S&P 500 and NASDAQ 100 Forecast

S&P 500

The S&P 500 initially went sideways during the trading session on Tuesday, but then broke above the 2605 level, to break towards the 2016 handle. This market is a little overbought at this point, so for short-term pullbacks offer buying opportunities to take advantage of the break out. I look at the 2600 level underneath as the short-term floor in the market, and I think that we will continue to go much higher. With this being the case, it’s likely that the market will probably go to the 2650 level after that, and possibly beyond. Pullbacks should offer value at best, but if we were to turn around and break below the 2590 handle, the market could find itself selling off a little bit more significantly. I think the selloff is probably needed, but it is obvious that the market cannot sustain any bearish pressure, so in the meantime buying on the dips probably remains the only thing you can do.

I recognize that the 2625 level is going to be a target as well, as it has a certain amount of psychological importance. The S&P 500 has gone sideways for a couple of days, so I think that the momentum could stick with this market to the upside for the next couple of days, but eventually we will need to pull back as the market has been overbought for so long. If the US dollar starts to strengthen, you could see this market pull back in general, but I don’t think it would be a longer-term issue, rather than a short pull back. Ultimately, I think that the algorithmic traders continue to lift the S&P 500 every time we fall anywhere near 1%. It looks like the machine-driven buying continues.

Dow Jones 30

The Dow Jones 30 exploded to the upside on Tuesday, as we have extended gains above the 23,700 level. The market is getting parabolic again, so a pullback is probably coming. I look at a move like this as one that you need to wait for value to get involved. Buying at these high levels would be very risky, and essentially “chasing the trade.” In general, this is a market that could drop back towards the 23,600 level, where I would expect to see quite a bit of resistance that has turned into support now. I believe that the 23,500 level has now proven itself to be a bit of a floor, and that we are going to go looking towards the 24,000 level. A weakening US dollar should continue to help as well. Also, with the United Kingdom reaching a divorce bill agreement with the European Union, I think we are going to see bullish attitude and markets around the world.

NASDAQ 100

The NASDAQ 100 continues to go sideways, and therefore I think that we are trying to build up momentum over here to go higher. The 6450 level above is a target, and then obviously the 6500 level as it is a large, round, psychologically significant target. I believe that there is plenty of support at the 6400 level, that extends down to the 6375 level. The moving average is on the stochastic oscillator trying to cross to the upside, so therefore think it’s only a matter of time before the buyers enter and continue to try to drive the momentum higher. With the Dow Jones 30 and the S&P 500 breaking out to the upside, you would think that the NASDAQ 100 will follow shortly.

MORE WILL UPDATE SOON!!