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Short-term stock market outlook The following projections were curated from the November 28th Market Update, providing an overview of our trading methodology….
Short-term stock market outlook
The following projections were curated from the November 28th Market Update, providing an overview of our trading methodology. We also focus on the long-term outlook; however, as those cycles are still in play, long-term outlooks are only posted six months after their publication.
Stock Market
Barring another black swan event like the Fed coming out with the intent of purposely killing this rally or some massive change on the geopolitical frontier, the momentum has changed, and the path of least resistance is up. Market update October 31, 2022
The next obstacle for the Dow would be to finish the week at or above 32,910. If the Dow can do this, it would further cement the outlook calling for a test of the 34,300 to 34,650 range. Risk takers should consider limiting their exposure to the long side after the Dow trades to 32,910 or risk significantly less money. Market Update November 9, 2022
It ended the week above 32,910 and then mounted a powerful rally that took it to 34,386K before it reversed course. Bullish sentiment readings have been below their historical average for 12 months, indicating that the markets are still climbing a wall of worry.
In a surprise move, the MACDs on the weekly charts of several indices have experienced bullish crossovers, suggesting that the Dow is on course to test the 35K range barring a black swan event. It also indicated that the Nasdaq (the weakest of the pack) could pull a Houdini and mount a powerful rally over a short period. Discussed in more detail in the Advanced section, under the sub-heading “random musings.”
Only traders willing to take on higher amounts of risk should consider opening new longs. Consider waiting for the Dow to test the 32,910 to 33,000 range before committing new money.
The Dollar Index (https://cutt.ly/JBIKyxY )
So far, 109 continues to hold. We suspect there will be a swift move to the 105 range when it gives way. Market Update November 9, 2022
This has come to pass; the dollar traded as low as 105.15 before reversing. As it is still in a corrective mode, all rallies will fail until the dollar is trading in the oversold ranges on the weekly charts. There is still a good chance it could test the 101 to 102 range with a possible overshoot to 99.00. On a separate note, a weak dollar is bullish for the markets as it negates the effects of higher rates.
Bitcoin
A weekly close below 18k will lead to a series of new lows, and a move to new lows at this stage would equate to a selling climax. Market Update November 9, 2022
A break below 15K will lead to a test of the 12K ranges with a possible overshoot to 9K. Until it closes above 17,550 on a weekly basis, the short-term outlook will remain bearish.
Bonds (https://cutt.ly/2BIKcqC )
TLT must close at least above 104.10 on a weekly basis (the ideal level would be 105.00). Market Update November 9, 2022
A weekly close at or above 105 should lead to a test of 120-123 with a possible overshoot to the 128.00 to 132 range. Until then, the action will remain volatile.
Oil
Oil ended the week above 90, so the outlook has turned positive. For the bias to remain positive, it should not close below 84 on a weekly basis. Market Update November 9, 2022
It ended the week below 84 and could test the 74-75 ranges before attempting to trade past 84.00. The long-term outlook still calls for a possible test of the 2022 highs. In the interim, a test of the 69 to 72 ranges is possible before a bottom takes hold. The China COVID façade will end. China is using soft power to show the West that the world economy can’t operate smoothly without it (the factory of the world). Oil is still expected to test the 102 to 105 ranges before a long-term top is in place.
Conclusion
Given the current outlook on the stock market, it is important to consider the state of the economy and geopolitical events as they can impact the markets. This can be seen in the reference to a “black swan event” as a potential factor that could alter the current bullish trajectory.
It’s also important to note the potential risks involved in trading and to consider the level of risk tolerance when making investment decisions. For example, traders who are willing to take on higher levels of risk may consider opening new long positions, while those who prefer to minimize risk may wait for the Dow to test a specific price range before committing new money.
The analysis of the Dollar Index, Bitcoin, bonds, and oil provides insights into how these markets are likely to perform in the near-term and longer-term. For example, the analysis of the Dollar Index suggests that it is currently in a corrective mode and that all rallies may fail until it reaches oversold ranges on the weekly charts. Similarly, the analysis of Bitcoin suggests that it is currently in a bearish phase and that a weekly close below 15,000 could lead to a series of new lows.
Finally, it’s important to keep in mind that the outlooks provided are projections and are subject to change based on unexpected events or shifts in market conditions. As such, it’s crucial to stay informed and up-to-date on the latest market developments in order to make informed investment decisions.
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