#INDICES Forecast: #NASDAQ,#DOWJONES & #SP500 (7 NOVEMBER 2022)

Dow Jones Technical Analysis: Index Closes Cautiously Higher

The Dow Jones Industrial Average rose during its recent trading at the intraday levels, to break a series of losses that continued for four consecutive sessions.

The Dow Jones achieved strong gains in its last sessions, by 1.26%, to gain about 401.97 points, and to settle at the end of trading at the level of 32,403.23. This happened after its decline -0.46% in Thursday, but despite that, the index recorded weekly losses of -1.40%.

• Investors digested the mixed jobs report which raised hopes that the Federal Reserve will shift interest rates in the future to less severe degrees.
• However, the Nonfarm Payrolls report also showed that average hourly earnings rose 0.4% in October versus expectations of 0.3%, while job growth was stronger than expected.

Traders' bets on a 75bp rate hike in December rose briefly after the jobs report, but then eased back to split between the odds of a 50bp and 75bp hike.

Dow Jones Technical Analysis:

Technically, the Dow Jones' rise comes with the support of its continuous trading above its simple moving average for the previous 50 days. The index remains suffering from negative pressure due to its trading along a corrective bearish trend line in the short term, with the start of negative signals in the relative strength indicators. This happened after they reached areas of severe saturation with buying operations, as shown in the attached chart for a period (daily).

Therefore, our expectations suggest a return to the index's decline during its upcoming trading, as long as the resistance remains at 33,272.34, to target the first support levels at 31,598.60.

S&P 500 Forecast: Continues to Show Weakness

Earnings have been okay, but to think that they will continue to be in this macroeconomic environment is wishful thinking at best.

• The S&P 500 has continued to show weakness during the trading session on Friday as the volatility continues to wipe traders out.
• With that being the case, I do think that we probably have more negativity ahead than anything else, so you need to be very cautious.
• Keep in mind that most of what’s going on right now is all about the Federal Reserve and what they are getting ready to do, and Wall Street is already trying to convince itself that the Federal Reserve is going to slow down its tightening policy, even though Jerome Powell just told them that he was not going to. Hope burns eternal I suppose.

Market Likely to Face Pressure

This has been a very difficult market to trade in recently, and I don’t think that’s going to be going away anytime soon. The best thing that I have been able to figure out is simply fading rallies as they occur, at least with the first signs of exhaustion. You should also keep in mind that as the US dollar and interest rates rise in America, that puts even more pressure on this market, and the lack of growth is going to be a real concern going forward.

Whether or not the S&P 500 can break above 3900 arrange to be seen, but that would obviously be a bullish turn of events. In that environment, we probably make a run towards the 200-Day EMA, which is sitting just above the 4000 level. Nonetheless, I’m very cautious now and recognize that the downside continues to lead the way most days.

NASDAQ 100 Forecast: Continues to See Downward Pressure Despite Initial Pop

The Federal Reserve has reiterated this week that they are going to continue to fight inflation, and therefore remain tight for longer than people thought.

• The NASDAQ 100 initially gapped to the upside during the training session on Friday, as markets initially took off to the upside after the jobs number.
• The market has given back all of the gains rather rapidly, and it does suggest that perhaps going to continue to see the downtrend take hold again.
• Ultimately, this is a market that had broken above the downtrend line, and now it is breaking back through. Now it’s very likely that we are getting ready to go much lower.

Continue to be Bearish

The jobs number was slightly higher than anticipated, and therefore you need to pay close attention to the fact that the Federal Reserve still has no reason to loosen monetary policy, and therefore stocks will continue to take a bit of a beating. Ultimately, this is a situation where risk appetite is getting eviscerated, and I do think that it’s only a matter of time before you see all these rallies sold off. In fact, it’s not until we break above the 50-Day EMA that I would look at this chart as one that starting to look positive.

If we did break above the 50-Day EMA, it would confirm a bit of a double bottom and a potential “W pattern.” The market would of course look very bullish at that point, but quite frankly I just don’t see how that happens in this environment and clearly, we have seen a lot of damage done as of late. If that’s going to be the case, there’s no reason to get overly excited about owning stocks, especially technological stocks which tend to be especially sensitive to interest rate headwinds and risk-off behavior. With that being the case, I continue to be bearish on this market and just don’t see how we would be changing anytime soon.

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