Weekly #Forex Forecast –#USDJPY,#Gold,#Silver,#SP500 Index,#CAC,#USDMXN (13-17 May 2024)

Fundamental Analysis & Market Sentiment

Last week’s key takeaway was the souring of risk-on sentiment due to expectations in the USA of higher inflationary pressure over the short-term as well as US Consumer Sentiment data which came in at a six-month low. This souring did not come until the end of the week, and it is unclear how negative it is, as most assets over the entire week showed a risk-on rally.

It is unclear what sentiment will be like as the new week gets underway. It is likely that markets will be so fixated on the upcoming US CPI data release that nothing much will happen in the market before that.

The two major data releases last week were policy meetings at two central banks: the Bank of England and the Reserve Bank of Australia. Both central banks kept their interest rates unchanged, but the Bank of England vote was a little more dovish than expected. The RBA stated that inflation risk remains to the upside but that on balance they considered another rate holding to be the correct action. However, both banks effectively indicated a rate hike was out of the question.

Other important data releases were:

1. US 30-Year Bond Auction – this produced a slightly lower yield, which should be slightly bullish for risk.
2. UK GDP – this came in notably better than expected, with a month-on-month increase of 0.4% instead of the expected 0.1% increase.
3. US Unemployment Claims – this was slightly worse than expected.
4. Canadian Unemployment Rate – this was better than expected, with the unemployment rate remaining unchanged at 6.1% due t the creation of more net new jobs than was expected.

The Week Ahead: 13th – 17th May

The most important item over this coming week will be the release of US CPI (inflation) data on Wednesday. Apart from that, there are several other important releases scheduled, listed in order of likely importance:

1. US PPI
2. US Retail Sales
3. US Empire State Manufacturing Index
4. US Unemployment Claims
5. Australia Wage Price Index
6. New Zealand Inflation Expectations
7. UK Claimant Count Change
8. Australia Unemployment Rate

Monthly Forecast May 2024

Weekly Forecast 12th May 2024

Last week, I forecasted that the Japanese Yen would decline against the Euro, Pound, New Zealand Dollar, Swiss Franc, Canadian Dollar, and Australian Dollar. All of these were excellent winning trades, giving a large overall gain of 10.45%, as outlined earlier.

Directional volatility in the Forex market decreased last week, with 27% of the most important currency pairs fluctuating by more than 1% last week.

Last week, the Australian Dollar showed relative strength, and the Japanese Yen showed relative weakness.

Key Support/Resistance Levels for Popular Pairs

Technical Analysis

US Dollar Index

The US Dollar Index printed a small inside candlestick last week which closed slightly higher with a relatively large upper wick, signifying indecision. The candlestick is close to being a bearish pin bar. There is no true long-term trend here, as the price is above its level from 3 months ago but remains below its price of 6 months ago, making the US Dollar relatively unreliable to trade on a trend basis.

The weekly price chart below shows that the dollar has been swinging but has been in a consolidation pattern for quite a while, and the consolidation seems to be getting stronger and constricting.

However, it is worth noting that there is a confluence of a bearish descending trend line and a key horizontal resistance level at 105.81 which is not far from the current price. If the Us Dollar can get established above that level, it could be a significant bullish breakout. It could happen this week if the release of US CPI (inflation) data is notably higher than expected.

USD/JPY

The USD/JPY currency pair was active this week, as were all the Yen crosses. This is due to volatility remaining within the Japanese Yen after its recent massive price movements, with the volatility goosed by two suspected interventions from the Bank of Japan.

The Yen is weakening everywhere, and so of course it also weakened against the US Dollar. However, several other currencies gained even more against the Yen last week.

Technically we see the bullish momentum starting to evaporate into a consolidation below ¥156.00.

Yen weakness is quite likely to persist over the coming week. Whether this is the best pair to use to be short of the Yen is debatable. However, if the Yen does stay weak, long trades from bounces at support levels in this currency pair are likely to be good trades.

Gold

The price of Gold rose quite firmly last week, printing a bullish engulfing candlestick of good size, although Friday saw Gold give up some of its gains through a short-term topping out. The weekly price chart below shows some upper wick on the weekly candlestick. However, the price closed notably higher, and is not very far from making a record high weekly close, which was last made 4 weeks ago at $2392.

