Forecast Friday 📈
4Lights Forecasts: SP500 ▲+1.4% | BTC ▲+4.9% | 10Yr Yld ▼-0.1% | VIX ▲+1.4% | Gold ▼-0.8%
The S&P500 managed to close higher in August. I think most people (and my forecast model) are pretty surprised by the incredible turnaround. The model is pretty confident that the market will increase over the next 15 trading days. However, we’re back to being heavily over-bought across nearly all market sectors. The market is already pricing in some amount of rate cuts because it seems convinced that the Fed has won the war on inflation, which continues to moderate.
Bitcoin might be on the verge of a pretty big move, according to the model. It’s not very confident, however. Looking at the chart, and I it keeps trying to break through recent highs, but doesn’t quite get there. There’s a pretty clear downward channel forming. TradingView is pretty bearish on BTC.
The 10-Year Treasury Yield definitely appears to be in a down trend. The model has pretty high confidence that yields will fall further. The 30 year mortgage has now been below 6.5% since the end of July, which is great for home buyers.
The VIX Volatility Index reached historically high levels early in August. It was definitely an “oh shit” moment in markets, but the index has eased. Other measures of financial “stress” are much lower now, as well.
Gold 🪙 looks taking a pause for the short-term. With inflation cooling, one of the main cases for gold seems to be fading. However, there is still a lot of conflict in the world, which gold believers point to as a bullish case (Costco is still selling out of their gold).
Note: This is for informational purposes only and is not intended to be personal financial advice; be cautious — there is always risk involved with financial decisions!