Stock Market Trend Pattren 2022 Forecast Current State

Stock-Markets / Stock Market 2022 Aug 04, 2022 - 05:51 PM GMT

My stock market big picture remains to expect the Dow to target a trend towards 29,600 by late August / Early September. Note 29,600 is a TARGET for a low and NOT THE LOW, No one can KNOW THE LOW with any degree of confidence, all one can do is arrive at a high probability target and then look to see if the market confirms that expectation or not, so far the market is confirming it is heading for 29,600.

Looking beyond August I expect a volatile bottoming trading range into the end of October as the Dow swings through 29,600 several times ahead of probably a strong rally into at least Christmas. It would be too easy to expect the stock market to put in an easy to ready higher low during October before rallying into Christmas, more probable will be chaotic price action to confuse market participants with false breaks higher and lower during October.

Whilst nearer term my analysis conceded to expect a bear market rally to target 4088 by Mid July before the bear market is likely to resume.

(Charts courtesy of stockcharts.com)

Stock Market Trend Current State

The bear market rally materialised though so far not to the extent envisaged i.e. has yet to break above 4000, let alone target 4100. The rally is running out of the time where so far the SPX has failed to break above the last high of 3930. At best the rally has 5 more trading days left before it hit's the start of Q2 earnings season that is likely to deliver lower earnings coupled with downwards forward revisions. Furthermore whilst probability favours higher prices over the coming week, nevertheless the price action so far has been is corrective in nature which continues to suggest the stocks bear market will soon resume.

The bottom line is the rally is running out of time as it hurtles towards earnings season which kicks off Mid July that the EGF metric suggests that most AI tech stocks let alone regular stocks are going to report weak earnings. Later in the month will be the Fed July 26th / 27th meeting where expectations are for for a 0.75% rate hike to take the Fed funds rate form 1.5% to 2.25% and hence contributing towards driving the US dollar to the moon whilst acting to depress US stock prices. Which will be followed on July 28th by BEA Q2 GDP estimate that will probably report negative GDP for Q2 and thus confirm that the US now is in recession.

So this rally where the general indices are concerned should reach it's final conclusion by the end of the week (15th July).

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The rest of this analysis on the state of the stocks bear market and more Stocks Bear Market Rally Last Gasp Before Earnings Season, US House Prices 3 Year Probability Range was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $4 per month. https://www.patreon.com/Nadeem_Walayat.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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