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S&P 500 Forecast: Continues to Show Weakness – 07 November 2022

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Earnings have been okay, but to think that they will continue to be in this macroeconomic environment is wishful thinking at best.

The S&P 500 has continued to show weakness during the trading session on Friday as the volatility continues to wipe traders out.With that being the case, I do think that we probably have more negativity ahead than anything else, so you need to be very cautious. Keep in mind that most of what’s going on right now is all about the Federal Reserve and what they are getting ready to do, and Wall Street is already trying to convince itself that the Federal Reserve is going to slow down its tightening policy, even though Jerome Powell just told them that he was not going to. Hope burns eternal I suppose.


Stock markets are crashing again

With that being said, the 50-Day EMA seems to be offering a bit of a resistance barrier, so I don’t necessarily think that we are going to have an easy way regardless of what direction we plan on trading. Longer-term, I do think that the S&P 500 goes looking to the 3600 level as a potential target, especially as we have seen so much in the way of uncertainty. Earnings have been okay, but to think that they will continue to be in this macroeconomic environment is wishful thinking at best. With that in mind, I’m looking at rallies as shorting opportunities, but I also recognize that Wall Street will have a few surprises that it’s going to pull out occasionally.

This has been a very difficult market to trade in recently, and I don’t think that’s going to be going away anytime soon. The best thing that I have been able to figure out is simply fading rallies as they occur, at least with the first signs of exhaustion. You should also keep in mind that as the US dollar and interest rates rise in America, that puts even more pressure on this market, and the lack of growth is going to be a real concern going forward.

Whether or not the S&P 500 can break above 3900 arrange to be seen, but that would obviously be a bullish turn of events. In that environment, we probably make a run towards the 200-Day EMA, which is sitting just above the 4000 level. Nonetheless, I’m very cautious now and recognize that the downside continues to lead the way most days.

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