Using Technical Analysis to Forecast the Near Future of Eight Stock Indices
Nov 1, 2023
With the first 10 months of the year now out of the way, a mere one-sixth of 2023 remains. Considering how absolutely insane this year has been in all arenas (financial, geopolitical, legal, you name it), one can only imagine what the next two months might hold.
Instead of daring to speculate on the dozens of weighty matters already vexing the globe, I will simply focus on an octet of cash index charts along a common theme: the notion that each of them has hammered out a formidable and well-formed topping pattern and that, preposterous as it might seem to mainstream pundits (and flying in the face of endlessly cited bullish seasonality), it is within the realm of possibility that new lows for 2023 could be on hand for at least a few major indexes.
For simplicity's sake, the format of each of the charts below is consistent. Specifically:
Having said all that, let's go through the indexes one by one.
Which is the only one with two drop zones and two areas of resistance (one green, one yellow, the latter of which would be easier to penetrate). The smaller, higher one is, by definition, the high-probability one because it is a less dramatic drop. If the UTIL were to cut beneath this region, it would mean that it had broken a multi-decade trendline, and the index (and the market as a whole) might be in for a truly historic plunge.
Pretty much at the mercy of Nvidia (NVDA) these days.
Range-bound for the past two years but could potentially work its way to its next Fibonacci level lower.
Also prospectively heading to its next lower Fibonacci level as major support:
Considering the federal government’s tendency to bail out markets that are in trouble, it seems highly likely the scenario suggested by all the red rectangles above would compel it, once again, to plunge the nation into trillions of dollars of debt to stave off further drops in equity prices. Japan has been doing that for decades and, oddly, it seems to have worked so far.
When it stops working—and it seems inevitable that it will one day—the potential repercussions are too staggering to consider.
Tim Knight, a charting analyst with 35 years of trading experience, hosts Trading Charts, a tastylive segment airing Monday-Friday. He founded slopeofhope.com in 2005 and uses it as the basis of his technical charting and analysis. Knight authors The Technician column for Luckbox magazine.
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