We do not yet have bullish breakout conditions, but long trades do look more likely to succeed than short ones, and there is certainly a long-term bullish trend here.

I think we could see a good point to enter a new long trade if we get either:

• A daily close above $2400, or
• A retracement to any of the support levels above $2290.

Silver

The price of Silver rose quite firmly last week, printing a bullish engulfing candlestick of good size, although Friday saw Silver give up some of its gains. The weekly price chart below shows some upper wick on the weekly candlestick. However, the price closed notably higher, and is not very far from making a record multi-year high weekly close, which was last made 4 weeks ago at $28.69.

We do not yet have bullish breakout conditions, but long trades do look more likely to succeed than short ones, and there is certainly a long-term bullish trend here.

I think we could see a good point to enter a new long trade if we get either:

• A daily close above $29, or
• A retracement to either of the support levels at $27.72 or $27.46, with $27.46 looking especially strong due to its confluence with $27.50.

S&P 500 Index

After major US equity indices dropped quite sharply 4 weeks ago after making new all-time highs, US stock markets have been rising slowly but surely, and last week saw quite good performances, especially here in the broad, benchmark S&P 500 Index. It is worth noting that this Index outperformed the NASDAQ 100 Index, which is unusual in a bear market and suggests that the tech sector currently has some vulnerability.

The weekly price chart below shows a bullish candlestick that closed quite near its high. There was some upper wick, but nothing unduly large for bulls to worry about.

There is clearly a long-term bullish trend coupled with mostly bullish short-term momentum. The issue for bulls here is likely to be that the price is near the recent record highs which could provide resistance and trigger another bearish reversal if reached.

For this reason, I will only consider entering a new long trade here if we see a new record high daily close. I prefer a daily close above 5265 which would be a new record high.

We have seen renewed risk-on sentiment in recent days, which is benefiting stocks and precious metals. Gold and silver are positively correlated with stock market performances historically.

USDMXN :

The US dollar gap lower against the Mexican peso the kickoff the trading week, only to turn around and show signs of strength and fill that gap, only to turn right back around and start selling off. Ultimately, this is a market that I think is doing everything he can to break down below the 16 pesos level, but we have a long way to go. In general, this will be an interesting pair to watch due to the fact that it is an emerging market currency that is extraordinarily important. I think this still remains a market that you are looking to fade rallies in.

CAC

The French index was very positive this week, although it’s worth noting that Friday was little bit of a letdown. The market has struggled at the previous high, but this simply means that we will probably pull back only to find more buyers. Underneath, we have the €7900 level that is likely to offer quite a bit of support. Even if we were to break down below there, I think there’s even more support near the €7600 level as the 50-Week EMA comes into the picture.

Bottom Line

I see the best trading opportunities this week as follows:

1. Long of the S&P 500 Index following a daily close above 5265.
2. Long of Gold following a daily close above $2400.
3. Long of Silver following a daily close above $29.00.

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Indices Forecast: #SP500,#DAX,#NASDAQ100 (3 May 2024

DAX Forecast: Looks for Base After Pullback

• The German DAX has rallied just a bit during the early hours on Thursday as it looks like we are trying to recover a bit.
• The 18,000 euros level is an area that obviously will attract a lot of attention due to the fact that it is a large, round, psychologically significant figure, but it’s also an area where we have seen some noise previously.
• The market at this point in time continues to see the 50 day EMA underneath as potential support.
• In this type of environment, I think we continue to see a lot of consolidation as we try to sort out which direction we are going in the longer term.

Trend is Still Positive

The DAX is bullish overall, but I think also this is a situation where if we can break the candlestick from the last couple of days then we could go looking to the 18,500 euro level. Underneath the 50-day EMA there is a lot of support that we’ve seen recently so I’m not interested in shorting this market anytime soon.

That being said, the 17,500 level is an area that I think a lot of people will be paying attention to because if we were to give that up, then the uptrend could be threatened. Keep in mind the DAX is the gateway to Europe for most traders so they will look to it as a place to put money to work initially. In that sense, you can look at the DAX as a harbinger of what happens on the rest of the continent such as trading in the MIB in Italy or the AMX in Amsterdam etc. At this point it looks like we’re trying to beat back some of this negativity, but I think we’ve got some choppy and volatile days ahead

When you get this type of choppy volatility, you are better off using small positions, but given enough time I do think that we continue to see an attempt to rally. If we don’t rally in this market, and start to break down, then the real trade would be to short some of the smaller European indices.

