5 years. Since the trend for the S&P 500 is still up, we should remain bullish and expect more gains in November 2017.
Chart Courtesy Of Stockcharts.com
The chart above shows the seasonality chart of the S&P 500 index for the past 5 years. I think the data incorporates the gains in October 2017 and therefore October's data might be higher but anyway I check the closing higher percentage from 2012 to 2016 for the S&P 500 index in October and it is 60% with an average gain of 2.2%. So at least it followed the script where it has a chance of closing higher and the gains are near to the average for 2012 to 2016.
Since November 2017 has not past yet, the data is accurate. For the past 5 years, the S&P 500 index has closed higher 100% of the time with an average gain of 2.2%. Since the trend for S&P 500 is up and the seasonality supports it, we should be bullish and expect more gains in the S&P 500 this month.
The Dow Jones as expected also had a very nice bullish gain in the month of October 2017. See the green area that I have colored. Since the Dow is also above its rising 20 MA, 50 MA and 200 MA, it is showing us a picture of bullish strength. November is historically also a very good month for the Dow Jones Industrial Average.
I would like to see the Dow Jones consolidate a bit. Notice the box pattern that I have drawn on the chart. A nice consolidation as it meets the rising 20 MA would be great to produce a breakout in Dow and send it higher following the seasonality script. As long as Dow stays above the box area, I believe it is destined to continue to move higher.
Chart Courtesy Of Stockcharts.com
The above is the seasonality chart of the Dow Jones Industrial Average. November is a great month for the Dow. Closing higher 100% of the time in the past 5 years. The other great months were February, April And May which all closed higher 100% of the time.
The average gain for the month of November is around 2.9% and if history repeats itself, we can expect more gains in the Dow. Which is why I would love to see Dow Jones consolidate a bit and then breakout higher.
The Nasdaq Composite Index as shown in the chart above also had a tremendous gain in the month of October 2017. The latest rally has seen it go above the recent highs. As all technicians know, an old high that is overcome will become a new support for the Nasdaq.
Nasdaq is still in a bullish picture of strength as it is trading above its rising 20 MA, 50 MA and 200 MA. Since it is in an uptrend we should continue to be bullish on tech stocks.
Chart Courtesy Of Stockcharts.com
The picture above is the seasonality chart of the Nasdaq Composite Index. Notice that the month of November is one of the most bullish months for tech stocks with it closing higher 100% of the time for the past 5 years with an average gain of 2.7%. This is good news for us. With a good support below and a good seasonality chart to support our views, the path of least resistance would be upwards. Therefore, we should continue to remain bullish on techs.
Next I would like to show you some sector charts and individual charts which together with the information above still supports the bullish case in the stock market.
Apple which is one of the most widely followed stock in the world has just recently broke out of a triangle pattern in the daily chart. It has also made a new all time high and this is bullish for the stock market. With the long term trend of Apple still up, we can continue to be bullish about the stock market.
You can see how Apple is above its rising 200 MA. This is a picture of long term health. If Apple is good so does the whole world stock market.
Semiconductors that lead the market often point to more bulls. This is a true bull market. With the semi sector just broken out of an ascending triangle and still in a strong uptrend, it is telling us that the US stock market is still strong and alive. As long as the SMH is in an uptrend we want to stay bullish on the stock market.
Techs that are in an uptrend are also a hint to a growing economy. When techs are moving higher, we can be confident that this bull market is still strong.
The last chart I want to show you is the ACWX. This ETF tracks the health of the global stock market. It covers about 85% of the world's large cap and mid caps stocks and therefore it is a representation of the health of the world's economy. You can see that the etf is in a long term uptrend.
This tells us that the global stock market rally is good and the world's stock market is healthy. We should continue to be bullish on the US stock market and also the major world stock markets.
There are perhaps many more charts that I can show you that gives us an evidence that the US stock market and World's stock market are in a strong bull market and will continue to go higher. But I think that these 10 charts are enough to tell us to stay bullish at the moment. We will continue to monitor the market day by day and month by month.
I invite you to read my Daily Stock Market Analysis each day to know what will happen to the stock market in the future. Each day I go through the major indices and point out what is happening to it. Perhaps you will find some gems in there too.
Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com
Charts with the investing.com logo are courtesy of Investing.com powered by Trading View
Oct 15, 19 08:03 AM
Stock market analysis and some important stocks to watch that may be setting up important patterns.
May 06, 19 06:04 AM
Technical analysis of the US stock market with coverage of futures.
May 06, 19 05:46 AM
Step by step technical analysis of the KLCI Malaysian stock market.
Apr 22, 19 06:55 AM
A technical analysis of the US stock market. I go through the major indices of the US market and see where it is likely to go.
Apr 22, 19 06:47 AM
Technical analysis of the Hang Seng. Learn how the Hong Kong stock market is doing and where it is likely to go.