Weekly Briefing 10/17/21 - The Forecast

Weekly Briefing 10/17/21

Weekly Briefing 10/17/21

As long as support holds this week, we can see the market reach new all-time highs into the proposed multi-trillion dollar stimulus package slated for the end of the month.

Sentiment has rebounded from early October lows, but will likely dip to start this week as some volatility is expected.

Market Recap:

The market last week started with bearish trading action, but rallied though the mixed inflation report and slightly hawkish FOMC meeting minutes. Continued COVID-related improvements, a less noisy political landscape, and stabilizing energy markets all helped investor sentiment as well. The bullish start to earnings season was another plus for equities, and global stocks showed strength indicating we could be in for a few more peaceful weeks on Wall Street.

The week’s economic releases were a mixed with a worrisome Consumer Price Index (CPI), a promising Producer Price Index (PPI), and a blowout retail sales report. Meanwhile, the job openings estimate and the weekly number of new jobless claims both pointed to increased activity in the job market, but we will have to wait until the next jobs report three weeks from now for more clarity. Investors will likely remain focused on inflation in the foreseeable future, so this past week’s rally in commodities, especially copper, points to more commodity gains for the coming weeks and months despite the stable domestic growth.

The short-term technical picture is still not perfectly bullish, but thanks to Thursday’s massive rally, technicals improved across the board and the bull market might soon resume after a test of support early this week. The S&P 500, the Dow, and the Nasdaq all closed the week above their 50-day moving averages and the benchmarks are still well clear of their rising 200-day moving averages. Small-caps remained relatively strong despite Friday’s drop, and the Russell 2000 finished the week well above both its moving averages as well. The Volatility Index (VIX) also hit its lowest level since the first days of September and finished well below its moving averages and the key 20 level.

More positive indicators include the Advance-Decline line which finally climbed above its bull market high toward the end of the week, as advancing issues outnumbered decliners by a 5-to-1 ratio on the NYSE and a 6-to-1 ratio on the Nasdaq. The average number of new 52-week highs also increased on both exchanges, rising to 99 on the NYSE and 62 on the Nasdaq. The number of new lows dropped in the meantime, falling to 16 on the NYSE and 53 on the Nasdaq. The percentage of stocks above their 200-day moving average also started to rise this week, soaring well above the 50% level.

Over the past three weeks, we have successfully forecasted a whipsaw market for our Gold Members and expect more of the same into October 20/21.

Bitcoin is expected to put in a temporary peak in a blow-off top this week as the new Bitcoin ETF launches. We will cover expected upside targets as well as and support zones for the coming pullback for our Gold Members in our Nightly Briefings. Capital should also continue to move from major coins into the altcoin market in the coming weeks and months. Our very affordable altcoin newsletter published 2-3 times per week will continue to identify these coins that are able to experience exponential surges. Late last week, we saw one ALT coin surge over 1000% in a 1-2 trading day span.