INDICES MARKET OUTLOOK – 25 OCTOBER 2021

Market sentiment was mixed last week all over the world, but US indices managed to come out with a green week. NASDAQ, the Dow Jones and S&P500 closed the week out at +1.38%, +1.11% and +1.64% respectively.

The markets looked poised for an interesting week with a large docket of risk events alongside 2 of the 3 US indices being at their All Time Highs. In terms of risk events this week, although there are many, these will get the ball rolling as many investors are focused on the GDP results coming out from the US on Thursday. Friday also brings us the PCE Deflator, which happens to be the Fed’s preferred inflation statistic. With one of the main fundamental themes being monetary policy, a few high profile central banks are due to weigh monetary over the coming week.

FUNDAMENTALS FOR THE WEEK AHEAD

This week also brings us earnings reports from FANG, which could potentially bring some turbulence to the market. Facebook will be reporting 25th of December after the US session has ended. Google, Microsoft and Twitter report tomorrow. Amazon and Apple are set to report on Thursday. Many of these stocks have the potential for upside, but so does the 10 Year Treasury Yield. With the yield rising on Bonds, investors could potentially go for the safer option and take profit on their stocks. This could keep valuations in check for multiple high-growth companies.

US 10 YEAR TREASURY YIELDS DAILY TIMEFRAME

Looking at NASDAQ technically, price has come to a stand still in the $15 350 – $15 450 region with consolidation forming on the daily timeframe after price had that bullish run up 2 weeks ago. Investors may be stalling as they await numbers from earnings reports as well as the GDP numbers being released this week. If price manages to break and close above the $15 500 region, this would validate further potential upside on the tech-heavy NASDAQ. On the opposite side of the spectrum, a close below the $15 285 region could bring bears back into play leading to a short term correction. All in all, fundamentally, things look bullish for NASDAQ.

NASDAQ DAILY TIMEFRAME

The Dow Jones managed to create new all time highs during last week as we saw price break and retest the psychological level of $35 500 with ease. Friday’s daily candle (22/10) closed as a bearish doji which could be a sign of exhaustion and indecision at the highs. PA will interesting this week mixed alongside the risk event docket. Going forward, we can assume $35 500 would now act as support until it is broken. The path of least resistance seems to be upside. Should we see profit taking occur at the highs, we can expect a correction into one of our Fibonacci levels before seeing new highs in the weeks to come.

DOW JONES DAILY TIMEFRAME

As always traders, exercise healthy risk management and we hope you have a fantastic trading week ahead. For more updates like the one above, subscribe to our blog for instant updates to your mail or join our Telegram Trading Floor via our website at http://www.aspirefx.co.za.

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