Analisis Forex & Kajian: 17.10.2022 - Oversold in the stock market...

17.10.2022 04:29 PM

Oversold in the stock market could be a catalyst for its growth at the end of the year

The oversold stock market could be a catalyst for its growth at the end of the year. This is exactly the opinion Morgan Stanley came to after they released their long-term bearish forecast. It states that US stocks are ripe for short-term growth without an official recession. Suppose the reporting season turns out to be better than expected. In that case, it will provoke a rebound of many indices, especially NASDAQ and S&P, which showed a 25% decline this year, testing a serious level of support around the 200–week moving average.

Pay attention to the fact that recently, after updating the ready-made lows, the index has rebounded upwards, which indicates that the market is in a state of oversold, which begins to arouse gradual interest among investors, which can become a catalyst for a moderate rally until the end of the year.

However, do not forget that inflation remains a problem until the opposite is proven. The disappointing earnings of companies that we will learn about in the near future, especially from consumer-oriented companies, may provoke another difficult period for the stock market to bring it completely to a deplorable state. Do not forget about the aggravation of the geopolitical situation.

Premarket

Bank of America – shares jumped 3.1% in premarket trading after beating economists' estimates, and the third-quarter earnings report was pretty good. The results were improved by increasing net interest income.

Another bank, Bank of NY Mellon, and its securities rose 4.4% in the premarket after better-than-expected third-quarter results. Net interest income for the quarter increased by 44% compared to last year.

Apple securities gained 1.4% in the premarket amid the fact that Morgan Stanley called the company the "best choice" for its ability to withstand the economic downturn.

As for Meta, as noted in news sources, according to internal documents, the company is not achieving its goals for its flagship metaverse product, "Horizon Worlds." The product has fewer than 200,000 monthly active users, compared to the original goal of 500,000 by the end of this year and the revised year-end goal of 280,000. Despite this, the shares rose 1.6% in the premarket.

In a significant reorganization, Goldman plans to merge its various divisions into three divisions. Investment banking and trading operations will be located in one division, asset and capital management in another, and transactional banking in the third. Goldman gained 1% in the premarket.

Splunk rose 9.1% in premarket trading after the Wall Street Journal reported that activist investor Starboard Value owns under 5% of the software company's shares.

BP is trading at $26 per share and is up 2.2%.

Credit Suisse shares gained 3.2% in premarket trading after the Financial Times reported that the company is ready to sell part of its Swiss bank to raise capital.

As for the technical picture of the S&P500, after the index declines against the background of a weak retail sales report on Friday, traders are now full of optimism again. Purchases at the current lows of the index are more than attractive. Now trading is above $3,661, which creates good prerequisites for further growth of the trading instrument in the area of $3,699. The bulls will expect a breakdown of this level at the beginning of the regular session. Only a break above will strengthen the hope for an upward correction with an exit to the resistance of $3,735. The farthest target will be the $3,773 area. In a downward movement, buyers are simply obliged to declare themselves in the area of $3,661. However, a breakdown of this range will quickly push the trading instrument to $3,621 and open up the possibility of updating support and $3,579 – a new annual minimum for the index.

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