Equity markets have been in a distribution phase since April, which normally precedes a liquidation event. Tops are a process the majority of the time unless markets are blindsided by some binary geopolitical event. While we have forecasted each of the three major indexes, DOW, SPX, and NDX to make new all-time highs before markets roll over in the second half of June, the path to get there will not be easy. Most of the gains will likely come from a 3-5 day period. The rest of the time choppy advances will continue to be sold into by institutions. Many traders are often over-leveraged and impatient in trading periods like these, which often leads to frustration, early selling and losses. Recognizing difficult periods of trading separates the amateur trader from the experienced trader who makes money consistently. Markets are expected to begin an intermediate correction during the second half of June. The NDX should lead the sell-off. It is possible the SPX is propped up into the end of the quarter, June 30th. Big picture – markets are expected to start to drop into early July, bounce, then turn back down into a final intermediate low in August.
Events for next week:
Developments in the Middle East, the post-crash behavior of the crypto market, and global COVID trends could all influence trading on Wall Street next week. The U.S. economic numbers and treasury yields will also likely take center stage again. The consumer confidence number, Case-Shiller Home Price Index, second reading of the first quarter GDP print, and the durable goods report will highlighted mid-week, while the week will end with the Core PCE Price Index and personal spending.
Special Crypto update:
The crypto sector is led by Bitcoin so we will address our outlook for BTC for the rest of the year. While BTC broke out early in the year, we continued to forecast to our Gold Members that a re-test of the breakout at $20,000 was possible this year. We also accurately predicted the first plunge to exactly $30,000. Many crypto traders emailed us disagreeing with our forecast saying it would be different this time with price targets of $100k, $200k, and even a million. While we are long term bulls in a number of major crypto’s, that does not preclude us from making temporary bearish forecasts when natural pullbacks must occur. Bitcoin is volatile asset class capable of violating key support levels with wild spike lows. We would not be surprised to see a secondary overnight quick spike low form at the $20,000 level in the third quarter of 2021 while gold rallies. At some point late in the third quarter, BTC should give us a multi-month trending trade into year-end once our final low has formed.
To expect price to rally back to all-time highs in the $60,000+ range so soon is not reasonable. Sentiment will need to reset from the parabolic mini-bubble move which just occurred. Expect sentiment to stay oversold in bearish territory for a period of months for this to occur.
There is a hidden order to everything in the universe, and our cycle theory coupled with AI technology enables us to have successfully identify these trends. Join The Forecast as a Gold Member to learn more about these cyclical events and profit from them: