Dow Jones, Nasdaq 100, S&P 500 Forecasts for the Week Forward

Dow Jones, Nasdaq 100, S&P 500 Forecasts: Bullish

Dow Jones, Nasdaq 100, S&P 500 Forecasts for the Week Forward

US equities loved a modest acquire final week because the Dow Jones and S&P 500 creeped deeper into file territory and the Nasdaq 100 appeared to make up for misplaced time because it goals to retake an essential trendline whereas pushing to file ranges within the course of. Worth motion was removed from exuberant, nonetheless, as seasonal downtrends in quantity and volatility had been notably poignant.

S&P 500 Seasonality Chart

In consequence, the few good points that had been established had been carried out on low quantity, an incidence that doesn’t encourage quite a lot of confidence. Sometimes, a value breakout is most encouraging when it’s carried out on large buying and selling quantity and follow-through is quick. Nonetheless, the elemental backdrop stays accommodative and the arrival of earnings season may assist revive volatility.

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The season is about to start Wednesday with quarterly stories from a number of the nation’s largest monetary establishments corresponding to Wells Fargo, JPMorgan and Goldman Sachs. Further consideration could also be paid to Goldman Sachs because the financial institution reportedly escaped from the Archegos household workplace unraveling with out vital losses whereas others weren’t so fortunate. Ought to Goldman reveal info on the contrary, it might spark broader threat aversion on fears of systemic vulnerabilities.

Other than considerations surrounding Archegos, information from FactSet reveals the season could also be among the best in years by way of earnings progress. First quarter expectations have shot to 23.8% and since precise outcomes usually outperform expectations barely, company earnings progress might be even increased. Appreciable progress in earnings might assist reign in some valuation metrics many buyers have warned are operating too scorching like price-to-earnings and associated measurements.

Both approach, a string of upbeat quarterly stories might add additional gas to the bullish fireplace that was ignited after the latest barrage of upbeat financial readings starting from non-farm payrolls to shopper confidence.

With the economic system primed and prepared for enlargement, the Dow Jones, Nasdaq 100 and S&P 500 seem poised to proceed increased though seasonal market developments might gradual good points to a crawl. A gradual grind increased could change into extra doubtless somewhat than the fast ascent merchants have change into accustomed to as markets emerged from the pandemic lows. Within the meantime, comply with @PeterHanksFXon Twitter for updates and evaluation.

–Written by Peter Hanks, Strategist for DailyFX.com