S&P 500 Forecast: Continues to Consolidate (SIGNAL)

• Potential signal: if we break above the top of the wipeout candlestick from Tuesday, near the 5140 level, I would be a buyer and go looking toward the 5275 level. Underneath, the 5000 level would be my stop loss.
• Ultimately, this is a market that I do think has a lot of support underneath it, but the 5000 level is an area that I think he is psychologically important as well as potentially structurally supportive as well. In fact, I think it’s an area of support that extends down to the 4925 level.

The 50-Day EMA sits just above, offering a certain amount of resistance. If we were to break above there, then the market is likely to go looking toward the 5125 level. Breaking above that level opens up the possibility of a move toward the 5300 level, but we would need to see some type of momentum in the market. That being said, it’s probably only a matter of time before Wall Street finds a reason to start pushing a bullish narrative again.

Interest Rate Markets and Jobs

Friday is the nonfarm payroll announcement, and that of course will have a major influence on what happens next. Ultimately, which you need to watch is interest rates coming out of the 10 year note in the United States, because that’s the only thing that Wall Street cares about, whether or not it is going to get cheap money. This has absolutely nothing to do with the economy, because as an American I can tell you that things are getting rapidly more expensive. Wall Street is worried about getting cheap money to push around and take advantage of liquidity.

This is a bit ironic, considering we are in the midst of earning season, but quite frankly earnings have nothing to do with what happens with the stock. That’s like assuming that stocks have something to do with the economy. It’s a transmission of liquidity like it has been since the Great Financial Crisis. This is a market that is currently trying to sort out whether or not it has enough liquidity to support it. If it does, it will rise. If it does not, it will fall. At this point, I think the only thing you can count on is a lot of noise.

Nasdaq 100: Sandwiched, Watch US 10-Year Treasury Yield Next

• Nasdaq 100 has exhibited short-term intraday wild gyrations of 3% to 4% in opposite directions since last week.
• Today’s data focus will be on US non-farm payrolls and ISM Services PMI for April to offer clues on whether the stagflation risk narrative is still alive.
• Macro factors such as the movement of the US 10-year Treasury yield are likely to take over the driver’s seat over micro factors (earnings results) in the next two weeks.
• Key levels on the US 10-year Treasury yield to watch are 4.70% (above, likely to be bearish for Nasdaq 100) and 4.58% (below, bullish bias for Nasdaq 100).

Since our last publication, the Nasdaq 100 has continued to inch lower from its current all-time high level of 18,465 printed on 21 March 2024. It has just ended April with a monthly loss of -4.46%, its worst monthly performance since September 2023 after its prior five consecutive months of positive returns.

So far it has recorded a maximum drawdown of -8% from its current all-time high to the recent 19 April 2024 low of 16,974, and current episodes of minor rebounds in price actions have been rejected by the downward slopping 20 and 50-day moving averages; the hallmark of a potential on-going medium-term corrective decline sequence within its longer-term major uptrend phase.

On a shorter-term intraday basis, wild gyrations between a range of 3% to 4% in opposite directions have been seen on the Nasdaq 100 due to several significant risk events, and data releases that unfolded this week, two of the “Magnificent 7 group of mega-cap US stocks earnings results (Amazon and Apple), US ISM Manufacturing PMI, US Treasury refunding requirements, and the FOMC monetary policy meeting.

These events and data sets offered conflicting signals on the state of the US economy; stagflation risk is still alive but negated by the Fed’s upcoming Quantitative Tightening (QT) taper initiative to kickstart in June where the monthly amount of US Treasuries roll-off in the Fed’s balance sheet will be reduced to US$25 billion from US$60 billion.

Hence, the QT taper initiative has offered a relief to potentially cap any adverse liquidity squeeze in the US financial system that can trigger a spike in short-term and overnight interest rates as a lesser amount of banks’ reverses may be needed to fund the US Treasury general account (TGA) as the amount in the Fed’s overnight reverse repos facility (the primary source of funding for TGA replenishment since September 2023) has dwindled to almost zero (US$428.68 billion as of 2 May 2024) from a peak of US$2.55 trillion in December 2022.

