New forecasts for S&P 500 index and Bitcoin
14th March 2023 07:48
by Alistair Strang from Trends and Targets
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SVB's collapse triggered some wild movements on global financial markets, but where will they be when the music stops? Independent analyst Alistair Strang publishes his latest predictions.
Judging by the media, the world is going to hell due to a US bank failing. Markets across Europe appear to be taking tabloid headlines as “gospel” whereas in the US, where Silicon Valley Bank hails from, the markets appeared fairly relaxed and enjoyed a pretty typical Monday. HSBC Holdings (LSE:HSBA) even took the time to buy SVB Financial Group (NASDAQ:SIVB)'s UK arm for a whole pound!
The burning question now, did we just see the first warning for severe turbulence ahead on the markets?
We’re not sure, is the inevitable answer, but suspect the response should be 'no'.
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On Monday, Wall Street needed to close below 31,760 points to enter a cycle which calculates with the potential of a further 1,000 point drop, perhaps even 2,000 points. Instead, some fancy manoeuvres in the closing stages of the day saw the index close the session at 31,819 points, still a resident of what passes for safety on the market and down by -0.28%.
Around 7.30pm UK time, it was almost like a grown-up had noticed what was about to happen and yanked a metaphorical handbrake. This behaviour makes us suspect Armageddon may not yet be waiting, especially as the FTSE 100 managed reversal of -2.6% on the day.
And then, there is the S&P 500.
Similar to the Dow Jones, the market for the S&P didn’t close Monday in dreadful territory, finishing the day ‘only’ down by 0.15%. It didn’t even achieve the accolade of a lower low, yet the German Dax successfully trashed itself by 3% for Monday.
If we remain expectant of the worst yet to come, it is certainly the case that should the S&P 500 wander below 3,855 points, reversal to an initial 3,746 is probable with secondary, if broken, at a dangerous 3,585 points.
The use of the word dangerous is allowed due to the index breaking below the uptrend since the 2020 pandemic low, finding itself exploring a zone where 2,686 calculates as providing an eventual bottom potential.
For a chance of surprise gains, the S&P needs to resurrect itself above 3,967 points, hopefully capable of triggering movement to 4,060 with secondary, if beaten, at 4,228 points. This secondary is quite a big deal, restoring the index to Big Picture territory and a probable cycle uphill to 4,725 eventually.
Source: Trends and Targets. Past performance is not a guide to future performance.
And finally, there is the Bitcoin.
Monday was strange for the cryptocurrency, price movements proving a little ridiculous as we were being forced to regard the currency as ‘defensive’, irrational surges upward in a similar manner to that which happens with gold when stock markets are enjoying a grotty day.
Quite how anyone could regard the value of Bitcoin or gold as defensive when share prices are going a little mad, should call into question the sanity of who’s making the statement. Around the world, there are still plenty of people ‘walking funny’ due to Bitcoin variations, making us question what will happen with Bitcoin if it is decided the second-largest banking collapse in US history is a little blot on the landscape, just capitalism doing its thing to paraphrase the US president.
Certainly, if Bitcoin manages to stumble below $22,450, it could now very easily tumble down to $17,498 with secondary, if broken, at $15,000 and hopefully a bounce.
Source: Trends and Targets. Past performance is not a guide to future performance.
We’re failing to yield to the temptation of optimism from Monday's movements as the cryptocurrency needed to close the session above 24,600 to achieve a realistic ‘higher high’. In such a scenario, we’d be forced to concede an initial target of 27,080 with secondary, if bettered, at 28,030 points.
These numbers could prove transformative for the crypto, ticking the first of a series of boxes which allow an eventual visit to 46,900 USD and some hesitation.
For now, it feels like the world shall come to terms with the SVB collapse and we’d warn Bitcoin may face a bit of a thumping due to this.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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