9 Monster Stock Market Predictions: With Rallies' Highs In, Reversal May Be Next
Michael Kramer | Mar 28, 2022 12:43AM ET
It will be a critical week for stocks after two weeks of gains. The S&P 500 finished Friday in an exciting spot and at more than one inflection point. It could mark the start of a much bigger run higher to the mid-4600s or the beginning of the next leg down, which will likely result in a new low.
This past week, the S&P 500 traveled right back to the bottom of the rising megaphone pattern that started in the spring of 2021, which also connects with a horizontal line to the September highs. It looks like a retest of significant resistance.
That closing price on the S&P 500 also hits the 61.8% retracement level from the January peak to the February Intraday low. That evidence is reason enough to consider that the rallies’ highs may be in, and a reversal is here.
It is also worth noting that the NASDAQ Composite flashed a hanging man on Friday, which can be a bearish reversal candle.
But more critically, a bond proxy like the iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG), which typically trades highly correlated to the S&P 500, started to head lower again. That ETF finished the week down almost 1%.
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The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:LQD) finished the week down more than 2%.
The iShares TIPS Bond ETF (NYSE:TIP) also fell by 1.4% this week. When this ETF falls, it is indicative of real rates rising. So it’s no wonder why the Invesco QQQ Trust ETF (NASDAQ:QQQ) has followed the TIP ETF so closely over the past year.
The recent rally in the QQQ could have the NASDAQ playing catch up to falling real yields. But now that real yields are again starting to rise, that likely means the NASDAQ will need to reverse lower.
Amazon.com (NASDAQ:AMZN) couldn’t push beyond that $3,300 level I mentioned last week. On top of that, the long-term trend in the RSI is pretty negative. If Amazon turned lower at this point, it should not come as a surprise.
It would be something if ACADIA Pharmaceuticals (NASDAQ:ACAD) could clear resistance at $27 and push back to $30. I am hopeful this stock has finally turned the corner, and I think it is a big positive that the FDA is finally giving Nuplazid its chance in front of an Adcom panel for Alzheimer’s disease psychosis. It feels like a never-ending saga with Acadia, and maybe I’m getting my hopes up, but the chart is starting to look positive.
Higher copper prices could help keep Freeport-McMoran Copper & Gold (NYSE:FCX) moving higher, as the shares have the potential to climb back to $56.85, a price not seen since before the financial crisis.
Meanwhile, Adobe Systems (NASDAQ:ADBE) flirts with support at $420; it would be great if this stock could flush lower already. It would probably set up a long-term buying opportunity if it can get back to or below that February 2020 level. That valuation would be right at or near its historical trends.
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