Watch US NFP & ISM Services PMI for more clarity on the state of the US economy

There will be two more key pieces of economic data to digest before we end this hectic and volatile week, US non-farm payrolls for April where there may be a risk of upside surprise as consensus expectations have been lowballed to +181K jobs added after a surprise rosy print of +232K jobs in March. April’s ISM Services PMI on the health of the US services sector will be out later; still in an expansionary mode (above 50 reading) but the pace of expansion has slowed since the start of the year with last month’s March print of 51.1 versus 53.4 seen in January. If April’s number comes in below expectations of 52 and March’s 51.1, the stagflation risk narrative is likely to gain traction again.

US 10-year Treasury yield may dictate Nasdaq 100’s next intermediate moves

A clearance above 4.70% resistance on the US 10-year Treasury yield (inverted) may trigger another potential downleg in the Nasdaq 100 with its key medium-term support zone coming in at 16,560/290 (also the 200-day moving average).

On the flip side, a break below 4.58% near-term support on the US 10-year Treasury yield (inverted) is likely to see a continuation of the rebound on the Nasdaq 100 from the19 April 2024 low to expose the next intermediate resistance at 17,900

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NASDAQ & #SP500 Analysis for today (23 April 2024)

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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Indices Forecast: #SP500,#DAX,#NASDAQ100,#CAC (16 April 2024)

CAC Forecast: Paris Gives Up Early Gains

• The Parisian CAC 40 has initially rallied during the training session on Monday, but has given back in the early gain.
• While we did end up forming a bit of a shooting star, it’s not necessarily something that I’m overly concerned about, as it looks more like consolidation at this point than anything else.
• In fact, you could almost make an argument that we are in the midst of forming some type of Polish flag, which of course a lot of traders will pay attention to.

The Trend

The trend has been higher for stock markets around the world for some time now, as it appears that people are waiting for central banks to cut rates yet again. The European Central Bank might even be cutting it soon as this summer, and if that’s going to be the case it could add a little bit of liquidity to the CAC, the DAX, the MIB, the AMX, etc. In general, I think European indices should do fairly well, at least initially. The question then becomes whether or not the ECB is cutting because of some type of emergency that it can get its arms around?

Technical Analysis

At this point, I’m very interested in the €7900 level as a potential support region. It’s probably also worth noting that the €8000 level sits just below current trading, so that probably comes into the picture as well. The 50-Day EMA is racing toward the current trading levels, so I think that is essentially going to be the “floor in the market” as things stand right now. I was an area we had broken out of as significant resistance, during the beginning of the year. Ultimately, this is a market that I continue to buy dips in, and I do think that it is probably only a matter of time before you rally again, but it does make sense to work off a little bit of upward momentum. Markets don’t go in one direction forever, so there’s no reason to think that the CAC would be any different at this point.

S&P 500 Forecast: Continues to Bounce Back and Forth

• The S&P 500 initially tried to rally during the course of the trading session on Monday, as the 5100 level underneath continues to be supported.
• The 50-Day EMA sits just below there, and it does make a certain amount of sense that we would continue to see interest in the market.
• On the other hand, the market rally and from here would open up the possibility of a move toward the 5200 level, as we continue to consolidate overall.

Earnings Season

Earnings season of course has kicked off, so I think a lot of this noise that we see will ultimately end up being the norm. All things being equal, I think it’s likely that the market will be very noisy, but ultimately, we are still very much in an uptrend. The earnings season causes quite a bit of noise, and therefore it’s likely that the market will continue to be difficult to hang onto, but the overriding fact is that we are most certainly in an uptrend, and that has not changed.

Even if we were to break down below the 50-Day EMA, the 5100 level itself is supported as well. Breaking through all that then puts the market in the mode of looking at the 5000 level to see whether or not we can see enough buyers in that region to keep the market supported. As long as we can say above the 5000 level, I think that there’s a real shot at this market continuing to go higher.

