Jump to content

Equities Q3 2022 Forecast


Recommended Posts

Equities Q3 2022 Forecast: Bearish Momentum Remains Amid Rising Recession Risks

Jul 1, 2022 | DailyFX
Justin McQueen, Strategist

Wall Street: Location, History, and How It Works

Our Q2 forecast for equities had centred around a mentality shift from a “buy the dip bias” to a “sell the rip” with the Federal Reserve and central banks alike in a tightening overdrive to fight inflation pressures. Consequently, with inflation yet to have peaked and the Fed raising interest rates in 75bps increments, the majority of equity markets have fallen into bear market territory, posting one of the worst first half-year returns in history. Using the S&P 500 as a benchmark, at the time of writing the index has fallen over 22% in H1. Only 1962 and 1932 produced worse returns in H1 at -25.7% and -54.1% respectively (Figure 1).

FIGURE 1. S&P 500 H1 RETURNS (1928-2022)

Equities Q3 2022 Forecast: Bearish Momentum Remains Amid Rising Recession Risks

Source: DailyFX, Refinitiv

CAN H2 BE AS BAD AS H1?

Heading into Q3, the bias will remain the same, fade rallies until the Fed pivots away from its extremely hawkish tone. However, with inflation at 8.6% and inflation expectations extremely elevated, a policy put by the Fed is still some distance away. Therefore, momentum will remain with the bears. Keep in mind, as is often the case in bear markets, sharp market rallies are common and get larger the deeper the bear market.

Looking back at the top 10 worst performing H1 returns in the S&P 500 (outside of 2022), H2 has tended to fare better on average as the table below highlights. What’s more, Q3 returns during these years have been pretty good, averaging 7.5%. Using current levels (3800), a 7.5% gain would suggest a move to 4080-4100. Although, should we see recession risks increasingly priced into the market, the S&P 500 risks a move to 3400-3500.

TOP 10 WORST H1 PERFORMANCES IN THE S&P 500

Equities Q3 2022 Forecast: Bearish Momentum Remains Amid Rising Recession Risks

Source: DailyFX, Refinitiv

Link to comment

Equities Q3 2022 Technical Forecast: Rebound then Lower Again

Jul 3, 2022 | DailyFX
Paul Robinson, Strategist

Silence on Wall Street: New York Stock Exchange prepares for all-electronic  trading

At one point last quarter the U.S. stock market was off by about 25%, with all losses coming in the first half of the year. Stocks became oversold with sentiment nose-diving, and on that it appears we are in for a bit of a recovery. However, all that is expected is just that – a recovery rally amidst a broad bear market.

S&P 500

The rally could be sharp and bring back a fair amount of optimism before all is said and done. It will be key for S&P 500 futures to hold onto the recent lows at 3639, and if broken it will need to be a short-lived event, if the recovery outlook is to maintain.

On the top-side, a rally could develop towards 4200, but not likely to exceed it by much given the bigger picture bear market outlook. Countertrend moves can be tricky when trying to play momentum, so taking a pullback approach (buy-the-dip) may be the most prudent way to participate.

S&P 500 WEEKLY CHART

Equities Q3 2022 Technical Forecast: Rebound then Lower Again

Chart created with TradingView

DAX 40

At one point last quarter the German benchmark was holding up much better than its US counterpart, but that outlook quickly changed towards the end of the last leg lower. The DAX is likely to recover, but it could be a bit more sluggish than the US index.

Watch support via the trend-line off the March 2020 low. A firm breakdown below 12965 could have the earlier-year low in play. On the top-side, watch the trend-line off the January peak, and after that resistance clocks in from just over 14700 up to 14925.

DAX 40 WEEKLY CHART

Equities Q3 2022 Technical Forecast: Rebound then Lower Again

Chart created with TradingView

NIKKEI 225

The Nikkei is also looking like it could be on path to a sluggish move higher despite having generally been stronger than the US market. A bounce could have the 200-day at 27754 (& declining) and trend-line off the 2021 high in play as strong, confluent resistance. This could be a spot to look for the Nikkei to roll over. On the downside the March 2020 trend-line is in the area as support, followed by the yearly low at 24681.

NIKKEI 225 WEEKLY CHART

Equities Q3 2022 Technical Forecast: Rebound then Lower Again

Chart created with TradingView

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      23,627
    • Total Posts
      97,022
    • Total Members
      44,188
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    caryeetey
    Joined 05/12/23 18:46
  • Posts

    • This post is majorly for new crypto enthusiasts looking for good exchange to explore however it is also beneficial to those who already have an exchange they are using. Coinmarketcap and Coingecko is one place new users can explore to find out about the ranking of crypto exchanges however one must do other research not to base his/her judgement only on the position the crypto exchange occupies on this platforms. Other factors like user protection fund, proof of reserve and regulatory compliance must be considered before choosing a CEX especially with the evolving regulatory landscape from different countries which have forced some exchanges out of some countries. From the point listed above, Binance and Bitget take the industry lead in protection fund with $1b and $401m respectively and have verifiable Proof of reserve whose public address can be seen and viewed by their users but when it comes to regulatory compliance, Bitget is number 1 as the exchange is operating in most countries where other top cex are not operational. The visit to the respective cex website and mobile app also indicate users interest and popularity of the exchanges. Below is the ranking of top crypto exchanges by weekly visit. The figure below is only for website visit excluding mobile app. It is important to note that this exchanges were not founded the same year hence it's understandable to see clear difference in the number of website visit. HTX and Gateio were founded in 2013, 10 years in the industry. Kucoin, Binance and OKX were founded in 2017 and MEXC, Bitget and Bybit were founded in 2018. The above exchange are all good exchanges for new users to explore. Which of these crypto exchange do you use and why do you choose it over others?
    • Every investors top priority in choosing a crypto exchange is security of their assets. Over the years, many exchanges have come and gone due to varying factors. Some packed up as a result of mismanagement of users funds, others were due to security breaches like hacks and some due to harsh bear market condition but in the midst of this, Bitget continue to shine, soar and expand across board with the latest report seeing the exchange protection fund record a new ATH of over $400M in the month of November. No doubt the month of November was quite good for crypto however Bitget protection fund was around $330M four months ago. Very drastic addition in my opinion, while some exchanges seems to be having different issues like lawsuit, hacks and some even packing up due to bankruptcy, it still beat my imagination what Bitget is doing differently to achieve such significant milestone. What are your thoughts about this development?
    • Considering the impact of Lisk LSK to Defi and web3 and the simplicity it provides for developers to transfer skills more rapidly for the building of dApps. Am confident that the token will highly be sought after. I have deposited some of my LSK on Bitget to share from the Airdrop event to celebrate the listing of the token on the CEX.
×
×
  • Create New...
us