Inventory Market Forecast for the Week Forward: Impartial
Inventory Market Forecast for the Week Forward: The Summer season Doldrums Strategy
The Dow Jones, Nasdaq 100 and S&P 500 loved modest features final week because the three indices superior roughly 1.1%, 2.3% and 1.3% respectively. Inflationary issues and discuss of the Fed’s financial coverage response drove a lot of the worth motion and have been the suspected catalysts behind preliminary value motion on Monday and Tuesday. Because the week progressed quantity and volatility died down and the key indices maintained a good buying and selling vary into the weekend.
That being mentioned, the market conduct skilled late final week could also be an indication of what’s to come back for the Dow Jones, Nasdaq 100 and S&P 500 as seasonal headwinds work to weigh on market exercise. Already, day by day buying and selling quantity on the key US indices dipped to among the lowest ranges within the year-to-date final week and as summer season approaches, the development might proceed till September.
Sluggish market exercise can result in failed breaks with little follow-through which, in flip, could make buying and selling ranges extra frequent presenting a great panorama for range trading strategies. That mentioned, the market ought to proceed to derive affect from the identical basic themes, inflation and taper discuss, which is able to make Friday’s non-farm payroll report a extremely vital market occasion as market members try to gauge exactly when the Fed will look to shift its coverage path.
Fed Chairman Jerome Powell has repeatedly acknowledged any change can be communicated properly upfront which has led buyers to suspect latest remarks from some Fed officers may very well be the beginning of mentioned communication. Crucially, there was no official assertion and the subsequent alternative to supply such a shift might current itself on the June FOMC assembly when a brand new Abstract of Financial Projections (SEP) is launched.
Within the meantime, markets might grasp for path as liquidity and volatility look set to dry up. Observe @PeterHanksFX on Twitter for updates and evaluation.
–Written by Peter Hanks, Strategist for DailyFX.com