Regardless, I have no interest in shorting any of the US indices as everybody is hanging out and waiting for monetary easing to come out the Federal Reserve, something that should be the case during the later part of this year. Ultimately, it’s also worth noting that retail sales has still been strong, so even if we don’t get monetary policy easing, the reality is that Americans continue to spend. As long as that’s the case, it’s likely that we will try to revisit the 5300 level over the longer term. I have no interest in shorting US indices at the moment as the momentum has been so strong.

DAX Forecast: Strong with a Bounce

• The German Dax has shown the market to show upward pressure with the €18,000 level, an area that a lot of people will be looking at as and an area of interest.
• The 50 day EMA since underneath there and therefore I think it offers a certain amount of support if we can break above the highs of both Friday and Monday, then I think the Dax has a real shot at going to the 18,500 level.
• This is an area that we have seen selling in the past, but I think it is only a matter of time before we break through it overall.

At this point, the market is likely to continue to see a lot of volatility. And with that being said, I think you have to be very cautious with your position sizing. Nonetheless, if the Dax has shown itself to be resiliently bullish and the fact that we have pulled back just a bid offers enough value that I think people would get involved.

A Recent Small Drop Offers Opportunity

When you look at this drop of about 4%, it could very well end up being a buying opportunity. The 50 day EMA offers a significant amount of technical support as well, and as long as it looks like the ECB is going to be cutting rates, it’s very possible that you will have the Dax be the first place people throw money at.

I have no interest in shorting this market and even though we have had this a little bit of a pullback, we are still light years away from turning around and showing any proclivity to drop for a significant amount. So, with that being said, I think you have to keep in the back of your mind that this is a market that you have to be very patient with. You probably don’t want to have a huge position in, but you certainly should see this as a market that could rally over the next several weeks, if not months.

NASDAQ Forecast: Continues to See Buyers Overall

• The Nasdaq 100 has rallied a bit during the early hours on Monday, as perhaps there’s been a big sigh of relief that the Middle Eastern conflict hasn’t expanded.
• That being said, I think we are still very much in a consolidation area, and that is an area that I think a lot of people would pay close attention to.
• This market will continue to move on the handful of major stocks that everyone owns.
• Nonetheless, this market is in an uptrend, and people will continue to see buyers ahead. Remember though, this is earnings season, so volatility could be an issue overall.

We had so much in the way of a massive uptrend that working off some of that excess makes sense. Furthermore, we also have the idea that the earnings season is currently kicking off and that obviously has an influence on stocks. But regardless, the big driver, of course, is going to be the Federal Reserve and its monetary policy. Fed watching is by far the most important thing that traders can do at this point in time. Earnings may have an effect, but longer-term it is still about the interest rate situation.

This Market Has Support

At this point, it’s likely that we could see a situation where, any dip I think gets bought into the 17,775 level should continue to be support right along with the 50 day EMA. So as long as we can stay above all of that, I think we’re going to continue to see choppiness, but overall, more leaning towards the upside.

If we can break above the 18,500 level, then it opens up a much bigger move in the Nasdaq 100 and I think eventually will go looking to the 20,000 level. I’m not necessarily expecting that right away. but I certainly would not be surprised by it as the trend has been so strong up to this point. A breakdown below the 17,775 level could lead to a deeper correction, but, that won’t only end up being a buying opportunity down the road.

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Monthly Forecast : #NASDAQ100 & #SP500 (April 2024)

NASDAQ 100 Monthly Forecast: April 2024

Post-choppy March, watch 17,775 support for direction. Potential grind higher amid summer quiet. Key strategy: buy dips, avoid shorting.

• The NASDAQ 100 has seen a very choppy month of March, but quite frankly we have shot straight up in the air so little bit of consolidation was exactly what the market needed.
• Whether or not that holds for the longer-term remains to be seen but I am watching the support level from the month, the 17,775 level, for signs of where we go next.
• As long as we can stay above that area, then I don’t think much has changed and quite frankly we may be looking at a market that is just trying to sort out where it goes next.

Ultimately, I do think that this market will go higher but we may need a little bit of a reset. That reset could take the form of a month or two of grinding, as we work off some of the excess froth. Furthermore, we are starting to get a little closer to the summer season, which typically is a bit quiet. Nonetheless, I still think that the market is very much the same market that we have been in for a while, meaning that you can either be on the sidelines and simply out of the market, or you are looking to buy dips. Shorting the NASDAQ 100 has been tantamount to blowing up your account on purpose every time you do it.

