Forecast and levels for S&P 500 - page 16

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The FED meeting caused a sharp rise in US yields, a move that affected its European counterparts early in the session. 

 

Asian markets closed with contained losses in a session marked by a negative surrounding. The North Korean Foreign Minister warned that his country could test a hydrogen bomb in Pacific waters. This announcement generated a risk aversion but only assumed more significant proportions in the South Korean market, with the local currency reaching the low of the last month against the US Dollar. In a more economic sphere, Standard & Poor’s reduced Chinese rating of AA- to A +, citing the strong growth of credit assignment as the main risk to the economy, fueling speculation in some economic activities and making investments with little rational economic development.

 

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Sergey Golubev, 2017.09.23 19:31

Weekly Fundamental Forecast for S&P 500 (based on the article)


S&P 500 - "The S&P is still looking to hold onto the prior record highs from August, with the 2491 level on watch. As we noted earlier in the week, the trend and recent breakout favors higher prices, but a rally could quickly be capped by one of a pair of top-side trend-lines. One extends back to March and clocks in close to 2520, while the other crosses over highs since June and registers in the vicinity of 2430/35. They are moving targets given the upward slope. A strong undercut of 2491 would be reason to be cautious."

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Chart was made on MT4 using iFibonacci indicator and MaksiGen_Range_Move indicator from CodeBase (free to download).


 

Markets closed lower as investors reacted to yet another proclamation by North Korea and the uncertain political context in post-secessional Germany. Pyongyang authorities have defined the words of the American President as being “a declaration of war” at the United Nations. In China, the main indexes suffered losses of around 1% after local authorities announced that new measures will be introduced to control the strong real estate speculation that characterizes several areas of the country.

 

The Euro broke the support of the 1.18 against the Dollar. This level is very important in the medium-term technical situation of the common currency because it signals an increase in the likelihood of a correction. A downturn in the Euro favors several European sectors such as the automobile, the industrial, etc. However, this positive impact does not always translate into an increase in their shares. Sometimes the devaluation of the Euro results in a mere overperformance of the exporting sectors compared to the others.

 

In addition to the presentation of the draft tax reform, the main indexes were still driven by the recovery of the technology sector. Another catalyst for this rally is the approach of the end of the quarter, which is a very favorable period for stock markets.

 

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Sergey Golubev, 2017.09.30 08:57

S&P 500 - bullish breakout (based on the article)

Daily price is far above Ichimoku cloud in the bullish area of the chart: the price is breaking ascending triangle pattern for the daily breakout with 2,511 resistance level for the bullish trend to be continuing.


  • "The S&P 500 and NASDAQ Composite both hit new all-time highs on Friday and the Dow 30 was less than 15 points away (0.07% below). Two major reasons the stock markets have done so well is due to increased earnings and positive growth forecasts combined with the continued low interest rate environment."
  • "President Trump’s tax proposal are estimated to add between $6 to $10 to the S&P 500’s earnings which if passed would either decrease the PE multiple (since one thought is that at least part of the markets increase is based on a tax package passing) or help the market move higher."

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Chart was made on MT5 with BrainTrading system (MT5) from this thread (free to download) as well as the following indicators from CodeBase:


 

A general improvement in sentiment was felt in this last session of the week, with major European stock indexes closing on positive territory. Banks and producers of raw materials were among the best performers, with few of the sectors ending up lower. Against the cycle were the shares of Volkswagen that were pressured by the announcement that the operating result was penalized by a charge of 2500 M. € related to the increase of provisions. On the macroeconomic front, the consumer price index reached 1.50% during September, compared to 1.60% expected and below the 2% target set by the ECB.

 

Several short-term technical indicators have hit the highs of the last two years, which increases the likelihood of a decline in the coming days. Financial markets do not move in straight lines, but their evolution resembles more of a series of waves. Therefore, if a short-term correction materializes in the next few days it is only a natural move after the strong gains of the last 4 weeks.

 

When an index reaches a new high, it usually attracts the buyer interest of several (mostly private) investors, stimulated by the coverage that this feat generates. This buyer interest manifests itself in two ways: through the direct purchase of shares and the subscription of funds. At the present stage, subscriptions are not meeting this standard. In fact, in the last two weeks it was observed the redemption of stock funds, in the amount of 10 500 M.USD.

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