Source: PaxForex Premium Analytics Portal, Fundamental Insight
Traders will start the new trading week with no market-moving economic data, placing the focus on earnings seasons, while geopolitical developments add reasons for medium-term concerns. US earnings season has been good for major US banks, as higher interest rates have boosted income and revenues, offsetting slowdowns elsewhere. Other companies offered mixed results and outlooks, offering bulls and bears ammunition to push and pull equity markets in either direction. For example, Netflix surprised investors with subscriber growth, while Tesla disappointed and tampered its outlook to the downside, especially for its much anticipated Cybertruck.
This week will see earnings season continue in full swing, and investors may focus on regional banks and how they fare in this high-interest rate environment. Today, 264 companies will report earnings, followed by 250 on Tuesday. Earnings season will kick up a notch on Wednesday, as 385 earnings releases are on the calendar, with Thursday set as the busiest day, with 528 before Friday closes off this week with 152. The current environment makes stock picking more attractive for short-term traders, but long-term investors are likely to stay the course.
Sticky inflation and the prospect of higher-for-longer interest rates are ongoing concerns. The 10-year US Treasury yield moved above 5.00%, and the 30-year US fixed mortgage rate climbed above 8.00%. US debt eclipsed $33 trillion, with credit card debt above $1 trillion, suggesting US consumers are nearing a point where they must slow spending. The outlook for the S&P for the fourth quarter is bearish, as none of the downside catalysts are likely to vanish until 2025 or beyond.
The forecast for the S&P 500 remains cautiously bearish after this equity index experienced a four-day sell-off. The Ichimoku Kinko Hyo Cloud supplies ongoing downward pressures with a gradual shift lower but has entered a sideways trend with the Senkou Span A and the Senkou Span B flat. The next move could continue the move lower. Volatility could rise following the bearish crossover of the Tenkan-sen below the Kijun-sen after the Tenkan-sen flatlined while the Kijun-sen holds on to its downtrend. Traders should also monitor the CCI after retreating from extreme overbought territory into extreme oversold conditions. This technical indicator may bounce higher but is unlikely to move above zero before resuming its downtrend with plenty of downside potential. Can bears maintain control over the S&P 500 and drive price action into its horizontal support area, below the psychological 4,000 level and multi-month lows not seen since March 2023? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the SP500 Index remain inside the or breakdown below the 4,000 to 4,260 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 4.235
- Take Profit Zone: 3.940 – 4.000
- Stop Loss Level: 4.320
Should price action for the SP500 Index breakout above 4,260, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 4.320
- Take Profit Zone: 4.490 – 4.520
- Stop Loss Level: 4.260
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
