Indices Forecast: #SP500,#DAX,#NASDAQ100 (7 May 2024)

Dax Forecast: Builds Case for Basing

• You can see that the DAX did rally pretty significantly right off the bat here early Monday morning, but we are starting to see trouble in a very familiar area.
• This area for lack of a better number, I’m going to call 18,250 euro.
• It does look like we are essentially trying to consolidate here

With that being said, it does make a certain amount of sense that perhaps we will see a market that just bangs around between the 50 day EMA and the 18,250 euro level in the short term. But overall, it is a market that’s bullish. This consolidation makes a certain amount of sense after the recent pullback as traders have to test the waters to see whether or not the stock market is where they want to be.

DAX is the Big Market for EU

Furthermore, you must keep in mind that the DAX is the gateway to the rest of the European Union. So as the DAX goes, typically, so goes the AMX, the CAC, the MIB, et cetera. So with all of that being said, even if you’re not trading the DAX directly, this is an index that you need to pay close attention to if you have anything to do with equities on the continent.

If we can break above the 18,250 euro level on a daily close, I think at that point in time, you will have a real shot at this market trying to reach the highs again, near the 18,563 euro level. On a pullback, if we were to break down below the 50 day EMA, we could see the DAX go looking to the 17,500 euro level in area that has recently been massively supported. This area being broken below would obviously be a major turn of events, and therefore would be disastrous for not only the German stock exchanges, but for exchanges around the continent, as it is such a big player.

The EUR/USD pair could also give us an idea of how things go, as the German economy is so laden with export based companies. The euro falling against the dollar could also be a tertiary signal for where we go here as well.

S&P 500 Forecast: Continues to See Inflows

• The S&P 500 rallied early during the trading session on Monday, as it looked like money was flowing back into Wall Street and stocks overall.
• This does make a certain amount of sense, because people are starting to celebrate the idea that the jobs report in the United States was fairly weak, and therefore we could possibly be seeing the potential scenario setting up that the Federal Reserve could actually cut rates.

After all, this is what Wall Street cheers. They cheer unemployment. This should bring down inflation and therefore stocks should perform a bit better as rates in America drop. Speaking of rates, you will have to pay close attention to the interest rate situation which has been falling, but certainly looks as if it could turn around at any moment. If rates start to spike in America, that could very well put downward pressure on stocks.

Not Equal-Weighted

The S&P 500, of course, is not an equal weighted index. So, you have to keep that in mind. But I think ultimately as long as the top ten stocks or so are doing fairly well, you have a situation where the S&P 500 will rally. Underneath we have the 50 day EMA hanging around the 5090 level. And then underneath there we have the 5000 level which could be massive support as well, both from a structural and psychological standpoint.

It looks to me like the market is going to continue to be a buy on the dip scenario, and that we will eventually try to go looking toward the 5300 level, which is essentially where we topped out at recently. In general, this is an uptrend that had a nice correction of roughly 6 or 7%. And now those who are willing to follow the trend are starting to put money to work. That being said, you need to be very cautious about jumping in with both feet as there have been a lot of issues out there as of late, some of which have nothing to do with the stock market itself such as the geopolitical risks. Ultimately, I am bullish of this market, but I also recognize that there are a lot of exterior pressures out there that could come into the picture. Obviously, comma the fact that we are in the midst of earning season is a major issue as well.

NASDAQ 100 Forecast: Continues to Find Buyers

• The Nasdaq 100 rallied a bit during the trading session on Monday, after initially pulling back the 17,850 level continues to be important as it showed itself to be support on that short term pullback.
• Nonetheless, this is a market that I think does continue to go higher and eventually goes looking to reach the 18,385 level.
• The market has been bullish for some time, and the fact that we have recovered so aggressively over the last couple of trading days certainly bodes well for the index.

Keep in mind that the 50 day EMA sits just below the 17,850 level as well. So that’s another reason to think that there are buyers just waiting to get involved in this environment. I just don’t have any interest whatsoever in trying to short this market because quite frankly, there’s just too much momentum. We will have to pay close attention to interest rates in the United States because quite frankly, if they start to rally, that might cause major issues for the Nasdaq 100 and some of the major technology companies.

We are in the midst of earnings season, so that could bring in a little bit of volatility. But I think at this point in time, it’s obvious that the Nasdaq 100 index wants to do everything it can to go higher. The short term pullbacks, I think, continue to be buying opportunities. The 17,000 level underneath is probably a major floor in the market, as it was the most recent swing low. This is more than likely not to be a concern, but it is a possibility if we get a sudden surge of fear in the markets overall.

The Other Scenario

If we break down below there then the 200 day EMA comes into the picture. But really at this point in time, I just don’t see an argument for shorting the market. And every time we pull back, I would have to assume that there will be buyers getting involved trying to take advantage of the Nasdaq 100 itself.

