#INDICES Forecast: #NASDAQ,#DOWJONES & #SP500 (30 January 2023)
Dow Jones Technical Analysis: The Index is Preparing to Attack an Important Resistance
Technically, the index moves along a bullish corrective slope line in the short term, as shown in the attached chart for a period of time (daily), supported by its continuous trading above its simple moving average for the previous 50-day period.
- The Dow Jones Industrial Average continued to rise in its recent trading on intraday levels, achieving gains for the sixth session in a row, by 0.08%.
- It added about 28.67 points to the index, to settle at the end of trading at the level of 33,978.09 after the index rose during Thursday’s trading by 0.61%.
- During the past week, the index rose by 1.81%, recording three weeks of gains out of four.
Dow Jones Technical Analysis
Technically, the index moves along a bullish corrective slope line in the short term, as shown in the attached chart for a period of time (daily), supported by its continuous trading above its simple moving average for the previous 50-day period. It is extremely oversold so the index prepares in its recent trading to attack the important 34,281.36 resistance level.
Therefore, our expectations indicate more rise for the index during its upcoming trading, especially if it breaches the aforementioned 34,281.36 resistance, to then target the first resistance level at 35,361.36.
NASDAQ 100 Forecast: Overtakes the 200-Day EMA
If the Federal Reserve raises rates by 50 basis points, that might be enough to shock the market back down, but between now and then it will all be about the narrative and the rumors whispered on Wall Street as they try to get in front of the announcement.
- The NASDAQ 100 has shot straight in the air during the trading session on Friday, as we have overtaken the 200-Day EMA.
- By doing so, it looks as if the market is ready to go much higher, and very well could for the next couple of days. However, we will have to pay very close attention to the market on Wednesday, and the way it reacts to Chairman Powell.
- After all, we have the FOMC Monetary Policy Meeting going on, and a lot of the future direction could come down to whether the market believes that he is going to be hawkish going forward.
- At this point, I really don’t know what else the man can do to convince Wall Street, but it’s his fault and the rest of the Federal Reserve's for coddling traders for the last 14 years. This is the mess that they have created.
All the Momentum is to the Upside
After all, if asset prices continue to strengthen, that’s going to have a negative influence on what the Federal Reserve is trying to do, which of course is drive down consumption. People feel rich, they’re not necessarily going to stop spending. This spending is driving the massive amount of inflation that we have seen, and therefore something must be done about that.
We do take off to the upside, the 12,500 level would be the next major target, followed by the 13,000 level. Quite frankly, this is going to be an interesting show of psychology as we will have to figure out what the market is going to do in reaction to what he says, which I can almost guarantee won’t be dovish. If the Federal Reserve raises rates by 50 basis points, that might be enough to shock the market back down, but between now and then it will all be about the narrative and the rumors whispered on Wall Street as they try to get in front of the announcement. It’s nonsense of course and it’s almost impossible to trade, but at this point, it looks like all the momentum is to the upside.
S&P 500 Forecast: Playing Chicken with the Federal Reserve
I anticipate that on Wednesday of next week when the FOMC meeting happens in the statement occurs, he will say something to reiterate the Federal Reserve's hawkish stance.
- The S&P 500 rallied during the trading session on Friday again, as traders continue to bet that the Federal Reserve is going to acquiesce and give them cheap money.
- However, this is a monster of the Fed’s own making, as they’ve been coddling Wall Street for 14 years.
- This is a lot like what happens when you give your children money all the time, they eventually don’t appreciate it and they expect it to be something that happens in perpetual momentum.
Be Cautious with Your Position Size
Jerome Powell even uses the word “pain” multiple times on one of the rare occasions that Wall Street believed him. I don’t know that the man could be any more straightforward. However, most traders and money managers that are out there right now have always lived in a loose monetary policy environment. Quite frankly, they don’t know any better. As we are during her earnings season, we could get a dose of reality sooner or later, but in the short term, it looks like we are going to continue to see the market play chicken with the Federal Reserve.
I anticipate that on Wednesday of next week when the FOMC meeting happens in the statement occurs, he will say something to reiterate the Federal Reserve's hawkish stance. Whether or not Wall Street listens might be a different story, but we are approaching a significant resistance barrier in the form of the 4100 level, so I would be watching that. If we break above there, then it’s likely that the next 100 points or higher. However, be cautious with your position size because of the peace boost in the market, we could go straight back down to the 200-day EMA.
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