Last year, NQ1! dropped approximately 34%, entering a bear market territory. In 2023, we hardly expect any significant improvement in the stock market due to the persistence of bearish fundamental factors, including high inflation, the prospect of more interest rate hikes, and a global slowdown. We expect these factors to stay in place throughout the year and weigh heavily on the index. Furthermore, we expect them to lead the U.S. economy deeper into a recession. With that said, we anticipate the bear market to progress from the second stage into the third stage in 2023.
We will seek confirmation of our assessment in the upcoming earnings season and look for corporate underperformance and outlook downgrades. Additionally, we will look for a jump in corporate bankruptcies and a pick-up in unemployment. In accordance with our outlook, we maintain a bearish stance on the index and keep our price target of $10 000 for NQ1 (although we think the index has a high chance of going far below that).
Illustration 1.01 Illustration 1.01 shows the daily chart of NQ1! and the declining channel we showed a few months ago. Currently, NQ1! trades near its upper bound. If it manages to break above it, it will bolster the bullish case in the short term. However, a failure to do so will be bearish and hint at exhaustion.
Technical analysis Daily time frame = Neutral Weekly time frame = Neutral
Illustration 1.02 The image above shows the daily chart of NQ1! and simple support/resistance levels. In addition to that, two moving averages are present, acting as additional resistance levels; in case of an upward correction, we will pay close attention to these SMAs and their ability to halt the price rise.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
The current support level (especially for SPX) appears to be stiff, bears have not managed to push the curve down the stair. I see a decent amount of short-term bullish pressure, especially given today's (Jan 6) rally, might exit my short positions for now.
It will be stressful (also could be exciting) during the next month. We will have December inflation next week, concentrated company earnings in the weeks after, Fed announcement in the week of Feb 1st. I'd rather stay out of the craziness myself and simply lean back and watch it since I don't have the guts to bet on a daily basis.
CPI and Fed (50 vs 25) is hard to predict. I'd expect most company earnings to disappoint. Not in the sense of missing expectations since I don't give a shit about WS analysts' manipulated expectations, but in the sense the revenue growth rate would burst or even become negative. The real question is how the market would react to it, and in the case of a negative reaction how low would the market go.
If the market makes a new low then yes the bearish trend will continue.
In the case of another black swan event, then of course the market could easily drop another 30-40% in a short period of time.
Nice post BTW, thanks for sharing.
Tradersweekly
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@SarahTrade, Thank you too very much for your comment.
buffermet
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this is not how TA works...
Tradersweekly
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@taosamurai, How does it work then?
buffermet
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Backtrack the 1W RSI divergences and you'll see what they're doing