Market Outlook for Next Week
Futures were up on Sunday night and today trend the trend continues, particularly the Dow Jones, up 300 points. However, all majors have plunged today.
Volatility is up so investors don’t really and they’ve succumbed to the latest negative news announcements. There could be some profit taking and some may be preparing to bail out tomorrow. The main issue here is that this is just the first of a series of rate hikes and the economy isn’t strong enough to take that.
Observers believe Biden has no power to reduce inflation or oil prices and driving the US into the recession is his only game plan now.
Oil is down $8 today, and Oil stock traders might bail out quicker during these oil price drops because the last oil release gambit endured a little. The private China/Russia oil deal is affecting Brent and WTI prices, and the Biden’s desperate pleas to the Saudis, Iranian leaders and Venezuela is worrying a lot of people. All these countries are enemies of the US and Biden is making the US dependent on them. This is going to end badly.
Saudi Arabia and OPEC may not like a plunge in price so they will likely avoid cooperation with Biden. A more acceptable route would be to open up the XL pipeline with Canada, given it has 1 trillion barrels of oil to be transported to US and world markets. The US can actually earn revenue on that (exports to global markets) so it is clearly better to work with a friendly nation, rather than shun them.
Traders might be covering short positions, some might be buying the dip with expectations that this week’s rate increase will be minimal and the market will bounce back up.
It’s hard to be too optimistic however and the 3 month forecast period is a little bleak. By summer, we might see improvement in the supply of goods, but inflation will likely increase. Oil prices and gold are down this evening too, another reflection of recovery expectations. It may be that realists and pessimists have taken the March break.
China is talking in support of Russia and that can’t be good for the stock market outlook. Covid is rebounding a little in Europe and is still a menace around the world. Bank of America and Goldman Sachs feel there is a 30% to35% chance of a recession now.
Investors 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 sinking of late. 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 reason, investors should be cautious. This downward trend isn’t over yet, but within 3 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 we’ll see the usual reports on the PMI index, consumer confidence index and price index, nonfarm payrolls, and us factor orders. Yet with the Omicron response overshadowing everything, the most important news will be the WHOs report on the transmissibility of that variant. Let’s hope the S. African infection numbers don’t rise, because that is a signal that many traders will act on.
Of course, increased talk of a stock market crash is also giving investors an alternative view of US picture. Where to invest next week? Manufacturing, energy, and consumer discretionaries are hot, but probably not next week. This month, you could get a good look at some stocks to buy on the dip. Bitcoin stocks are on everyone’s radar now. With (MRK) Merck’s new pill for Covid treatments, it looks like Covid 19 is on its last legs. That should be a positive for the market.
Financials, Industrials, energy and materials stocks led the route. The health sector is the only one that bucked the trend.
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.
Last week, stock futures were up on new jobs (↑916,000) and wage numbers (↑4.2%) and the market had a good week. Still some investors are in waiting mode regarding the current President’s infrastructure stimulus plan. The Republicans are not expected to pass it. So the waiting game continues.
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.
Here’s the Top performers Today
Surprise, surprise, the top performers (from Yahoo Finance) are biotech and vaccine stocks!
This week’s stock market price surge might signal a change. The pandemic winter’s dour mood is leaving us. Retail stores are reopening and tourism is picking up vaccination numbers grow. Airlines flights, hotel rooms and travel prices are rocketing, indicating a coming tourism bottleneck for the next 6 months at least.
Tech Stocks Still in Waiting Mode
The Dow Jones and the S&P are the market darlings right now. NASDAQ rose about 240 points last week as tech stocks improved and Dow jumped by 600 points over that 5 day period. Tesla, Google, Facebook, Amazon, and Apple are in waiting mode. The OECD forecasts US GDP will double to 5.6% growth because of the stimulus hand out and vaccinations are proceeding well in the US.
What About Volatility?
The big events were consumer spending, Covid vaccinations, jobs growth, and the interpretations of Jerome Powell’s speech about interest rates, and of course the passing of stimulus relief, which many thought might never happen. Investors aren’t sure the stock market forecast looks good right now, for this week and the next 6 months.
Government bonds rates have been rising and it’s causing concerns for investors. It promotes the idea that interest rates will be on the rise. However, the economy is too fragile for interest rate rises, even with $1.9 stimulus. Some believe inflation will lose steam in the second half and perhaps set us up on the road to a market crash.
If rates rise, it could crash the housing market, creating more issues for affordability, new construction and much higher house and rental prices (supply vs demand).
If that was the cause of the recent correction, the release of the Stimulus funds package should help to get business moving again and that should shrink the bond market back down. The Fed has pronounced steady low rates for years. The economy can’t take higher rates so the talk is likely just pandemic pessimism and political propaganda (like usual).
The NASDAQ, S&P, Russell, and Dow Jones are indicating a bottoming now as the stimulus relief is appearing and as vaccinations grow fast. The more reports this week about vaccination numbers, and a reopening of local and state economies will push jobless numbers down plus ease unemployment claims.
This might be the week we see the pandemic stocks take a dive as investors move onto post pandemic stocks.
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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.