31 Oct 2021, 10:08

The stock market continues to move up strongly after a brief pause during the week. The S&P 500 Index is clearly moving along in a channel as shown in the chart. After going through a torrid correction in September, we managed to catch the bottom at the beginning of Oct and we have been riding up this momentum with some stock entries ever since.

As we come to the beginning of November, we project the uptrend to continue as we move inside the channel lines. Most likely, the S&P 500 is heading for the blue channel resistance line. This means, there could be some more room for the bulls to move up. How fast would the resistance be reached? This could come in November as the month is traditionally bullish ahead of the Thanksgiving holiday season whereby retail sales is expected to pick up.

Currently, we still do not see any major signs of a stock market crash. Hence, we are of the opinion that this bull run would most likely continue till the end of this year. However, 2022 could be a different ball-game altogether. Currently, the stock market bull run is flimsy, only upheld by continued stimulus measures from the Federal Reserve.

We will be closely monitoring the inflation rate in US. Currently, it is at the high of 4%. If this continues, the Fed could be forced to taper its stimulus and hike up interest rates. This could be cue for the stock markets to fall like a deck of cards. 

 

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