As a swing trader, each week I do a stock market outlook to determine if I’ll be placing new trades during the week or not. The stock market outlook gives me a sense of market health, and thus how much or little of my capital I want to deploy.

Here is my stock market outlook for the week of September 18, 2023.

The stock market outlook is based on:

• how the major indices are performing
• “Market Health Indicators”
• recent watchlist and trade performance
• sector performance

My swing trading is based on: Overall market conditions (discussed below) –> strong/weak individual stocks for longs or shorts –> patterns –> trade triggers.

Stock Market Outlook for This Week

Heading into the week of Sept 18, market conditions are poor. Currently holding off on deploying capital on swing trades until conditions improve.

Here are the current stock watchlists:

• Best Swing Trading Stocks List for September
  
  
• Current Stock Watchlist (setups in the making)
  
  
• Can also check for setups on the following regularly updated lists: Best Performing ETFs, Best Performing Stocks, Buy the Dip Stock List, and Long-Term Holds.

Here is a video summary of the stock market outlook for this week:

How the Market Indexes Are Doing

I look at 4 different US indices because they each tell a different story about overall stock market health. The stock market is healthiest—and swing trading stocks on the long side is most profitable—when all these indexes are in uptrends. Here’s what each of the 4 indices represents:

• Nasdaq 100 – Tech stocks
• S&P 500 – Large US companies
• NYSE Composite – A wide array of stocks, varying in size and industry
• Russell 2000 – Smaller companies

The Canadian index tracks large-cap Canadian stocks.

Charts provided by TradingView, the charts I personally use.

Market Summary (Indexes) on TradingView

From a price action perspective, the indices are mixed. Nasdaq 100, S&P 500, and NYSE Comp. are trying to recover after a pullback in August. But that recovery was very sluggish last week and ended on a down note. The Russell 2000 is trading near multi-month lows.

The Canadian market has been rallying and is approaching the top of the 2023 range.

Overall, we can say conditions are not ideal. The Market Health Indicators below also tell us this. Thus I will be staying away from taking long swing trades until conditions improve a bit more.

Bitcoin still hanging out near the June low. Watch for a false breakout lower (a buying opportunity), or the possibility of a legitimate breakout lower.

State of the Market Health Indicators

The following chart shows the market health indicators I track. They tell me the condition of the stock market overall, and whether it’s a good time to swing trade individual stocks.

S&P 500 Index Chart on TradingView

Market health indicators are signaling caution. Health indicators are not in good shape currently.

• 33% of S&P 500 stocks are above their 50-day moving average. 33% of all US stocks are above their 50-day moving average. It’s generally much easier to swing trade profitably (on the long side) when most stocks are above their 50-day average. When this indicator is below 50% it tends to be sideways or a downtrend for most stocks/indexes. Poor.
  
  
• Volume is not currently relevant (the spike on Friday means nothing…it was options expiration).
  
  
• The dark blue bars are the daily percentage movement of the S&P 500. Big moves are associated with downtrends and turning points. Small values are associated with an uptrend. No big drops since a series of them in March. Good.
  
  
• The blue line is the cumulative NYSE Advance-Decline Line. It is moving with the S&P 500 and not showing signs of strength. Neutral to Poor.
  
  
• The blue columns are NYSE up volume divided by NYSE total volume. It tracks buying and selling enthusiasm. Two back-to-back 80% upside days on Aug 28 and 29. That is equivalent to one 90% upside day. Bullish.
  
  
• The ultimate indicator is how many quality setups there are and how trades are working. Overall, I am pretty happy with how the stocks on my most recent Stock Watchlist held up (and several rallied aggressively). That’s a good sign. Some trades are working, but need to be pretty selective out there.

The Complete Method Stock Swing Trading Course covers my entire method of swing trading stocks. Now is a great time to review the material and prepare for the opportunities that are unfolding.

Sectors on the Move

I don’t typically focus on Utility or Consumer Defensive stocks because they don’t move as much in good market conditions as the other sectors. In poor market conditions, these sectors hold up a bit better but are often still dropping.

Main sectors to watch: Energy, Communication Services, Consumer Cyclical, Financials, Basic Materials.

Sector performance provided by Finviz.

The article, How to Scan for the Strongest Stocks in the Strongest Sectors covers how to find high-momentum stocks by looking at sector performance in Finviz, StockRover, StockFetcher, or StockCharts. It also shows you how to determine when money is flowing into or out of a sector.