Look for Value

I think the only thing you can do on this index is to simply look for value as it occurs. Short-term pullbacks will come from time to time, and as long as you are not betting the entire account that you have on that pullback, you should be fine. There’s nothing wrong with building up a position over time, but quite frankly I think this is a market that has gotten so far ahead of itself that we could see a 10% correction. Dad 10% correction would be an excellent buying opportunity but I just don’t see anything on the chart right now that suggests we are about to have it. When I say that there could be a 10% correction, is just a simple statement that we had shot straight up in the air so rapidly.

SP 500 Monthly Forecast: April 2024

Bullish trend persists in well-defined channel. Potential for short-term pullbacks, but overall market likely to rise with rate cut expectations.

• Stock markets are essentially stuck in a feedback loop around the world, and the S&P 500 of course will be no different.
• The S&P 500 is the largest stock index in the world, and therefore it is worth paying close attention to what it’s doing.
• I do believe that we continue to see bullish behavior due to the fact that traders simply feed on momentum more than anything else.
• During the course of March, we have most certainly seen quite a bit of buying again, but it’s probably worth noting that we are just simply going up in a very rigidly defined channel.

At this point in time, I do think that the market could probably use a little bit of a pullback, and for what it is where we have recently seen a lot of noisy choppy volatility. This does suggest that perhaps we might get a short-term pullback, but I think at this point in time it’s obvious that the short-term pullbacks continue to get bought into. After all, the S&P 500 is not an equal weighted index, and of course the traders on Wall Street are all gung ho for the idea that the Federal Reserve is going to cut rates this year. If they do, that obviously could help stock markets in general, so I think this is about a self-fulfilling prophecy.

Keep It Simple

There’s no reason to overthink the entirety of the market right now. The S&P 500 is not equal weighted, so as long as the handful of stocks that everybody loves continues to attract inflows from retirement funds, pension funds, investment banks, etc., then it makes quite a bit of sense that the S&P 500 will be forced to go higher. Yes, the move was absolutely ridiculous, and I do think that a pullback is desperately needed. However, it does not matter what I think, what matters is what will happen.

At this point in time, I think it’s simply a matter of buying into the S&P 500 every time it pulls back significantly, because it does give you an opportunity to pick up a little bit of value. I see the 5100 level as a value level that I’d be very interested in, and of course I would be even more interested in the 5000 level. I have no interest in shorting this market and look at any significant selloff as a buying opportunity for longer-term investors.

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S&P 500 (#SPX) Looking to Complete 5 Waves Impulse (29 MARCH 2024)

Short Term Elliott Wave view in S&P 500 (SPX) suggests cycle from 1.6.2024 low is in progress as a 5 waves impulse. Up from 1.6.2024 low, wave ((i)) ended at 4931.09 and pullback in wave ((ii)) ended at 4845.15. Wave ((iii)) higher ended at 5187.78 as the 30 minutes chart below shows and pullback in wave ((iv)) ended at 5095.88. The Index has resumed higher in wave ((v)) with subdivision as another 5 waves in lesser degree.

Up from wave ((iv)), wave (i) ended at 5179.87 and dips in wave (ii) ended at 5105.28. Index resumed higher in wave (iii) towards 5261.1. Pullback in wave (iv) ended at 5203.42. Internal subdivision of wave (iv) unfolded as a double three Elliott Wave structure. Down from wave (iii), wave a ended at 5229.87 and wave b ended at 5246.09. Wave c lower ended at 5216.32 which ended wave w. Rally in wave x ended at 5234.7. Down from wave x, wave a ended at 5225.05and wave b ended at 5230.38. Index then resumed lower in wave c towards 5203.42 which completed wave y of (iv). Near term, as far as pivot at 5105.28 stays intact, expect dips to find support in 3, 7, 11 swing for further upside.

S&P 500 (SPX) 30 Minutes Elliott Wave Chart

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Indices Forecast: #SP500,#DAX,#NASDAQ100 (22 March 2024)

DAX Forecast: Continues to Look Bullish Despite Pullback

DAX remains bullish despite pullbacks, with eyes on €18,250. ECB’s hinted easing may boost momentum, supporting a surge towards €19,000 and long-term €20,000 targets.

