SPX 2022 EOY predictions: 3000 (or less), 3200, 3500 or 3900+ ??
here is a bit longer term rendition of my current views. the red circled area is the end of the year and has the largest number of confluencing factors -- midpoint of pitchfork, 50% retracement of covid gains. ironically the bull case would be the top near the yellow line at 3900 and the extra bearish case would be more like 3200 or so, which is a 62.8% retrace - possible, perhaps likely but not as nicely confluenced. i think it's possible we might see 3200 (or 3000) next year in the 1st half, but i dont see us going much lower than that. but either way, a 3650 retest is likely coming really soon!
while the last inflation report didnt say much was going on with wages, I think this is a semi fake view. there are a ton of job hoppers pushing wages up. the recent amtrak deal suggest workers still have too much bargaining power. those wage hikes will contribute directly to pushing harder on inflation. we're not done yet, and there needs to be a tremendous amount of demand destruction to help jack the unemployment rate up higher and rebalance the leverage workers have against corporate needs.
in future administrations, one might hope they would realize that supply side problems are not gently handled by demand destruction, but rather by investment, improvement, and incentive around the supply chain. this is obviously not happening.
there are a few interesting standouts - ELF, AMPS, TSLA, but really it's not worth trying to fight the fed on this one. if you take the bear case pitchfork to 3000-3200, that is still a 20%+ smack from here. I dont see the potential for 20% upside in any of these names, so you're best hiding out in short term paper until things settle down.
for EOY predictions...:
over 3900: 5%
3500-3650: 50%
3000-3200: 40%
under 3000: 5%
what do you think??
while the last inflation report didnt say much was going on with wages, I think this is a semi fake view. there are a ton of job hoppers pushing wages up. the recent amtrak deal suggest workers still have too much bargaining power. those wage hikes will contribute directly to pushing harder on inflation. we're not done yet, and there needs to be a tremendous amount of demand destruction to help jack the unemployment rate up higher and rebalance the leverage workers have against corporate needs.
in future administrations, one might hope they would realize that supply side problems are not gently handled by demand destruction, but rather by investment, improvement, and incentive around the supply chain. this is obviously not happening.
there are a few interesting standouts - ELF, AMPS, TSLA, but really it's not worth trying to fight the fed on this one. if you take the bear case pitchfork to 3000-3200, that is still a 20%+ smack from here. I dont see the potential for 20% upside in any of these names, so you're best hiding out in short term paper until things settle down.
for EOY predictions...:
over 3900: 5%
3500-3650: 50%
3000-3200: 40%
under 3000: 5%
what do you think??
Note
we had a pretty good spike-high reversal intraday today, pumping over 3900 and failing to under 3800. dxy is open to 120 after clearing its previous relative high and could easily account for additional carnage. surprisingly by RSI, we aren't oversold here either.Note
last week we planted an ugly gravestone doji on weekly. still a lot of downside potential to come. some commodities running - wheat, corn, oil all will hinder the fed. possible we see 6-7% fed funds next year. look for vix spike of 50+ or a break ont he lower bound of the trend channel to suggest we are finding a bottom - but we're not there yet.last weeks mini-rally failure (bull trap) broguht many indicators out of the oversold condition, so there is a room for more downside here post cpi later this week. as always, bear rules apply: short rallies, cover on new relative lows.
Note
Noting this rally has legs. Not because things are better, but because the dollar (DXY, UUP) do not look healthy here at all. Im looking for 3800-4000 on spx in the next couple weeks. But dont be fooled: this is a bear market rally, possibly to the upper end of the downtrend channel.Note
we broke into the 3800-4000 range today. futures look ugly due to msft/goog, but it looks limited to tech atm. ill be buying this dip and only blow out if we close under 3800 spx. today we saw a bit of a dollar dip push indexes higher; this thesis is just starting. there is argument for 4100 gap fill though i am not so optimistic. we have still 1-2 weeks of rally left imo.
Note
looks like the amzn/meta/msft (and aapl?) are going to drop us sub 3800 -- meaning it's time to get back ont he short train. should be a quick jaunt back to 3500 or less.Note
well obviously posted that comment too soon as we did not break down under 3800. so looks like we have about 100 points to go, then short train. the very stretchiest would be to 4100 including a gap filll.
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