This week we have a stock market forecast for the week of 5/30/21 from our friend Bo Yoder of the Market Forecasting Academy. Be sure to leave a comment and let us know what you think!
The S&P 500 (SPY)
The S&P 500 (analyzed here using SPY) extended the range forward this week, which, as noted, was the most likely scenario.
The inaction this week has “coiled the spring” in the market, and I would expect to see an increase of volatility next week. In terms of a forecast for this week, I can’t make one with confidence as the odds are about 50/50 right now in both directions as the market’s supply/demand forces are balanced right now.
There is little motivation with the indexes, so quiet to add risk this week, and I suspect we will see a bullish whipsaw before any retest of the range lows can occur.
Time to keep my powder dry and wait for one side or the other to commit.
Electronic Arts (EA)
Electronic Arts (EA) was on strict probation this week and managed to form a daily head and shoulders pattern, which means that next week will either make or break this trade.
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Because this “pattern within a pattern” has formed, it allows me to tighten up the stop and reduce the open risk by about half. If the highs at $147 are broken, then I would consider this trade as a failure and would take the loss.
If this stock hasn’t stopped out or shown significant weakness by the end of trading on Friday, you will see me exiting it as a scratch for nonperformance.
Coca-Cola (KO)
Coca-Cola (KO) was in a do-or-die situation last week, and it did nothing to prove that it should remain open. It’s time to scratch the trade and move on. The buying power can be better utilized in some other opportunity.
Gold (GLD)
Gold (analyzed here using GLD) has been outperforming week after week!
That being said, this market is overbought in the short term, so I would expect a correction to begin to form.
Since this is expected, it’s not going to cause any negative emotions when it occurs. It’s also a healthy and NEEDED cycle which will let off some pressure and trigger a new round of bullish interest to enter the market.
The Eurodollar vs The US Dollar
I’m STILL waiting for the EUR/USD currency pair to work out a textbook head and shoulders reversal pattern on its weekly chart. Slowness seems to be a theme as the markets deal with uncertainty from many economic fronts.
Another “tail” on the weekly chart formed this week, and that should bring selling into the market. If the week to come doesn’t produce a clear and significant downward move, then I would take that as a signal to scratch the trade and move on.
If you have been following these forecasts for a while, you will see and feel the cycles as capital is deployed, and then profits and losses are locked as risk is taken off. This cycle flows with the odds for directional movement... So, when you see a few weeks of quiet action and fewer and fewer open positions, you know it’s time to be cautious in the markets.
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Check back to see my next post!
Bo Yoder
Market Forecasting Academy
About Bo Yoder:
Beginning his full-time trading career in 1997, Bo is a professional trader, partner at Market Forecasting Academy, developer of The Myalolipsis Technique, two-time author, and consultant to the financial industry on matters of market analysis and edge optimization.
Bo has been a featured speaker internationally for decades and has developed a reputation for trading live in front of an audience as a real-time example of what it is like to trade for a living.
In addition to his two books for McGraw-Hill, Mastering Futures Trading and Optimize Your Trading Edge (translated into German and Japanese), Bo has written articles published in top publications such as TheStreet.com, Technical Analysis of Stocks & Commodities, Trader’s, Active Trader Magazine and Forbes to name a few.
Bo currently spends his time with his wife and son in the great state of Maine, where he trades, researches behavioral economics & neuropsychology, and is an enthusiastic sailboat racer.
He has an MBA from The Boston University School of Management.
Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation for their opinion.