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DAX #Forexsignal: DAX Shows Signs of Life (23 April 2024)

• The German DAX gapped to the upside during the early hours on Monday, as it looks like we are trying to recover.
• The €18,000 level above will continue to be an important area to pay attention to, as it is a large, round, psychologically significant number, and it is also an area where we have seen a lot of action as of late.

Keep in mind that the DAX index is considered to be the bellwether index for the European Union, so you should be thinking far beyond Germany, and the health of the European Union itself. Since the Great Financial Crisis, there has been this perverse correlation between loose money and stocks going higher, and quite frankly with the European Central Bank likely to cut rates later this summer, it does make sense that European stock markets start to rise. This is especially true in a place like Germany which is such a major exporter, and benefits from loose monetary policy as it can make the euro less expensive for foreigners. In other words, “bad news is good news”, as a recession in Germany is good for corporate earnings. I know, it’s counterintuitive but this is the world we live in.

Buying on the dips

At this point, it looks like buying on the dip will continue to be the favored way to approach this market, because quite frankly I do think that has much further to go. If we can break above the crucial €18,000 level, then I suspect that there will be more momentum chasing involved, and that the market will find a way to start buying again. At that point, I would suspect that the market would find a way to go looking toward the €18,500 level above, where we had seen a bit of selling pressure. After that, it could open up a move all the way to the €20,000 level. That being said, I think it would take a significant amount of effort to make that happen.

Potential Signal

• I believe that if we can break above the €18,000 level, it’s time to start buying the DAX again.
• At that point, I would have a stop loss just below the 50-Day EMA indicator, it would be aiming for a move to the €18,525 level.
• At that point in time, I would move my stop loss to break even and hold on to my position.

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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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US #DJIA Technical: Major US Banks’ Q1 Earnings in Focus Over Adverse Macro Factors (12 April 2024)

• Three major US banks; JPMorgan Chase, Citigroup, and Wells Fargo will report their Q1 2024 earnings results today. JPMorgan Chase is ranked 13th in terms of component weightage in the DJIA.
• Analysts’ Q1 earnings estimates for these three US banks have been lowered which increases the possibility of positive earnings surprises.
• Technical analysis suggests a potential short-term mean reversion rebound scenario on the DJIA after 10 days of decline.
• Watch DJIA’s key short-term support of 38,200/060.

Since our last report, the price actions of the Dow Jones Industrial Average have shaped the expected rally, surpassed the highlighted 39,610 resistance, and printed a fresh all-time high of 40,031 on 1 April 2024 based on data obtained from the US Wall Street 30 Index (a proxy of the Dow Jones Industrial Average futures).

Thereafter, a minor corrective decline took form in the past 10 days and the Index tumbled by -4.5% amid a lingering fear of interest rates in the US staying higher for a longer period that pushed up the US 10-year Treasury yield above its 4.50% key medium-term resistance (it recorded a daily close of 4.59% in yesterday, 11 April US session).

A diminishing “Fed dovish pivot” narrative due to the recent backdrop of a resilient US jobs market and firmer US inflationary trends inferred from March’s CPI prints as well as commodities prices have triggered near-term headwinds on the major uptrend phases of the major US stock indices via a higher cost of funding conduit that can potentially put downside pressure on net profit margins, especially growth-related stocks.

DJIA’s performance has lagged S&P 500 & Nasdaq 100

Fig 1: Year-to-date performances of major US stock indices with key US equities, sectors & global stock indices as of 11 Apr 2024 (Source: TradingView, click to enlarge chart)

So far, the Dow Jones Industrial Average has lagged behind the Artificial Intelligence (AI) technology-heavy weighted Nasdaq 100 (+11%) and S&P 500 (10%) with a year-to-date gain of just 2% as of yesterday, 11 April (see Fig 1)

Q1 earnings growth expectations for major US banks have been lowered significantly

Fig 2: Analysts’ Q1 2024 EPS estimates for major US banks (Source: LSEG, Reuters News as of 11 Apr 2024, click to enlarge chart)

Three major US banks; JPMorgan Chase, Citigroup, and Wells Fargo will report their Q1 2024 earnings results today before the start of the US session. Given that these banks’ guidance on revenue outlook has been lowered in the past two months, equity analysts on average as surveyed by LSEG (see Fig 2) have pencilled in a weaker pace of earnings growth on US banks in Q1 2024; JP Morgan Chase is likely to post a 4% y/y drop in earnings per share (EPS) from the year-ago quarter, and further declines of 35% y/y and 11% y/y in EPS are forecasted for Citigroup and Wells Fargo.

Given that a “lower bar” has been set on the Q1 earnings projections for these three major US banks, a potential positive earnings surprise beat is likely to be easier to obtain which in turn may trigger a positive feedback loop at least in the short-term for the Dow Jones Industrial Average (JP Morgan Chase is ranked 13th in terms of component weightage in the DJIA while Goldman Sachs is ranked 3rd).