• The German DAX initially did rallying during the trading session on Thursday, but pulled back a bit as it may be just a bit overstretched.
• Ultimately, this is a market that I still believe looks very bullish, and despite the fact that we couldn’t hang on to gain early on Thursday, the reality is that we are very much in an uptrend and there’s no reason to be fighting it.

ECB to the Rescue?

While the European Central Bank hasn’t explicitly said so, they have at least hinted that perhaps they may be open to the idea of loosening monetary policy later this year. As Germany is in a recession, that automatically puts a dent into roughly 1/3 of European GDP, and therefore the ECB will have to pay close attention to this. All things being equal, a short-term pullback is very likely, but I think that pullback would end up being a situation where a lot of people will be looking for momentum driven trading, as we have seen in New York, and for the same reason – liquidity. If the ECB starts to flood the market with liquidity, that will drive asset prices higher.

Underneath, I see plenty of support levels that are worth paying attention to. The first one would be the €18,000 level, followed closely by the €17,600 level. We also have the 50 day EMA underneath that would come into the picture, which is currently near the €17,400 level.

SP 500 Forecast: Continues to Look to the Upside

S&P 500 Aims Higher: Market buoyed by Powell’s remarks and momentum, with eyes on breaking 5300 level amidst expected Fed cuts and strong core stocks.

• The S&P 500 rallied slightly in the early hours on Thursday, as it looks like the markets are going to do everything, they can to continue going higher.
• This does make quite a bit of sense considering that Jerome Powell didn’t say anything to upset Wall Street.
• With that being the case, I think you have a situation where anytime you get a short-term pullback, you become a buyer yet again.
• Quite frankly, this is a market that is running on momentum right now, and that’s the only thing that matters.

Momentum Continues to Reign

The market has continued to be one that continues to show a lot of momentum, as traders jump in and try to chase the latest move. FOMO trading is a real thing in this market, and therefore think you get a situation where the traders are just simply looking for any opportunity or excuse they can to get involved in the market. Furthermore, the Federal Reserve is likely to continue to cut later this year, perhaps as much as 75 basis points, which is reason enough for Wall Street to blow up the latest bubble.

Keep in mind that the market is only driven on about 6 or 7 stocks, so as long as all of the usual suspects are rallying, this is a market that will continue to go higher. All things being equal, the market still has plenty of support underneath, with the 5000 level being a major floor in the market, especially now that we have the 50-Day EMA hanging around that area. It’s not until we break down below that area that I would be concerned, and even then I don’t necessarily know that the trend would be over, just that we might be more or less trying to find some type of reason to bring in the hot money yet again. Ultimately, the market is one that you cannot short, and therefore you have a situation where the market is one that you will either be sideways, or long. As far as the target is concerned, I believe that the S&P 500 is now starting to have thoughts about breaking above the 5300 level.

NASDAQ 100 Signal: Continues to See Upward Pressure

Potential Signal: I am a buyer of the NASDAQ 100 at the moment. I would have a stop loss at 17,928, with a target of 19,000.

• The NASDAQ 100 rallied early during the trading session on Thursday, as we continue to see a lot of bullish pressure.
• At this point, the market is likely to continue to see upward pressure in general, and I do think that every time this market pulls back at the look at it through the prism of a potential buying opportunity.

Wall Street Celebrates Federal Reserve Day

The Federal Reserve didn’t do anything to step away from the idea of 3 rate cuts this year, therefore it’s likely that we will continue to see a lot of buyers jumping into this market and trying to take advantage of the idea of each pullback through the prism of “momentum trading” that will continue. Keep in mind that the NASDAQ 100 is running on the idea of artificial intelligence more than anything else, as it is the one thing that everybody wants to own.

At this point in time, I think it’s probably only a matter of time before we go look into the 18,500 level, which I believe is the next target. Short-term pullbacks continue to see plenty of support underneath to hold the market higher, with the 18,200 level being one area that I think people will be interested in, followed of course find the 50-Day EMA underneath there. In general, the NASDAQ 100 is not something that you should be short of anyway, due to the fact that it’s not an equal weighted index so it’s not even designed to fall. Yes, it falls from time to time but at the end of the day it’s very difficult to see massive losses in this market.

