#INDICES Forecast: #NASDAQ,#DOWJONES & #SP500 (8 NOVEMBER 2022)

Dow Jones Technical Analysis: Index Rises Along a Bearish Corrective Slope

Investors are now focused on the midterm elections later Tuesday, which will determine which party will control Congress.

The Dow Jones Industrial Average rose during its recent trading at the intraday levels, to achieve gains for the second consecutive day. It went up by 1.31%, to gain about 423.78 points, and settled at the end of trading at the level of 32,827.01, after rising by 1.26% in Friday's trading.

The Dow jumped more than 400 points on Monday, led by gains in shares of Walgreens Boots Alliance Inc. WBA shares 4.10%, Salesforce Inc CRM shares 3.45%, Boeing Co. BA at 3.06%.

Investors are now focused on the midterm elections later Tuesday, which will determine which party will control Congress. That's because there is a potential for tax hikes, and any kind of massive spending is likely to be viewed as inflationary.

Traders are divided over whether the Federal Reserve will raise interest rates by 50 basis points or 75 basis points at the US central bank meeting in December.

Dow Jones Technical Analysis

Technically, the index’s rise comes with the support of its continuous trading above its simple moving average for the previous 50 days. In front of that the index continues to move along a corrective bearish slope line in the short term, as shown in the attached chart for a (daily) period, with the influx of negative signals on the strength indicators. This is relative, after reaching earlier areas of severe overbought.

Therefore, our expectations still suggest a return to the index's decline during its upcoming trading, throughout the stability of the important 33,272.30 resistance level, to target the first support level, at 31,598.50.

NASDAQ 100 Forecast: Has Positive Session to Kick Off the Week

At that point, I’d be looking for the NASDAQ 100 to hit the 10,500 level, followed by the 10,000 level.

• The NASDAQ 100 has rallied about 1% during the trading session on Monday, as we are hanging around the 11,000 level.
• Keep in mind that the NASDAQ 100 is heavily influenced by a lot of the major technological company such as Tesla, Microsoft, Amazon, Google, and the like.
• Ultimately, it is very sensitive to interest rates, so if we do see rates rally a bit in the United States, then it’s likely that we will continue to see the NASDAQ 100 struggle.

If we do continue to go higher, then I’m going to be paying close attention to the 50-Day EMA, which is currently sitting near the 11,500 level, and dropping. Beyond that, we also must look at the 11,750 level, which also has been structurally resistant. I think at this point, a lot of people were looking at this through the prism of a potential “double bottom”, and a lot of people are hoping this is the bottom finally. It’s difficult to think that is going to happen anytime soon, so I’m looking for rallies now to show signs of exhaustion that I can take advantage of. If we do break above the 11,750 level, then it’s possible that we could go much higher, but I think that is going to be the hardest way to go.

Waiting for a Shorting Opportunity

If we break down below the double bottom, then it’s likely that we could continue to see a massive selloff, probably something along the lines of a meltdown. At that point, I’d be looking for the NASDAQ 100 to hit the 10,500 level, followed by the 10,000 level. At this point, it is very unlikely that we continue to see rallies be able to stick, mainly because there’s so many negative things out there. With that being the case, I think it’s only a matter of time before you get a nice shorting opportunity.

If we did take off to the outside, then we would need to see some type of Federal Reserve action, or perhaps slowdown in its aggressive monetary policy to make a rally mean anything, so therefore it’s likely that we would continue to see it as a bit suspicious until the Federal Reserve gives the “all clear.”

S&P 500 Forecast: Bounces Toward the 50-Day EMA

When I look at the chart, it looks as if we are trying to form some type of bottoming pattern, but at this point, we have not proven it quite yet. Yes, we had broken the above resistance at one point, but then turned around to show signs of weakness, to begin with.

• The S&P 500 has rallied a bit during the trading session on Monday, as we continue to see a lot of volatility.
• The market is sitting right around the 3800 level. The 3800 level has been difficult to get beyond a couple of times, but the question now is whether we can finally make it stick. The market seems to be waiting for some type of confirmation that the Federal Reserve will pivot.
• Quite frankly, it’s just setting itself up for disappointment. At this point, it’s likely that we will continue to see signs of exhaustion as selling opportunities, but at this point, it looks like the short-term momentum is to the upside.

The Federal Reserve has several speakers this week that could come out and cause problems, so I suspect that it’s only a matter time before the Bears come back down. It will break down below the lows of the last couple of days, it’s likely that the market could go down to the 3600 level. That is a large, round, psychologically important figure. At this point, that is an area where it’s likely that we would see a lot of momentum to break out of this range, but quite frankly we could very well see some type of shock to the system as somebody somewhere will say something.

Be Cautious

When I look at the chart, it looks as if we are trying to form some type of bottoming pattern, but at this point, we have not proven it quite yet. Yes, we had broken the above resistance at one point, but then turned around to show signs of weakness, to begin with. The 50-Day EMA will offer a certain amount of interest, but really at this point if we can break above there is possible that we could go to the 3900 level, and then perhaps even the 4000 level where we have the 200-Day EMA.

Looking at this chart, it’s likely that we will continue to see a lot of volatility, but that should be nothing new if you been playing the market anytime recently. I think at this point, you need to be very cautious with the position size that you use because quite frankly I think we are going to see more volatility, not less of it going forward.

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