April 2021 monthly update

Today, like every first of the month, the monthly forecast has been brewed by r.Virgeel. The monthly forecast looks into the future for 24 bars, two years from now! and has demonstrated in the past to have a particularly happy touch. Obviously, I cannot make the forecast public, for respect of the paying subscribers, but I want to share a couple of interesting numbers.

First, beware the area 3780/820: if the S&P 500 crosses these levels making a monthly close below, we might be in a long term reversal. Very dangerous and not much probable.

Then, I want to share a valuable number: just to put under pressure r.Virgeel’s skills, it is forecasting a yearly close at 4350. Forecasts is always a risky business, so I take my risk.

Take note. It’s nine months in advance. As the model is adaptive and responsive, this end-of-the-year target may change in the future and I will keep you informed.

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Big changes at the horizon

Bears are excited! Finally the market has moved and moved downward, as it often happens after a long choppy flag. We have to consider the movement to come as a run-up (down!) that comes before the market going to new highs. It may be scary and even some panic may rise, but it will take few weeks to reverse.

The model is suggesting that in 4 to 5 weeks the correction will exhaust its energy and a new positive wave will rise to new highs. Target may be very low, with even a 7% loss from current price, or a more realistic 4 to 5%.

Investors in the euro area may have a sort of parachute from the eur/usd exchange.


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Some turbulence ahead

In few days the sentiment has collapsed: now 2 out of three are bearish and this is really a nice bullish news. We are going out of the long choppy flag and rising volatility will be the main trait of coming times. Up and down for a while, with a upward bias and a lot of fear around.

Don’t be part of the herd, otherwise you may only lose: either you trade intraday or you invest for long time perspective, the advice of the model is to privilege the long entries and be very very careful with shorts. Consider the drops as good entry points for long accumulation and be patient. For euro based investors, time is even better: the rise in S&P 500 should combine with lower EURUSD rates, multiplying the gains.


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A glance into deep future

My monthly forecast goes ahead 24 months (2 full years) from the present, and shows what path is the market price following. Some of my readers ask to have an indication, an insight, a suggestion and today I want to share some of the valuable information produced from the monthly model.

First, there is no doubt that the market is heading higher.  Will it go straight and direct to its targets? Obviously not, so any correction must be considered as a buying opportunity, exactly as it is happening in these days.

Then, how much higher is the market going? Believe it or not (and I’m sure you will NOT believe me),  the model is projecting the market around 2700 in 12 months. It is more than a 23% rise from now and I can see your disgust and your incredulity, you that are trying to short it every time your stochastic is overbought and turning.

Is that the final target or the highest level that the model sees? No.

Is there a possibility that the model is wrong and that market crashes with violence? Yes, of course. The possibility of an exceptional event or some totally unexpected occurrences (flying donkeys, aliens invasions and similars) is always there and may condition deeply the market, but…

Also, do not forget that my forecasts are adaptive and responsive, meaning that they change digesting the market behavior and updating the experiences as market develops.

Why the market is going to move this way? The model does not explain why and does not even try to guess, it does not need to know WHY, when it can detect HOW the market will move, in advance. Having a model of how the market will move in advance, your behaviour as investors or traders in so much simpler!



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Apocalypse Now!

The market has undoubtly taken the upside, and a strong and vigorous sprout is blooming. It will take time, but it will flower. When I say the market here I refer to the S&P 500 index and the index is booming. It’s like looking at a rocket launch: few seconds after the start it is at few dozens meters from the ground, pushing madly. Can you imagine in that moment where the satellite will be in a few minutes, hundreds of kilometres away?

Where will the market be in 4, 10 weeks? and in 12 months? Let me think… higher?

What I can say now is that the growth will be incredible! We are looking at a large scale common interest in parking money in dollars and this shifts part of this money into the market. A self breeding device has been activated: more value, more people interested, more money, index rises and next Christmas you will be eating your hat because you did not buy in July, afraid of any news and ticks. As the dollar evaluates, more money will be attracted into the US stock market, seen as more solid than government bonds. If FED hikes, more money into the dollar and toward US markets. If FED lowers, well, you know, market booms.

Uncertainty in Europe will push money into dollar. as well. Market will get mad. We will be stoned , I promise. Imagine the S&P 500 at 2400:  all the financial world would enter climax; then after few months we will arrive at 2600 and then 2700. Time for  Apocalypse, a world wide progression will flood the market with money: rising dollar + rising market = 2 gains with one shot. With the index at 3000 madness will rule. A vision from Bosch:1024px-Mad_meg

Someone will say: “This time is different” and this will induce us to open the most fantastic short of our lives.

The appreciation of the dollar will be crucial. Probably the dollar may sustain a 20% evaluation against euro or yen, but beyond that level an internal recession may be critical. A dollar too strong will push US economy in recession, with the rest of the world in a very fragile configuration.



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Big Bear Chase still open

The area 2060/70 is a strong resistance that will produce some turbulence, but probabilities are still on the side of a rising index, supported by all the barking bears around, by all the uncertainty and by the  weakness of the euro. A short phase of consolidation is not rare at this stage of the rise, something that may last one or two weekly bars, where some more bears traps will be set to work.

Acquisizione a schermo intero 23032016 115455The Elliott Wave analysis (AdvGet) confirms that the upward move is unfolding as forecasted, even if targets are slightly different from those previewed by the model. What we are looking at is – with much probabilities – the first wave of a new cycle: it will go for new highs in the 2180 area.

Posted by Luca in elliott's soup, forecasts, free