By S&P 500 Forecast: Continues to Rally into the Weekend – 14 November 2022
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Bear market rallies tend to be extraordinarily vicious, and therefore I think it’s likely that we are going to continue to see people lose money.
At the very least, I would expect to see some type of pullback, because even if the trend did change, you cannot go in one direction forever. I don’t think the trend has changed, although we are seeing one hell of a bear market rally. Bear market rallies tend to be extraordinarily vicious, and therefore I think it’s likely that we are going to continue to see people lose money. If you are jumping in now, you’re just likely to lose money because the 200-Day EMA will attract a lot of attention, not to mention the fact that it is sitting right there at 4000.
Furthermore, people have delusions that the Federal Reserve is suddenly going to loosen its monetary policy or at least pause. Even if they were going to pause, they are going to stay tight for quite some time, and therefore it’s likely that risk assets will suffer over the longer term. This move has been a bit ridiculous, but if you have made good money off the move, then it might be time to start thinking about tightening up your stop losses. If you are outside of the market like I am currently, then you are looking for some type of exhaustion that you can get involved in. After all, we are still technically in a downtrend, even though we have seen one hell of a bounce.
The 3800-level underneath would be an area that we could target if we break down below the bottom of the trading session on Friday. At that point, we are also reaching towards the 50-Day EMA, so it all comes together quite nicely. Earnings season was “less bad” then some people thought, the forward guidance was absolute garbage. This tells you that a lot of people understand that profits are going to be harder to come by in the future, so this is simply a function of liquidity coming in and out of the bond market. If you’ll start to rise again in the bond market, this thing is going to get pounded.
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