Market Outlook for Next Week

Friday’s big rally on top of the big gains in October is saying a lot more than traders covering short positions.

See more on the events of last week, along with market predictions, and the underlying cause of the market rally.

Reported this week were:

  • Consumer Confidence rose in Sept: 108.0 vs 104.6
  • New Home Sales rose strongly in Aug: 685k vs 500k estimated
  • Initial (weekly) Jobless Claims fell 193k vs 215k estimated
  • Personal Spending for Aug rose slightly by 0.4% vs +0.2% estimated
  • Core PCE Prices for Aug had risen slight more than expected: +0.6% vs. +0.5% est

The UK’s economic struggles, the Baltic Sea pipeline bombing, Putin’s claim on Ukranian soil, the destruction of Hurricane Ian in Florida, and the question of a Fed pivot in interest rates occupied investor’s attention last week.

It’s hard to be too optimistic however and the 3 month forecast period is a little bleak.

WTI crude oil and US gasoline prices jumped in some areas including California, prompting the governor to cut gasoline regulations, a seemingly impossible option for the Democrat-controlled state which has declared an all-out war on carbon fuels and US oil companies.

The disaster caused by Hurricane Ian could plunge Florida’s economy and housing market as the clean up continues. Estimates of the damage range from $100 to $200 billion and will leave homeowners struggling to find affordable home insurance going forward.

Tech StocksInvestors will still be wary of tech stocks as interest rates will rise and international trade tensions will grow. Buying into tech is risky, and Google, Facebook, and Netflix have been the best performers however Facebook’s CEO just resigned.

Commodity plays including wheat, oil, gold, palladium, aluminum, copper, and lithium are looking good.

President Biden’s sloppy zeal over Russia’s financial collapse is worrisome.  Some feel it could ripple back to the US by 2023. After trying to broker oil deals with Iran and Venezuela (two enemies of the US), it could be Americans are tiring of the Democrats ploys.  Economists and stock market experts both are concerned energy prices could contribute to a recession. Rising rates with Fed bond purchases tapering off too fast will also send a shockwave.  Europe is expressing great difficulties with shortages and 50% food price increases.

For these reasons, investors should be cautious.  This downward trend isn’t over yet, but within 3 to 6 months, we should see some improvement in the Dow, NASDAQ, and S&P. Most of the prognosis stems from an end of covid, recovery across the US.  The US may need some infrastructure stimulus if rates go up too quickly.  Experts believe the Biden admin has few tools to manage this crisis. Getting too involved in a war right now is very risky.

Looking Ahead at Next Week

Next week’s events include 42 earnings report events and 60 economic events to digest. ISM and Construction numbers come out on Monday.  Tuesday, reports on durable goods and factory orders will be released.

Of course, increased talk of a stock market crash is also giving investors an alternative view of US picture.  Where to invest next week?

S and P Sectors last week.
S and P Sectors last week. Screenshot courtesy of CNBC

If you’re a self-directed investors using the main stock market investing resources online, you might be building more sensitivity to the short term market forecasts. Smart investors are always looking ahead to tomorrow or next week or the next month, but don’t forget the long term view.

Weekly forecast hunters are pursuing clues about the direction of the Dow Jones, S&P, and NASDAQ for specific stocks or ETF’s worth buying or those they should dump. I’d like to hear from you about which stocks you think are the most likely stocks that will jump next week and over the next 6 months.

Is a Weekly Stock Forecast Even Possible?

Day traders especially zero in on these temporal changes in stock values.  They love that volatility if they can figure it out.  For the last few weeks, there’s been a lot of uncertainty regarding the Fed stimulus package.  With it’s passing into action, that volatility might ease and we could be back to the bull market run.

You can see consistent factors in routine Monday to Friday trading, but do weeks have consistent buying patterns?  If there was, the technical guys would have said something about it by now.

But let’s face it, there’s not many professional advisors sticking their neck out about stock price predictions for 5 to 7 days from now.  If you can see how stock investors reacted last week to news, and you know the news coming, then you may be able to figure out how they’ll react next week. Next week’s price growth will likely mirror last weeks, perhaps picking up the pace.

Top performers Last Week

top performing stocks. Screenshot courtesy of Barchart

Tech Stocks Still in Waiting Mode

The Dow Jones and the S&P and NASDAQ indexes sagged once again last week.  Tesla, Google, Facebook, Amazon, and Apple are in waiting mode.

The NASDAQ, S&P, Russell, and Dow Jones are all looking for bottoms but they’re not appearing. The questions about the Fed pivoting on the central rate hikes is growing. Increased volatility and political pressures will intensify as the US senate and house mid term elections near.  November 8th will be on everyone’s mind soon.

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* Note: This post on next weeks stock prices is for informational and entertainment purposes and should not be regarded as investment advice for any market transactions. Please consult with your stock and financial advisor for investment decisions.