The S&P 500 market prediction was spot on from last week. The market closed the week flat right on top of the green drawn prediction line from last week as seen in the chart below.
I look at a lot of indicators and I ponder if that indicator supports or contradicts the move on the S&P 500. I will be posting a series of articles looking at each of these indicators shortly. The bottom line is that the stock market prediction has gotten a little more bullish over the last week. I have updated the prediction path on the chart above.
The S&P 500 market prediction path has become more bullish because market internals show traders are pumping in money in anticipation of Republican’s tax plan that will be released next Wednesday. Tax cuts will be the media buzz next week.
The predicted pullback on the S&P 500 next week is much more shallow now. We then get a sideways grind where range is compressed and the only way to make money will be very tight swing trades and day trades. Finally, sometime in mid to late October (not shown on chart) we get the big best 6 months of the year trade (November – April). Traders will start front running November and the start of the best 6 months of the year sometime during the last two weeks of October.
I think it’s important to NOT buy breakout patterns right now ahead of the next couple of weeks.
In mid to late October, we will be going long seasonally strong stocks that have a tendency to rally between the end of October and mid-December. Make sure to review this stock trading lesson on seasonality.
It’s important to note that Wells Fargo came out with their stock market prediction for 2018 last week and it’s not very good. You can read more about the Wells Fargo prediction here.
This market prediction can change in the blink of an eye with catalysts or black swan events like: Trump’s tax plan completely defeated, war, hurricanes, earthquakes, and terrorist attacks.