What I’m Doing Right Now

Sitting in cash right now, waiting for more conditions to improve.

I also day trade stocks and the EURUSD. What I like about day trading is that I can trade every day. Whereas swing trading has periods of action and inaction.

You can check out my stock day trading methods in the Price Action Stock Day Trading Course.

See how I day trade forex in the EURUSD Day Trading Course.

Don’t want to have to analyze market conditions and pick individual stocks to trade? You can also passively invest. In my “long-term account,” I buy the same ETFs every month, regardless of market conditions. Buy and hold. Simple. It doesn’t make as much as swing trading or day trading, but it is much less work.

By Cory Mitchell, CMT

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.

Historic Conditions:

Week Of:	Indices:	Conditions	Watchlist/Trade Performance	What I’m Doing:	Top Sectors (Ex: Utlt, Con Def)
Sept 11	Trying to recover	Poor	Ok	Awaiting better conditions	Energy, Communication Services, Consumer Cyclical, Financials, and Technology
Sept 5	Pulling back	Poor (right on the cusp of turning good)	Nothing	Awaiting better conditions before buying	Energy, Communication Services, Consumer Cyclical, and Technology
Aug 29	Pulling back	Poor	Nothing	Not buying	Energy, Consumer Cyclical, Technology, and Industrials
Aug 22	Pulling back	Mixed/poor	Nothing	Not buying	Energy, Consumer Cyclical, Technology, and Industrials
Aug 14	Uptrends (in pullback)	Good (approaching key levels though)	Good	Deploying Capital	Energy. Healthcare stronger recently. Consumer Cyclical, Technology, and Industrials took a hit recently, but strong over the longer term.
Aug 7	Uptrends (in pullback)	Good	Good	Deploying Capital	Consumer Cyclicals/Discretionary, also Basic Materials, Financials, and Energy moving up.
July 31	Uptrends	Good	Good	Deploying Capital	Consumer Cyclicals/Discretionary, Technology, and Industrials. Basic Materials, Financials, and Communication Services moving up.
July 24	Uptrends	Good	Good	Deploying Capital	Consumer Cyclicals/Discretionary, Technology, and Industrials. Basic Materials, Financials, and Real Estate moving up
July 17	Uptrends	Good	Good	Deploying Capital	Consumer Cyclicals/Discretionary, Technology, and Industrials. Basic Materials and Real Estate moving up.
July 10	Uptrends	Good	Good	Deploying Capital	Consumer Cyclicals/Discretionary, Technology, and Industrials.
July 3	Uptrends	Good	Good	Deploying capital	Technology, Communication Services, Consumer Cyclicals/Discretionary, and Industrials. Most sectors performing pretty well.
June 26	All US indices in at least short-term uptrends	OK	Ok	Deploying Capital	Technology, Communication Services, and Consumer Cyclicals/Discretionary, and Industrials.
June 19	All US indices in at least short-term uptrends	Ok	Ok	Deploying Capital	Technology, Communication Services, Consumer Cyclicals, and Industrials
June 12	Mixed trends, but all moving. Nasdaq & S&P 500 strong.	Ok	Ok	Deploying capital	Technology, Communication Services, and Consumer Cyclicals
June 5	Mixed trends, but all moving up	Ok	Ok	Deploying some capital	Technology, Communication Services, Consumer Cyclicals
May 30	Nasdaq uptrend, rest mixed	On cusp	Improving	Deploying some capital	Technology and Communication Services
May 22	Nasdaq uptrend, rest mixed	On cusp	Flat	Deploying some capital (if I see very high-quality setups)	Technology and Communication Services
May 15	Nasdaq uptrend, rest mixed	On cusp	Flat	Deploying some capital (if I see very high-quality setups)	Technology, Communication Services, Healthcare
May 8	Nasdaq uptrend, rest are mixed	On Cusp	Flat	Deploying some capital (if I see very high-quality setups)	Technology and Healthcare
May 1	Nasdaq uptrend, rest are mixed	Improving/On the Cusp	Flat	Deploying some capital (if I see very high-quality setups)	Healthcare, communication services, and technology
April 24	Nasdaq uptrend, rest are mixed	Improving/On the Cusp	Flat	Deploying some capital (if I see very high-quality setups)	Pretty much everything doing well in the last month. Healthcare doing well on all time frames.
