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6 Monster Stock Market Predictions for a Somewhat Slow Week

By Michael KramerStock MarketsJan 23, 2023 12:06AM ET
www.investing.com/analysis/6-monster-stock-market-predictions-for-a-somewhat-slow-week-200634594
6 Monster Stock Market Predictions for a Somewhat Slow Week
By Michael Kramer   |  Jan 23, 2023 12:06AM ET
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This week won’t have Fed speakers as they enter the blackout period ahead of their February 1 rate announcement. That will leave us with a somewhat slow week, with economic data and bond auctions as the main headlines.

The big data points will be fourth quarter GDP, PCE, and University of Michigan, which won’t come until the end of the week. GDP is expected to climb at an annualized rate of 2.7% for the fourth quarter, while the price index is expected to have increased by 3.2%. That translates to a roughly 5.9% nominal growth. The Atlanta Fed currently sees fourth-quarter GDP at 3.5%. Any number around 3% is very healthy and has an above-trend growth rate.

This week, there will also be 2-year, 5-year, and 7-year auctions. This will be important because, as I expected, the Treasury General Account started to tick higher at the end of last week. The Treasury reports the TGA’s value daily, with a one-day lag. The TGA was up to $455 billion as of Thursday. While the Treasury is using extraordinary measures to fund the government, I think the Treasury will probably keep building up the TGA so it can have the extra cash for when the debt ceiling debate kicks into higher gear and it has exhausted all of its other options.

The TGA and reverse repo activity have the biggest impact on reserve balances, and reserve balances fell through Thursday for the week, which helps to explain the drop in the S&P 500 mid-week.

Reserve Balances vs SPX Index Chart
Reserve Balances vs SPX Index Chart

1. S&P 500

The S&P 500 appears to have formed a corrective running triangle, a consolidation pattern. This pattern suggests we break lower; it has three touches on the top of the triangle and just two contacts on the bottom of the triangle—usually, the triangle patterns break following the third touch of the trend line.

S&P 500 Futures Daily Chart
S&P 500 Futures Daily Chart

2. Banks

What makes this more convincing to me is that we see the same pattern in the BKX bank index.

KBW Bank Index Daily Chart
KBW Bank Index Daily Chart

3. Dow Jones

The same scenario is not visible currently in the Invesco QQQ Trust (NASDAQ:QQQ) or Dow Jones Industrials. The Dow Jones Industrial Average has been trending sideways for a bit and has been near a main support level of around 33,200, so that is the level to watch this week for the Dow, which will need to hold to avoid further losses.

DJIA Daily Chart
DJIA Daily Chart

The Dow continues to be the key to the market in many ways because it has outperformed quite a bit, and if it faltered and declined, it would probably be a warning sign for the rest of the market.

4. Goldman Sachs

One reason is that the Dow is heavy in financials and industrial stocks, and these have been two of the biggest gainers since the middle of October. Goldman (NYSE:GS) has been one of those big gainers but has pulled back sharply since it reported fourth-quarter results. Goldman is also close to support around $340, which could serve as a leading indicator for the Dow, should Goldman begin to break lower.

GoldmanSach Inc Daily Chart
GoldmanSach Inc Daily Chart

5. Ford

Ford (NYSE:F) has been trending lower more recently in what appears to be a descending triangle. It is also apparent that the RSI is trending lower, suggesting a loss of bullish momentum in the share price. For Ford, the big level of support that needs to hold comes at $11.

Ford Daily Chart
Ford Daily Chart

6. Netflix

Netflix (NASDAQ:NFLX) spiked following its results, delivering better-than-expected net additions. The stock rallied on Friday, and it appears it could have just been related to a significant drop in implied volatility. We saw something similar last week on banks like JPMorgan (NYSE:JPM), so it would not be surprising if Netflix gave back some of Friday’s gains this week.

Netflix Price Chart
Netflix Price Chart

That’s all for this week.

Original Post

6 Monster Stock Market Predictions for a Somewhat Slow Week
 

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6 Monster Stock Market Predictions for a Somewhat Slow Week

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Comments (11)
Kris Jay
Kris Jay Jan 26, 2023 3:35PM ET
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the emperor has no clothes!
Joe Spoor
Joe Spoor Jan 24, 2023 12:01AM ET
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This is my problem with technical analysis, trying to predict dailys when news and sentiment is driving price.
Joseph Levy
Joseph Levy Jan 23, 2023 9:15PM ET
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Throughout 2022 Kramer was a bear, which proved to be correct. Despite correctly forecasting the direction of the market, his firm (Mott Capital) reported 2022 net losses of -15.2%. If you can’t make money when you know market direction this suggests Kramer is not a good investor! My suggestion is for him to get a job as a college professor rather than managing money.
jason xx
jason xx Jan 23, 2023 3:35PM ET
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This guy goes home every night and pulls his pud to the Jpow Jackson Hole speech that crushed the market rally last summer. Ever since he thinks it is going to happen again every time Jpow opens his mouth. It was the high point of his life.
Mantis Toboggan
Mantis Toboggan Jan 23, 2023 3:35PM ET
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lol
Kris Jay
Kris Jay Jan 23, 2023 1:47PM ET
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i think key for useful analysis is something like SP500 will go down to 3500 after less than spectacular earnings, however between now and then it will rally to 4050 to 4200 prior to earnings.  Just "SP500 will go down to 3500 is not useful as the time frame is unknown and the height of the market is unknown.  if traders know the market will move sideways until that event then the trader can sit in cash.  However if the market is going to have a bull run first to 4200 then that's an important data point.  Predictions of "second events" are less useful. So in both your and Mike Wilson's call, its of little value one either trusts your judgement and waits the year or two for the market to go down to that level but misses all the upside in the mean time.  or you are wrong, trader misses a year of market upside.  worse if the trader shorted based on your "diamond pattern suggests", they are in a worse position when it rallies 8% since the DEC prediction (just 1.8% since this write-up).
Kris Jay
Kris Jay Jan 23, 2023 10:35AM ET
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i would avoid any further predictions based on triangle shapes as apparently it doesnt mean what you think it means.  it has each time, gone up, so in a bull market the triangle has no meaning other than to be geometric lines which match the peaks/vallies of normal trading.
Kris Jay
Kris Jay Jan 23, 2023 10:34AM ET
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well "triangle suggests we go lower" turns out to cause SP500 to rally up another 1%.
Joe Rizzuto
Joe Rizzuto Jan 23, 2023 8:10AM ET
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again with the monster stock market predictions!
Jim Bellino
Jim Bellino Jan 23, 2023 8:01AM ET
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This guy is constantly wrong. Must be a (C)Kramer thing
Haytham Metwally
Haytham Metwally Jan 23, 2023 8:01AM ET
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Can't agree more!!!
Kris Jay
Kris Jay Jan 23, 2023 7:42AM ET
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will hold you to the "This pattern suggests we break lower;"  the triangle pattern presented itself before in late DEC and you said SP500 would break lower, and it roared higher for the first 3 weeks of Jan.  We'll see.  I hope you are right but the track record lately has not aligned to what the market wants to do.
 
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