The last
trading week of October deliver more negative tunes as S&P 500 broad market
index erased most of its gains by the end of the week. Disappointing Q3 earnings
for Amazon, Meta, Microsoft and Apple pushed the High Tech Nasdaq100 index down
by 2.5%.
Negative
results of the Big Techs came as major disappointment of this week, while the
second one came from the European Central Bank (ECB) after its President
Christine Lagarde said that the ECB sees a looming recession, while making
another interest rates hike by 75 basis points to 1.5-2.25%. Lagarde consistently
declined to acknowledge recession risk before. So, something extraordinary has happened
for such statements to be publicly delivered. Maybe it is recent PMI that
demonstrated production and service sectors to look down towards recession.
Maybe it’s another trick in order to supports stock markets, to convince that
central banks may change their monetary policy soon. However, any disputed
about of U-turn in monetary policy are seen out of reality amid inflation of
9.9% and targets at 2.0%.
Strong Q3
2022 GDP data in the United States at 2.6% year-on-year have ended two consecutive
declines in the first and second quarter of this year. This could be a reason
for complacency, but it is not as the Federal Reserve (Fed) would certainly use
these data to justify another jumbo rate hike. Hopefully, the Fed won’t use the
GDP data to claim the victory over inflation that is currently at 8.2%.
Otherwise, it may lead to a downturn of the U.S, economy and, eventually, to
the collapse of the global one.
The S&P
500 index hit primary targets of the aggressive upside formation at 3850-3950
points, and is rolling back now. There are more upside targets at 4100-4200
points to reach. But it would strongly depend on the Fed meeting results next
week. Downside targets are far below at 2000-2200 points.
Oil market
is heavily dependent on geopolitics. OPEC+ clash with the United States pushed prices
above $90 per barrel of Brent crude benchmark, and they are likely to hook
above this level. Any downside to $88-90 level are likely to happen after the
election in the United States on November 8. So, aggressive downside scenario
with primary target at $75-85 per barrel is intact. Long-term expectations that
suggest Brent crude prices to dive towards $50-65 per barrel should be rescheduled
to the end of January 2023.
Gold prices
down slide has exhausted this week. It may resume later on. So far the strong
support is seen at $1620-1630 per troy ounce. However, the period of the downside
correction seems to be over for now. So, investors may consider closing their
short positions for now.
Money
market continues to experience elevated volatility. So, any short-term signals
are unreliable. GBPUSD has hit is primary upside target at 1.16500. So, long
positions opened at 1.11500-1.12000 should be closed. The pressure on EURUSD is
still on. Traders are better to wait for October closing to consider other
trades.