April 17	Nasdaq upternd, rest are mixed	Improving/On the Cusp	Good	Deploying some capital if I see quality setups. Very selective.	Basic materials, Energy strong recently. Healthcare decent on all time frames. Technology and Communication Services still worth watching.
April 10.	Nasdaq uptrend. Other indices are neutral to weak.	Poor	No trades. Not much on watchlist.	Nothing	Technology, consumer cyclical, and communications services
April 3.	Pullbacks or downtrends, except Nasdaq in uptrend	Poor	No trades	Nothing	Technology, consumer cyclical, and communications services
March 27	In pullback, several near prior lows, SP 500 mid-range, Nasdaq100 at swing high	Poor	No trade	Nothing	Technology and communications services
March 20	Pullback, possible reversal	Poor	No trade	Nothing	Technology and communications services
March 13	Pullback	Poor	No trade	Nothing	Technology, industrials, and energy holding up the best
March 6	Pullback	Cusp	Good (but few triggering)	Buying (very cautious	Basic Materials, Consumer Cyclicals, Communication Services, Technology, Industrials, and Financials
Feb. 27	Pullback	Cusp	Good (but few triggering)	Buying (cautious)	Consumer Cyclicals, Communication Services, Technology, Real Estate, Industrials, and Financials
Feb 20	Flat the last week	Good	Good (but few if any setups)	Buying	Consumer Cyclicals, Communication Services, Technology, Real Estate, Industrials, and Financials
Feb. 13	Moving Up	Good	Good	Buying	Consumer Cyclicals, Communication Services, Technology, Real Estate, and Financials
Feb 6	Moving up	Good	Good	Buying	Consumer Cyclicals, Communication Services, Technology, Real Estate, and Financials
Jan 30	Moving up	Good	Good	Buying	Basic materials, Consumer Cyclicals, Communication Services, Technology, Real Estate, and Financials
Jan 23	Moving up	Good	Good	Buying	Basic material, everything else doing pretty well
Jan 16	Moving up	Good	Good	Buying	Basic materials, Industrials, Financials, and healthcare
January 9	Moving up after a sideways period	OK	OK	Buying	Basic materials, Industrials, Financials, and Healthcare
January 1, 2023	Short-term downtrends	Poor	OK	No new purchases	Energy, basic materials, Industrials, and Healthcare
Dec. 19	Short-term downtrends	Poor	OK	No new purchases	Basic materials, Industrials, and Healthcare
Dec. 12	Right on the cusp of a downtrend. Could go either way.	Still ok, but right on the cusp.	Ok, not great.	Conservatively buying. Limited capital. If indices drop, not buying.	basic materials, Industrials, healthcare, and financials
Dec. 5	short-term uptrends	Good	Good	Buying if setups occur	basic materials, Industrials, healthcare, and financials
Nov. 28	short-term uptrends	Good	Good	Buying if setups occur	basic materials, Industrials, and Financials
Nov. 21	short-term uptrends	Good	Good	Buying if setups occur	basic materials, Industrials, and Financials
Nov. 14	short-term uptrends	Good	Ok	Buying if setups occur	basic materials, Industrials, Financials, and Energy
Nov. 7	short-term uptrend, except Nasdaq 100	Mediocre. Everything good except recent >2% daily drop in S&P 500	Doing Ok, nothing great.	Holding current positions. Not taking new positions this week.	energy, industrials, financials, and basic materials
Oct. 31	Short-term uptrend	Ok	Doing ok, nothing amazing	starting to take some positions	energy, industrials, financials, and healthcare
Oct 24	Downtrend, but pushing up at prior swing highs	FTD + Lowry upside day	Not published publically, But I did scan – LLY, plus a few others. All did very well in the past week	Started taking some positions.	energy, basic materials, healthcare, financials, and industries
Oct 17	Downtrend: ST, LT	Poor, All	N/A – no trades, stocks performing poorly	No long swing trades	energy, healthcare, financials, and industries
Oct 10	Downtrend: ST, LT	Poor, All	N/A – no trades, stocks performing poorly	No long swing trades	Energy, ind, basic mat, finc, holding up best over all all the time frames
Oct 3	Downtrend: ST, LT	Poor, All	N/A – no trades, stocks performing poorly	No long swing trades	Industrials, Con Cyc, and Fin holding up better than most, but still down. Energy Up on the week.
Sept. 26	Downtrend: ST, LT	Poor, All	N/A – no trades, stocks performing poorly	No long swing trades	3&1 month – all negative. Fin, Ind, Con Cyc holding up the best.