S&P 500 Forecast: S&P 500 Continues to Look for Floor
- The S&P 500 has shown itself to be somewhat bullish to kick off the week and that does make a certain amount of sense considering just how sold off we had gotten.
- Keep in mind that the S&P 500 continues to be rather held hostage to the idea of the Federal Reserve and what it’s going to do with its monetary policy, and more importantly, whether or not it is going to loosen monetary policy.
We are in the midst of earnings season, so that could come into the picture as well, so also be aware of that. Regardless, I do think that value hunters are starting to come back in the S&P 500 index, and they will take advantage of this market being so cheap as it were with this.
Value? Maybe.
I think you have to look at the S&P 500 through the prism of a value play. You also need to be aware of the fact that it could be very noisy and messy in the short term, so keep that in mind. With this, I like the idea of buying this dip, but I would not get massively overexposed at this point. After all, the market has been hammered quite recently, and therefore it is going to be somewhat tentative. The market breaking down below the lows of the Friday session would be extraordinarily negative and certainly send this market into a tailspin. I don’t necessarily expect to see that, but it is something that you need to be aware of.
Ultimately, this is a market that I do think eventually takes off to the upside again, but we need to build a certain amount of confidence in the market that has clearly been shattered as of way. Furthermore, we also need to get through earning season and see a lot of good reports to get people excited about buying into the S&P 500 again. Keep in mind that the index has also seen a lot of underlying rotation from sector to sector, so that can somewhat make the index look worse than it really is.
NASDAQ 100 Forecast: Looking for Buyers
- The Nasdaq 100 rallied a bit during the early hours on Monday, as it looks like we are trying to bounce a bit from the massive sell-off that we had seen previously.
- Quite frankly, this is a market that I think continues to see a lot of interest in the 17,000 level, and the 17,000 level is not only a large round figure, but it’s also an area that previously had seen resistance.
Because of this, the NASDAQ 100 market memory comes into play. And I think if for no other reason than simple value hunting, we probably have a bounce just waiting to happen. Keep in mind that the lack of economic announcement during the session could help as well. So really all things being equal, I do think we will continue to go higher, at least for the short term. Whether or not it’s sustainable is a completely different question altogether, but I do think eventually we have to look at that potential.
The breaking above Friday’s highs opens up the possibility of moving to the 50 day EMA, but that’s going to take some effort. I do think there are a lot of questions out there when it comes to what’s going to happen next, and of course with earnings season being front and center. That can cause some headaches, but right now, I think a little bit of value hunting is going on, and that will, more likely than not, continue to be the case.
Earnings Season
Keep in mind that the earnings season will cause a bit of volatility in and of itself, but ultimately, I do think it is probably only a matter of time before we get some type of bounce simply due to the fact that Wall Street doesn’t know what else to do with itself. Yes, they will always look for the handout from the Federal Reserve, but eventually they will find some type of narrative to sell stocks, because that’s what Wall Street does. Given enough time, this will end up being a lovely buying opportunity.
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