This week we have a stock market forecast for the week of 10/31/21 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)
This week we have seen a lot of conflict between the bears and bulls, and when we look at the weekly chart above. It seems the bulls have won this week as a small green candlestick seems to "confirm" the bullish breakout.
To understand this better and get a more precise view of supply and demand pressures, we must look at the market in a more granular manner.
The hourly chart seen here tells a different story. You can see here the character of the last two breakout moves, highlighted in yellow. Both times as soon as price tested up into uncharted territory, it triggered a wave of profit-taking.
This puts us back into conflict, as we have seen for weeks now. We have a clear line in the sand near $454, which I'm using as a bias trigger point next week.
If the bulls can keep this drifting, faded rally going, then I will keep my posture unchanged.
If the bears CAN overwhelm the bulls, we will see price drop down to break the support at $454, and that break will be a catalyst for more serious and sustained profit-taking.
I know it's boring, and I know how hard it is for traders to stay passive during the interface zone as a change in trend is digested.
There are always intraday markets if you are looking for more money velocity because the cycles are tighter, and the cycle rate is faster. However, I'm focused on getting the weekly top if/when it forms to surf a larger wave to larger profits.
Caterpillar Inc. (CAT)
CAT continues to drift higher with the markets, and so I'll let it be for another week as a hedge while we wait for the markets to pick a direction.
SPDR Gold Shares (GLD)
Gold pulled back a bit this week as its mildly bullish chop continues. This market is "coiling," and this quiet period is likely to produce a cycle of increased volatility as the price breaks out above the $173 area. Notice how many different markets are in "hover mode" as they chop near trigger points? Lots of fun volatility should be coming for us to play in... the only thing we are waiting for is the catalyst.
Estee Lauder Company (EL)
EL is a stock that has had a fantastic run over the last year. Unfortunately, the last pullback was deeper than normal, and now this market has formed a lower high. If my forecast about the general market is correct, then these pumped-up stocks are likely to get hammered by a wave of profit-taking. I'll try to capture that move by using proxies like EL, which I would see as attractive anywhere in the red zone.
If the price can break out above the highs of the red zone, this pattern would have failed, and stop losses should be taken.
The Boeing Company (BA)
BA has pushed down slightly below the recent lows and closed right at the breakdown point.
Again, we have a trade that is on the brink of real movement acceleration. When there is this much pressure built up and unrealized, there is often some news that is about to break, so be on the lookout for that as well in the week to come.
To Learn How To Accurately and Consistently Forecast Market Prices Just Like Me, Using Market Vulnerability Analysis™, visit Market Forecasting Academy for the Free 5 Day Market Forecasting Primer.
Check back to see my next post!
Market Forecasting Academy
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.