Weekly Market Outlook – That’s What Happens When You Play With Fire

GDP Growth Charts

Source: Thomson Reuters

Finally, we're going to add a couple of related data points to our list of ongoing analysis that we hadn't covered in the past. Going forward we'll be monitoring personal income and personal spending, which are reported as having a 'high impact' on the market's direction. The next report will be posted on Friday. Economists are expecting solid forward progress on both fronts. But, year-over-year, that doesn't mean much.

Personal Income, Personal Spending Growth Charts

Source: Thomson Reuters

Stock Market Index Analysis

Good news, and bad. The bad news is, the 50-day moving average line (plotted in purple on the daily chart of the S&P 500 below) served as a resistance line last week, helping to prompt Friday's meltdown. The good news is, the green 200-day moving average line has yet to even be tested as a floor. More good news ... the VIX is nearing a more absolute ceiling near 30, which tends to be reached when the index is making a major bottom. Ideally, the VIX will hit 30 and the S&P 500 will find support at its 200-day moving average line at the same time, and mark a pivot back into a bullish mode.

S&P 500 Daily Chart, with VIX, Volume

Source: TradeStation

That's the best outcome investors can hope for here anyway. Whether or not things will work out that way remains to be seen.

Working against that best-case-scenario outcome is the calendar, in more ways than one.

The images below have been discusses before, but merit refreshed look. They're a comparison of where the S&P 500 currently is versus where it normally would be at this time of year, and where the index would usually be at this point in the third year of a Presidential term. Annually, this month and next are generally weak times for the market. Following the four-year Presidential term schedule, stocks should be weak through November.

S&P 500 Performance vs. Average Year

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