I would not be surprised at all to see the NASDAQ 100 reach the 20,000 level sometime this year, and quite frankly I think a lot of people were thinking that as well. With that being the case, I remain “long only”, and will continue to look for opportunities to pick up “cheap contracts” in this index, and will ignore selling pressure for the time being, at least until the fundamental analysis changes, which is nowhere near doing so at the moment.

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USDMXN and #NASDAQ100 Monthly Forecast: March 2024

USD/MXN Monthly Forecast: March 2024

Sideways trend observed with potential ‘double bottom’ formation. Key support at 16.80 MXN, focus on Fed rate cuts.

• The US dollar has gone sideways against the Mexican peso during the bulk of the month of February, and therefore I think we need to pay close attention to this pair because it could be trying to give us a little bit of a “heads up” as to what it does next.
• When you look at the longer-term chart, the area just below is a major support area, and I think that comes into the picture as to whether or not we bounce or not.

Just underneath, we have the 16.80 MXN level, an area that has been very important, and therefore I think we will continue to test that and probe that for signs of support. That being said, we are also in the potential beginning phase of forming a massive “double bottom” on the weekly chart, which would be interesting considering that the Federal Reserve is expected to cut interest rates this year. If that’s the case, the idea is that most traders would prefer to own the Mexican peso, because the Bank of Mexico offer such a high interest rate payment. However, if we bounce from here in the Federal Reserve continues to look like they are going to cut, this could be a sign of something ominous.

While a lot of you may not necessarily trade this pair from a longer-term perspective, it is worth watching because it gives you an idea as to how the US economy may be performing. Paradoxically, the worse the US economy performs, the better the US dollar will do here due to the fact that a lot of people will be throwing money into safety assets such as US Treasuries instead of emerging market currencies like the Mexican peso.

The outlook

I’m not going to lie here, this is going to be a difficult pair to trade for the month of March, mainly because it is a thinly traded pair, and of course is traded during specific times of the day more than others as it has a lot to do with cross-border payments. Simply put, I will often use this pair as a gauge on what to do with not only the US dollar, but sometimes the US stock market. That being said, if we were to break down below the 16.80 MXN level, that would be a horrific sign for the US dollar, meaning that it will probably be losing strength against almost everything.

NASDAQ 100 Monthly Forecast: March 2024

The NASDAQ 100 has been resilient in February, with 16,950 as key support. Despite possible pullbacks, the uptrend persists, led by the “Magnificent 7”. The outlook for March is primarily bullish, with sideways movements possible.

• The NASDAQ 100 has been very resilient during the month of February, as we continue to see a lot of upward pressure.
• Underneath, the market is likely to continue to see the 16,950 level as a major support level, I think that anytime we get close to that area, there should be plenty of buyers.
• The 20-Week EMA is testing that area right now, so I think that comes into the picture to perhaps send the NASDAQ 100 higher.

That being said, it’s very unlikely that the NASDAQ 100 is extraordinarily negative during the month of March, and I do think that it is probably only a matter of time before buyers come in and pick up bits of value every time you post back. Whether or not we are going to continue to see upward pressure is neither here nor there, because quite frankly it’s all about a handful of stocks. As long as we continue to see the “Magnificent 7” perform well, it’s likely that the NASDAQ 100 will continue to go higher. However, if they “Shoot the generals”, meaning that they take those 7 stocks down, the NASDAQ 100 will fall apart.

We are in an uptrend, and therefore it’s likely that you need to look at it through that prism. I don’t have any interest in trying to get too cute and shorting this market, despite the fact that a 10% drop would be about the best thing that could happen to keep the uptrend healthy. That being said, as long as we continue to have this mania in place, it makes quite a bit of sense that we either follow right along or sit on the sidelines.

NASDAQ 100 Outlook March 2024

The outlook for this market is rather straightforward and simple: it’s obvious that the NASDAQ 100 is very bullish, and I think that the month of March will more likely than not continue this. At the very least, I would anticipate that we continue to see a lot of sideways movement more than anything else, or perhaps an occasional pullback that we could take advantage of. In fact, I don’t have a situation where we start shorting unless of course we break down below the 50-Week EMA, which is closer to the 15,500 level, and even then I would have to see what was going on with the idea of interest rates. It remains bullish, and I just don’t see that changing.

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