#INDICES Forecast: #NASDAQ,#DAX & #SP500 (9 AUGUST 2022)
DAX Forecast: Index Shows Signs of Exhaustion
Keep in mind that the market has been very noisy for a while, and even though we have had a nice move to the upside, we have not changed the overall trend.
- The German DAX Index rallied again Monday but gave back the gains to form a shooting star.
- By doing so, the market looks as if it will continue to hear a lot of noise right around the €13,650 level, a place where we had seen a bit of a gap previously.
- Because of this, it makes quite a bit of sense of the market may struggle here.
Selling Pressure Ahead
Furthermore, it’s difficult to imagine that the German economy is suddenly going to take off due to the fact that there are a lot of concerns when it comes to energy, and therefore it’s likely that we would see a lot of negativity here. Ultimately, the market is likely to continue seeing quite a bit of selling pressure due to the fact that we have seen so much in the way of negativity when it comes to the economic outlook that this market will continue to be faded.
The 50-day EMA underneath should offer a little bit of dynamic support, but I think given enough time we will see a lot of selling pressure to at least test that area. If we break down below there, then it’s possible that we could go down to the €13,200 level.
On the other hand, we could see this market break to the upside, based upon some type of FOMO. If that were to happen, it’s possible that we could go looking to the €14,000 level. The €14,000 level will be psychologically negative, but that does not necessarily mean that it would hold the market. At that point, you would have to see how other stock indices around the world are behaving, because they will all more likely than not move in the same general direction.
The markets are so interconnected right now it’s all about the growth prospects of not only Germany, but the rest of the world on the whole. After all, Germany is a major exporter of goods to various countries around the world, so if the global economy starts to fall, that most certainly will have an effect on the German economy also. Keep in mind that the market has been very noisy for a while, and even though we have had a nice move to the upside, we have not changed the overall trend.
NASDAQ 100 Forecast: Index Gives Up Early Gains
Keep your position size reasonable, because violent swings will probably be more the norm than anything else.
- The NASDAQ 100 Index initially tried to rally Monday but gave back gains as traders are starting to run into a significant amount of technical resistance.
- Ultimately, this is a market that I think will continue to see a lot of noisy behavior, and you need to be cognizant of the fact that we ended up forming a shooting star, a very bearish sign indeed.
Eyeing the 13,000 Level
At this point, now we start to pay attention to the 13,000 level. If we break it down below there, could open up even more selling going forward, opening up the possibility of an attempt at the 50-day EMA which is currently sitting right around the 12,250 level. Breaking down below that opens up a wave of selling. The question now is whether or not interest rates will have to continue to go higher but there will be a lot of questions between now and Wednesday as we have to wait for the CPI figures. The CPI numbers will continue to be closely watched by the Federal Reserve as inflation is by far the biggest thing they are concerned about.
Alternately, if we were to break above the 13,500 level, that opens up the possibility of a move to the 200-day EMA which is closer to the 14,000 level. I don’t necessarily expect to see that happen, but the stock market is so disconnected from the real economy that it would not be a huge surprise. Ultimately, I would anticipate that we still have plenty of volatility ahead of us, and as long as volatility is relatively elevated, that does tend to bring significant selloffs occasionally. I do think that the biggest push lower has probably already happened, but I also recognize that there are a lot of things that could go wrong in the relatively near term.
We are a little overbought anyway, so a bit of a pullback does make sense. Furthermore, we are right smack dab in the middle of an area that’s been important multiple times, so one would think that a certain amount of market memory should come into play in this region. Keep your position size reasonable, because violent swings will probably be more the norm than anything else.
S&P 500 Forecast: Index Gives Up Early Gains at Resistance
This is a market that is difficult to trust because there’s no real reason for it to go higher.
- The S&P 500 Index tried to rally during the early hours on Monday, but the E-mini contract has pulled back from the crucial 4200 level.
- This is an area that we need to break above to continue the overall uptrend, and now that we have to worry about the Wednesday CPI number, this is definitely something worth paying attention to
Keep an Eye on the CPI
By forming a shooting star, it suggests that we have further to go to the downside. Having said that, I would anticipate that there’s a certain amount of support at the 4100 level, but the CPI number, especially the Core CPI number, will have a major influence on what people expect the Federal Reserve to do next. After all, the S&P 500 and stock markets in general have nothing to do with economic reality in the United States, but solely upon monetary flow coming out of the central bank. They gave up the idea of tracking the economy 14 years ago.
If we were to break above the 4200 level, it would almost be a reaction to a number on Wednesday that is likely to be a sign that the Federal Reserve can ease up on monetary policy. I don’t expect that to happen, and I do believe that even if we did, we would see more trouble at 4300. The 4300 level is an area that’s been resistant previously and now has the 200-day EMA sitting right around it as well.
This has been a nice rally, but I think it’s getting a little long in the tooth at this point. Breaking down below the 4100 level would be the first sign that we are going to test the 4000 level. The 4000 level will bring the 50 Day EMA into the focus of traders, which has a certain amount of technical interest built into it. If we break down below there, we will probably test the lows yet again. This is a market that is difficult to trust because there’s no real reason for it to go higher. There’s no real reason to think that the Federal Reserve is going to start stepping away from tightening, and it’s a bit surprising just how much credibility the central bank has lost over the years, as Federal Reserve governors coming out and stating that they are going to continue to get aggressive simply are ignored by the market.
0 comments:
Post a Comment