#Indices Forecast: #SP500,#DAX,#NASDAQ100 (10 April 2024)

NASDAQ Forecast: Looks Strong Ahead of CPI

• You can see that we did pull back just a bit during the early hours on Tuesday, but it looks like Wall Street is trying to power higher.
• Keep in mind that the CPI numbers come out on Wednesday and that of course will have a certain amount of influence on this market, but I think given enough time, we do break higher.

The Federal Reserve is likely to cut rates later in the year and it does seem like traders on Wall Street are betting on that. It is reflected in the stock market. I think in the short term though, we need to look at the $17,775 level underneath as a significant support level, while the $18,500 level above is a significant resistance barrier.

We may bounce around in this area, but obviously CPI numbers could cause some type of major shift at the moment. I think it's a market that's trying to work through a lot of excess froth and it does make a certain amount of sense that we consolidate for a while. After all, we've been in a strong uptrend for several months now.

Potential Technical Support

The 50 day EMA sits underneath it and continues to offer support. So therefore, I think a lot of traders will look at that as a potential bounce just waiting to happen as well. But either way, I have no interest in shorting this market. I think it is probably only a matter of time before we continue to see buyers on dips and the upcoming earnings season could be one of the major drivers.

Earnings season has been a bit of a pleasant surprise for a while on Wall Street, and I think we may continue to see more of that. Regardless, earnings will only have so much of an effect as it seems like most people out there are more or less focused on what the Federal Reserve may do, so it’s possible that “bad news is good news” fairly soon as traders will continue to hope for loose monetary policy.

S&P 500 Forecast: Wall Street Waits for CPI as SP 500 Stagnates

• The S&P 500 was rather quiet during the trading session on Tuesday as we wait for the Consumer Price Index figures.
• Ultimately, this is a market that will continue to be very noisy, but I think it’s probably only a matter of time before we start to pick up momentum in the upward direction yet again.
• After all, this is a market that is focusing almost solely on the idea of cheap money.

We do have earnings season coming and that of course has a major influence on what could happen in the short term, but longer term it’s going to be about interest rates as per usual. Currently, it looks like the Federal Reserve will be cutting by the end of the year, but it may be as little as to interest rate cuts now. That being said, Wall Street still has plenty of hope for more, so I think you will continue to see a lot of noisy behavior in the short term.

Consumer Price Index

In the short term, traders will be paying close attention to the Consumer Price Index numbers coming out on Wednesday, because it gives us an idea as to what inflation is doing in the United States, which directly influences what the Federal Reserve will not going. As long as inflation remains stubbornly high, the amount of interest rate cuts will continue to dwindle. Remember, there was a point in time where Wall Street anticipated 6 interest rate cuts between now and the end of the year. We are now favoring the idea of 2 or 3.

If we do rally from here, the 5300 level is an area that a lot of people will be paying attention to as it has shown itself to be massive resistance previously. If we can break above there, then the market is likely to continue to go to the 5500 level. If we break down from here, the 5100 level should be a significant amount of support with the 50-Day EMA sitting just below it is offering support as well. Either way, I don’t really have any interest in trying to short this market, because it has been far too relentless. Worst case scenario, I suspect that we go sideways.

DAX Forecast: Pulls Back during Tuesday’s Session

• The DAX fell during early trading on Tuesday, as we continue to see a little bit of a pullback in Germany.
• This does make a significant amount of sense though, due to the fact that the market had gotten far ahead of itself. We are currently sitting just above the 23.6 Fibonacci level of the latest leg higher, suggesting that perhaps technical analysis following traders may be looking for a deeper correction.
• In that scenario, we could be looking at a move down to the 38.2% Fibonacci level, which currently sits near the €17,725 level.

Germany is The Bellwether

Germany is the bellwether when it comes to the European Union, so you should be watching this index regardless of what you are trading. This is because so many instruments will focus on Europe, be it indices like the CAC, MIB, AMX, etc., and of course you have to pay close attention to what it could do with the euro. We have an interest rate decision next week coming out of the European Central Bank, and perhaps some of this is to simply traders out there willing to take profit ahead of that massive decision.

A lot of traders will be waiting to see whether or not the ECB will do something to lift asset prices, as they would liquefy markets. If they do not, then it’s possible this market could fall deeper as Germany is already in the recession. That being said, expect a lot of noisy behavior over the next couple of days but I do suspect that the DAX remains a market that you are looking to buy dips in, as it is a very strong uptrend and there’s no reason to think that it’s going to change anytime soon.

With all of this being said, I do think that the market is finally starting to show some cracks, which might give you a nice opportunity to pick up a little bit of value here. Nonetheless, I also recognize that you need to be very cautious with your position sizing, as you could find yourself in a bad trade very quickly if you get to over levered and we start to see a deep correction.

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