Watch the key short-term support of 38,200/060 on the DJIA

Fig 3: US Wall St 30 short-term trend as of 12 Apr 2024 (Source: TradingView, click to enlarge chart)

In the lens of technical analysis, trends do not move in a vertical direction but oscillate within trending phases.

The price actions of the US Wall Street 30 Index (a proxy of the Dow Jones Industrial Average futures) have started to transform into short to medium-term downtrend phases as it broke below the 20-day and 50-day moving averages.

Interestingly, recent observations seen in the hourly RSI momentum indicator have traced out a bullish divergence condition yesterday after it hit an oversold condition on Wednesday, 10 April which suggests that the short-term downside momentum in place since Wednesday has started to ease (see Fig 3).

The easing of downside momentum has increased the odds of a potential short-term mean reversion rebound for the Index as long as 38,200/060 key short-term pivotal support holds. A clearance above 38,660 near-term resistance sees the next intermediate resistances coming in at 38,930, and 39,100 (also confluences with the 20-day & 50-day moving averages).

On the flip side, a break below 38,060 invalidates the mean reversion rebound scenario for a continuation of the bearish impulsive down move sequence to expose the next intermediate supports at 37,770 and 37,390.

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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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Indices Forecast: #CAC,#SP500,#DAX,#NASDAQ100 (27 March 2024)

CAC Forecast: Continues to See Massive Moves Higher

The French CAC finds support, indicating bullish momentum, with a focus on €8100 as a key support level. ECB policies could further influence the market trend.

• The French CAC initially pulled back just a bit during the trading session on Tuesday but found buyers yet again.
• Ultimately, this is a market that I think continues to see a lot of bullish pressure, as we continue to see a lot of momentum.
• At this point, it looks like the €8100 level continues to be massive support, therefore I think you need to look at it through that prism.
• The market pulling back to that area almost certainly will offer some type of buying opportunity, as we have seen a lot of action in that area.

ECB and monetary policy

The European Central Bank will of course continue to take front and center stage when it comes to what happens with stocks on the continent, as traders are now starting to bet on the idea that perhaps the European Central Bank will have to loosen monetary policy. If that’s going to be the case, then it does make a certain amount of sense that stocks go higher due to the fact that most of what we see these days has to do with liquidity and not so much with the overall economy.

As for the floor in the market, I believe that it is at the €7900 level, an area that previously had been massive support and of course features a 50-Day EMA at the same time, so it’s a bit of a “double whammy” for technical analysts. At this point in time, we have to remember to buy the dips, because that seems to be with the way that most stock markets around the world are behaving, and the CAC of course is no different at this point in time.

DAX Forecast: Continues to See Upward Momentum

DAX experiences robust growth, breaking above €18,400, signaling potential climb towards €18,500. Its performance could set the trend for European indices.

• The German DAX had another strong session on Tuesday as we continue to plow higher.
• We are above the €18,400 level now, and it looks like we are going to try to get to the €18,500 level, and further than that to the upside.
• Keep in mind that this is the premier “blue-chip index” in the European Union, so I think it is most certainly worth paying close attention to.
• Ultimately this is a market that will continue to see a lot of hot money chasing it, as we are in a very strong uptrend.

Germany Leads the Way

Germany will lead the way for the rest of the European continent, so even if you are not trading this particular index, you should pay close attention to it as it could give you a bit of a “heads up” as to where we might be going in other indices such as the MIB, CAC, AMX, etc. Ultimately, this is a market that looks extraordinarily bullish and is much like US indices, being dragged along by momentum.

The ECB more likely than not will have to start to liquefy the markets, perhaps giving traders the ability to continue to push prices higher. After all, if Germany is in fact going to be in a recession, then it makes a lot of sense that traders are trying to get ahead of any ECB monetary policy decision. Ultimately, the worse the economy does in Germany, the better the stock market will do

Underneath, I see a massive amount of support near the €18,000 level, and therefore you need to be paying close attention to it. I think given enough time, not only with the €18,000 level be support, but so would the €17,950 level. In other words, this is a “buy on the dips” type of market and I think that will probably continue to be the way forward for the foreseeable future. In general, I have no interest in shorting the DAX, at least not until we break down below the €17,500 level, which is basically where the 50-Day EMA is hanging around. Until then, this is a mark that looks extraordinarily bullish.

S&P 500 Forecast: Seeing Sideways Action

If we break the highs of last week, then we could very well go looking to the 5,300 level, which I think we hit sooner or later.

• The S&P 500 was a bit choppy early during the trading session on Tuesday as we continue to look to the upside.
• But I think at this point in time, we may be lacking a real reason to get moving.
• After all, the major announcement of the week is on Friday, so I think a little sideways action does make a certain amount of sense.

