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Stock Market Trend Current State of Play

Stock-Markets / Stock Market 2022 Oct 10, 2022 - 10:30 PM GMT

By: Nadeem_Walayat

Stock-Markets

S&P closed at 3680. trading to a low of 3633, June's low is 3622, so the 50% retracement studies conclusion so far remains in tact which implies that this decline is a bear trap, to be clear a trap for the bears all betting on a collapse into the abyss of 3,200 and below, fantasy numbers such as 3000 area being bandied around, and apparently Monday 26th is the end of the SHIEMITA when a big CRASH is due!, Note I don't for a minute take this nonsense seriously, anyway today's the last day of the SHEIMTA that was ironically brought to my attention in June near the bear market lows when there were shrill cries of SELL EVERYTHING NOW! In which case the Shemita folk are looking to break even today (in US dollars). To be clear SHIMTA is BS, but like all BS's there will be coincidences which with the benefit of hindsight will be twisted and turned into support of BS as will probably happen to this SHEIMITA where what it originally implied will be subverted with the benefit of hindsight, that's the case with religious mumbo jumbo, people actually do want to believe in the super natural! That ancient religious texts somehow have magic powers to predict what the stock market will do in 2022 which can only happen via a self fulfilling prophecy, i.e. if enough believe in it and act on it then yes it sort of comes true, which in fact is the basis of Technical Analysis, traders and algo's lock step acting on wiggly lines on the charts. A quick google shows that most of the major market CRASH events happened AFTER SHEMITA but for some reason SHEMITA claims jurisdiction over them as well i.e. 1987 Crash, 9-11 attack and so on,


Anyone remember what happened in September 2015? Apparently we were days away from global economic destruction

https://cointelegraph.com/news/the-shemitah...

Enough on this!

This is the current state of play, so far 3620 still stands and given subsequent price action suggests that the market is ripe for a rally into the end of September/ early October. Looking at the put call ratio then the market is betting big on a big drop, usually at such extremes the opposite tends to happen.

At the time of this analysis the S&P early Monday morning is trading lower to 3678. In terms of swing projections it is possible that the June low could break, with swing projections targeting between 3500 and 3475. However recent swings have tended to to terminate earlier than projected by approx 1/3rd which implies that it remains probable that the June low manages to hold. to target a rally into the end of the month to 3930 to 4000.

What if the low breaks? We'll then we will be heading pretty swiftly down to 3500. The US economy IS contracting for which we only need to look at the yield curve that is showing an extreme inversion, with the 2 year yield spiking to well over 4%, in fact it's currently spiked to 4.22%! And with soaring yields so soars the USD, currently at $113, targeting a spike to $120.

Under these circumstances one should not be asking if the June lows will break but why hasn't it already broken! A 2 year year yield at 4.2% and rising is extremely bearish for the indices i.e. there cannot be be a return to a a bull market anytime soon whilst yields are rising like this. Nevertheless current extreme bearishness does mean that stocks could be ripe for a spike higher and what better place to spike off then the June low, even if the market does look set to eventually break lower during October! Nor do rising yields and dollar bode well for the prospects for commodity prices such as the precious metals, Gold is NO safe haven!

This analysis is an excerpt form Can the Stock Market Hold June Lows Despite Spiking Yields and Dollar Panic Buying? which 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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Stock Market Analysis and Trend Forecast Oct 2022 to Dec 2023

So for immediate first access to 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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Your watching the British pound burn at the official rate of 9.4% per annum analyst.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2022 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

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.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

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

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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