This downward spiral is exacerbated by the formidable macroeconomic challenges marked by the ascent of Treasury yields, ‘higher for longer’ interest rates, and concerning economic data emanating from Europe, hinting at the looming specter of recession.
The S&P 500 index bore the brunt, witnessing a harrowing 6% drop from its recent peaks.
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In light of these events, respected stock investor and analyst Puru Saxena offered his thoughts on the late developments and predicted the market’s path ahead for the remainder of 2023 and into 2024.
Analyst outlines stock market’s trajectory
In his post on October 28, Saxena gave insights into the stock market’s potential trajectory, drawing from historical data on the performance of the S&P 500 benchmark index during both bear and bull markets.
Based on different technical indicators, including the Relative Strength Index (RSI), there is more room for US stocks to decline following the latest sell-off, with the green lines indicating oversold territory.
These zones represent areas to “set up [a] relief rally,” said Saxena. This rebound will likely last for several weeks before the bear market continues, he added
Then, as the bears take control, it will take a while before the market forms a bottom sometime in 2024, according to his’s predictions.
In summary, the ongoing pressure on the S&P 500 is expected to persist, with a potential for the index to enter oversold territory. When it reaches this point, there is a likelihood of a relief rally as bullish sentiment returns, and this rebound is anticipated to occur in the final weeks of 2023.
Nonetheless, according to Saxena’s prediction, this rally is expected to be temporary, and the broader bear market is anticipated to extend into 2024 until a clear bottom is established.
Nasdaq Composite mimicking dot-com bubble chart patterns
Meanwhile, the Nasdaq Composite (NASX) – a stock market index that represents the performance of all the common stocks listed on the Nasdaq stock exchange – has been mimicking quite similar movements to the ones seen more than 20 years ago, during the dot-com bubble market crash.
Although the similarities in chart patterns are no clear indication that history will repeat itself, it is nonetheless an interesting sight, particularly when taking into consideration that it is happening during a tough period for the global economy.
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