Keep an Eye on Longer-Term Trends and Behaviors

But in the longer term, if you continue to buy dips, you will do much better, at least until something fundamentally shifts. At this point, the 5,000 level for me is the bottom of the market, with the 50 day EMA sitting just above there. I’d be particularly interested in the S&P 500 closer to the 5,185 level, which was an area of previous resistance, and therefore I think a little bit of market memory comes into play at that region.

If we break the highs of last week, then we could very well go looking to the 5,300 level, which I think we hit sooner or later, regardless of which direction we go next. I’m just looking for value. I think that’s the way you have to play this. You have to be patient, you have to scale in, and you have to buy it when it pulls back. What the economy is actually doing is totally irrelevant. We’re in a nice uptrend.

NASDAQ Forecast: Looking for Next Move

Keep in mind that the world is waiting for the Federal Reserve to start cutting rates again, and therefore everybody’s excited about owning stocks.

• As you can see, the NASDAQ 100 has shown itself to be somewhat dead money over the last couple of days as we are trying to sort out what to do next.
• Ultimately, this is a market that I think is bullish overall, but there isn’t much in the way of economic announcements to move the markets between now and Friday.

How to Trade It…

Buying dips continues to be the prudent way to approach this market because it offers value in what is obviously a very bullish run. If we break above the highs of last week, then the NASDAQ 100 could go looking through the 18,500 level, followed by the 19,000 level, which I think is very possible. That being said, as long as the fundamental narrative stays the same, I just don’t see an argument for shorting.

While the economy may or may not be strong, its all about momentum on Wall Street, and you must remember that a lot of the noise on the Street is New York centric, which isn’t reality. However, price is reality – and that’s what matters. The markets will continue to cheer bad economic news, based on the idea of liquidity being added by the Fed.

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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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USDJPY Analysis: Rate Hike Impacts Yen Value (20 March 2024)

USD/JPY moves as BoJ hikes rates, yet yen falls. Market questions BoJ’s one-off move against global rate trends. BoJ’s dovish stance persists despite policy shift, with focus on global yield gaps.

• Amid its best daily performance in over a month, the USD/JPY currency pair moved after the Bank of Japan announced that it would raise Japanese interest rates and finally abandon negative interest rates.
• Recently, the USD/JPY pair’s upward retracement gains reached the resistance level of 150.96 and is stabilizing around it at the time of writing the analysis.

But the question now is: why did the yen fall after the Bank of Japan raised interest rates?

Finally, the Bank of Japan took a decisive step when it raised interest rates and exited the yield curve control policy (a form of quantitative easing that saw the bank buy government bonds to keep yields under control). The bank said that negative interest rates and quantitative easing had achieved the goal of stabilizing prices at the 2.0% target, confirming that the bank believes Japan has emerged from a multi-year deflationary period. At the same time, the Bank of Japan raised the new interest rate range to 0-0.1%, ended yield curve control, and stopped buying ETFs.

According to forex trading platforms, after the decision, the Japanese yen fell. the pound sterling/yen exchange rate rose 0.60% to 192, the dollar/yen exchange rate rose 0.80% to 150.90, and the euro/yen exchange rate rose 0.82% to 163.88.

In general, the weakness of the Japanese yen contradicts the theory that monetary policy tightening through interest rate hikes will boost domestic yields and support the currency. In this regard, an analysis from Danske Bank explains that the forex market reaction is due to three reasons:

1. The market was in a position to do so due to months of speculation and innuendo, indicating that the financial market had already ruled out the decision.
2. Some expect this to be a one-off move.
3. The recent rise in global interest rates is more important than the modest adjustment made by the Bank of Japan.

While the Bank of Japan has ended its yield curve control program and ETF purchases, it has said it will continue to target long-term Japanese bonds, meaning it is still effectively implementing a form of quantitative easing. In short, the Bank of Japan remains a “dovish” central bank compared to its peers, while Japan still enjoys very low bond yields. Moreover, Japanese policy is unlikely to do any heavy lifting for the Japanese yen. Instead, the burden is on other central banks to cut interest rates and close the yield gap with Japan. This is a possibility from mid-year onwards.

USD/JPY Technical analysis and Expectations Today:

According to the performance on the daily chart, the price of the currency pair US Dollar against the Japanese Yen (USD/JPY) is on an upward path. As we mentioned before, the psychological resistance of 150.00 will remain a catalyst for the bulls to further control the trend. Technically, the continuation of gains towards the resistance levels of 151.20 and 152.00 will move the technical indicators towards strong saturation levels for buying. When the price of the dollar declined against the Japanese yen at the beginning of trading this month. Through the page of free live trading recommendations, we recommended buying the dollar against the Japanese yen from every dip level, which proved the strength of the forecasts. Finally, caution should be exercised until the markets and investors react to today’s announcement from the Federal Reserve.

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