Predicting the Stock Market's Next Big Move
NEW YORK (TheGoldAndOilGuy.com) -- The phrase "stock market predictions" represents a very controversial topic and seems to carry a negative or non-credible overtone to most traders, investors and the general public.
We all know you cannot predict the market with 100% certainty, but you can still correctly predict the market more times than not if you do things right.
Keep in mind that the term "market prediction" is also known as a market forecast or technical analysis outlook and is nothing more than an estimate of where the price for a specific investment is likely to move in the coming minutes, hours, days, weeks and even months.
Understanding how to read the dollar index can help in these forecasts, and will make you a better trader when you're trading stocks, exchange-traded funds, options or futures.
Your one-stop shop for 2012 stock recommendations and market predictions.
S&P 500 Stock Market Predictions -- 10 Minute ChartThese charts clearly show the inverse relationship between the stock market and the dollar index. Knowing how to read charts (candle sticks, chart patterns, volume, etc.) is not enough to give you a winning edge. You must also understand intermarket analysis because all markets are linked together in some way and the dollar plays a major role in where stock prices will move next. Review the charts and comments below on how I came up with my stock market prediction and trade idea.
Gold Market Prediction -- 10 Minute ChartsGold is another investment that is directly affected by the price of the dollar. Look at these charts for more details.
Long Term Stock Market ForecastThe weekly dollar chart is very important to watch as a short-term trader and long-term investor because trend changes in the dollar mean your open positions will also likely change direction. So, if we apply technical analysis to the dollar chart as seen below. You will notice we are able to create a market forecast and predict roughly where price is likely to move and how long it should take to get there. If the dollar can break above the red resistance level, then we can expect a rally for four to eight weeks and a price target around the 87-88 level. If this is the case then stocks and commodities would likely do the inverse price action and move lower, sharply lower.
Stock and Gold Market Forecast ConclusionIn short, the next weekly candle stick on the dollar chart could be a game changer for those who are long the overall stock market. I will admit that the current market conditions are not easy to trade because of all the headline news rolling out of Europe each week along with economic data. And I feel as though we have been tiptoeing through a mine field for the past 12-plus months, waiting for extremely negative news or extremely positive news to trigger a wave of buying or selling -- enough to make our jaws drop -- but it has yet to happen. Remember, always use stops and don't get over committed in a headline-driven market. If you would like to receive my free weekly analysis, be sure to opt-in to my list: www.GoldAndOilGuy.com. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV