#NASDAQ100 and #SP500 Forecast: June 2022
S&P 500 Forecast: June 2022
It's very likely that the month of June is going to be more of a “fade the rally” type of situation, at least until the Federal Reserve changes its attitude.
The S&P 500 futures market has been rather negative for the entire month of May, and June does not figure to be much better. We will more likely than not continue to see sellers every time we try to rally, as Wall Street continues its temper tantrum due to a lack of free and easy money. As the Federal Reserve tightens monetary policy, this will continue to put negative pressure on risk assets, with the S&P 500 being particularly vulnerable.
Keep in mind that there are a lot of concerns when it comes to the US economy, not the least of which will be the US consumer pulling away from spending. After all, 70% of the US economy is based on consumption, and we are focusing on a major shift in attitudes. Most consumer confidence-related economic figures continue to slump, meaning that spending is most certainly going to slow down. If this is going to be the case, then profits will have to be readjusted for future earnings. The one consistent message that you hear from CEOs around the United States is that future earnings are murky at the very least, and a lot of them are starting to suggest that the supply chain is in worse shape than we had thought. In that scenario, it’s difficult to make a profit.
Now that the market has broken solidly below the 4000 level, that should offer significant resistance to any attempt to recover. If we break above the 4000 level, that would obviously be a bit of a victory, but not necessarily the be-all and end-all of a turnaround. On the downside, the 3500 level underneath could be a target, but I would anticipate that would probably cause some type of meltdown. Regardless, it’s very likely that the month of June is going to be more of a “fade the rally” type of situation, at least until the Federal Reserve changes its attitude.
Right now, as long as inflation remains hot, it’s difficult to imagine that the Federal Reserve will be able to do anything other than tightening monetary policy. The market will continue to throw a tantrum, especially if interest rates continue to rise as the “risk-free rate of return” will continue to be a higher hurdle to overcome for equities. It’s not that we won’t get the occasional rally, but I would look at each rally as being suspicious.
NASDAQ 100 Forecast: June 2022
Any balance during the month of July has to be looked at as a potential selling opportunity.
The NASDAQ 100 has been like a virtual punching bag for the short-sellers during the month of May. While the market is certainly oversold, the reality is that there’s no reason to think that the NASDAQ 100 is suddenly going to take out to the upside. After all, there’s a lot of risk appetite that’s needed for this market to rally, so I still look at any time we bounce as a potential shorting opportunity. The 12,000 level has been broken below, and now it looks like we are trying to reach the 11,000 level underneath.
If we do turn around and rally, I believe that there is a significant amount of resistance to be found near the 13,000 level, and possibly just about there. In fact, it’s not until we break above the 13,000 level that I would start to think about the upside. Ultimately, this is a market that is going to continue to get beaten up by the idea of higher interest rates, as technology stocks do tend to suffer. The NASDAQ 100 is very volatile, and at this point in time, I think the volatility lends itself to be more negative than anything else. After all, the world is worried about growth and risk appetite in general.
Any balance during the month of July has to be looked at as a potential selling opportunity, so I would probably focus more on short-term charts than anything else, because the volatility will continue to make any rally suspicious, and I think that a lot of the buyers will be very cautious about trying to hang on to bigger moves. In fact, if you are a “long-only fund” at this point, you are probably more than happy to take small profits instead of risking yet another meltdown.
If the Federal Reserve changes its attitude, that changes the entire outlook for the market, but right now it seems as if it’s hell-bent on trying to get down to the 11,000 level, perhaps even down to the 10,000 level during the month of June. It should also be noted that the middle of the summer tends to be a bit less than bullish, so ultimately it’s a market that I just have no interest in trying to buy until we get a weekly close above the 13,000 level.
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