This week we have a stock market forecast for the week of 5/2/21 from our friend Bo Yoder of the Market Forecasting Academy. Be sure to leave a comment and let us know what you think!
The S&P 500 (SPY)
The S&P 500 (analyzed here using SPY) worked to process a new short-term top this week as forecast in last week’s submission.
My short-term forecast hasn’t changed since last week and can be seen in the form of the yellow arrows on the daily chart here. I expect to see a correction to form next week and then another push back up to retest the highs over the next couple of weeks.
The patience we have had to exhibit over the last month or two is paying off as there are a lot of nice opportunities showing themselves in individual stocks this week... Let’s look at a few!
Autodesk (ADSK) has been fighting unsuccessfully to break out above the $300 per share level. Over the last few days of this week, the bulls were rejected, and the price looks like it’s ready to ping pong back down to the recent range lows near $285.
That bearish move would set this stock up for a more significant fall... Back down to explore the lows set earlier this year near $260 per share. This trade is attractive for short exposure anywhere within the red zone, with stop-loss orders set above that zones high.
My forecast would be for price to make its way back down to the green zone as the large liquidity pool near $260 per share is tested.
Electronic Arts (EA)
Electronic Arts (EA) has just finished forming a bearish head and shoulders reversal pattern on its weekly chart.
This action and the failure of the recent rally to even retest the highs will likely produce some bearish follow-through to the downside in the weeks to come. This new position opportunity is considered attractive as a short anyplace within the red zone, with stop losses set above that area.
My forecast would be for the price to drop down to test the area indicated in green near the $120 per share area.
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Coca-Cola (KO) confirmed a double top on its weekly chart this week and now needs to respond with relative weakness in the week to come as the market indexes drop back down into correction.
If it cannot confirm in this manner and instead holds on near highs next week, it would make me question “if not now... when” and start looking for an elegant place to exit the trade for a loss.
Gold (analyzed here using GLD) worked out a textbook “Breakout/retest” pattern as price came back in to retest the support near $164. This correction was clearly forecast last week, so it was NOT a surprise and therefore didn’t cause any undue stress or negative emotions.
Instead, this is a positive week for the position, as this correction will create new levels of support that will become the places that the bulls defend in the future, thus ratcheting up the price as the new uptrend builds up the bull’s confidence and energy.
Regeneron Pharmaceuticals (REGN)
Regeneron Pharmaceuticals (REGN) is working its way through a complex correction after reaching the initial profit target last week. As the correction forms, the bears have been quite active. The tools I use to measure supply and demand forces are indicating to me that the odds are higher that this stock will remain channel bound for a while.
How things end up next week will be very important. If the correction ends and the highs near $510 are retested, then I would maintain exposure and let the trend unfold.
However, there are signs of increased bearishness in this correction, and if those persist through next week, it would be time to close out and move on, as there are likely better places for that risk that won’t waste so much time.
Eurodollar vs US Dollar
I brought the EUR/USD currency pair back into these forecasts last week because I could see a reversal starting to take shape. The supply was overwhelming demand, and as forecast last week, this market produced a false breakout on Thursday, which was the “multi-wave topping pattern” I spoke of in my last forecast.
Closing out the week with as much weakness as we saw confirms the weekly head and shoulders pattern, and I would expect that prices would begin pushing lower next week.
This offers a nice chance for some short exposure with a multi-month time horizon. This short is considered attractive anywhere within the red zone and should produce at minimum a retest of the lows near 1.1700.
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About Bo Yoder:
Beginning his full-time trading career in 1997, Bo is a professional trader, partner at Market Forecasting Academy, developer of The Myalolipsis Technique, two-time author, and consultant to the financial industry on matters of market analysis and edge optimization.
Bo has been a featured speaker internationally for decades and has developed a reputation for trading live in front of an audience as a real-time example of what it is like to trade for a living.
In addition to his two books for McGraw-Hill, Mastering Futures Trading and Optimize Your Trading Edge (translated into German and Japanese), Bo has written articles published in top publications such as TheStreet.com, Technical Analysis of Stocks & Commodities, Trader’s, Active Trader Magazine and Forbes to name a few.
Bo currently spends his time with his wife and son in the great state of Maine, where he trades, researches behavioral economics & neuropsychology, and is an enthusiastic sailboat racer.
He has an MBA from The Boston University School of Management.
Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation for their opinion.