Easygoing central banks fuel the stock markets, what’s next?
The S&P 500 and the Nasdaq hit a new record. In fact, last week marked the sixth consecutive trading session in a row of new all-time highs as the world’s major central banks remain mostly dovish and third-quarter earnings continue to beat Wall Street expectations.
The Bank of England was the last major central bank to maintain economic support, surprising many who expected a rate hike announcement. The BoE echoed US Fed Chairman Jerome Powell, citing uncertainties surrounding the job market, with both fearing that a move too soon could derail what has been an uneven job recovery.
In most western countries where inflation exceeds recent historical trends, the tension in the labor market is also currently a problem.
Consumers are expected to shell out another record amount this year not only on goods, but also on things that were mostly off the table last year, like travel and dining out. Not to mention the glut of container ships backed up at US ports yet to be unloaded and transported to warehouses and stores across the country.
Data to watch this week
Next week brings critical figures on the inflation front with the producer price index expected on Tuesday and the consumer price index on Wednesday. The only other major economic report to note next week will be consumer sentiment on Friday.
The pace of earnings releases next week will slow down a bit, but there are still several key results to come. Highlights include PayPal on Mondays; Adidas, BioNTech, Coinbase, DoorDash, Dr. Horton, NIO, Palantir, Sysco, Toast and Wynn Resorts on Tuesday; Affirm, Disney, GoodRx, Novozymes and Stellantis Wednesday; Applied Materials, Bridgestone, Nice, Siemens and Tencent Thursday; and AstraZeneca on Friday.
S&P 500 analysis
SP500 broke the resistance of 4600. Technically, it should hit 4800 with enough time. However, it seems that the market is moving too quickly and aggressively. Usually this is a sign that we will have increased volatility soon. ADL is still bullish. On the other hand, professional traders cut their long positions in the market. The accumulation pattern is similar to the one we saw in September. At that time, SP500 had lost over $ 250.
In general, everything supports the uptrend. But the risks increase for short-term traders.