AssetHawk Technologies

This is an overview to one of the services offered by AssetHawk Technologies. This is purely data driven and analyzed based on the Historical trends of how the US stock market will react to various variables like( Inflation, Interest Hikes, Unemployment,Quantitative Easing/ Tightening, Yield curves)etc., Our clients will get the weekly report, based on the incoming changes in data. These services enable the users to keep up with the changing trends in the US market based on the data analysis and back testing results.

LONG TERM MARKET OUTLOOK

Current Market Analysis:



As per Historical Trends, we are in the Bull Trap Phase as of October 2022. There will be a recovery 3-6 months.


Getting to 6-9 months is June of next year. We have the Return to normal phase as shown in figure . After that, If the incoming data doesn't improve, we will see the fear followed by capitulation in the market.


Plan of action: Long Term Market analysis


Analyzing the data from 1929 there is a huge probability, that one of the below cases will play out.


Case 1: Going to Deep recession

Case 2: Going to Rolling Bear Market


Weekly 50 MA is the major resistance for the market., Current probability, suggests this case to play out. This is like 3 months up and 1 month down.


Current stance : Already Priced in models

  1. Interest rate hikes

  2. Inflation

  3. Cycle is in tightening mode., Economy activity is peaking., Market is close to covid highs given all the uncertainties which is marking the short term bottom.

4. This will give chance for short term bottom and bounce.


Not Yet priced in:


  1. Oil prices will go up

  2. Inflation is spreading to other sectors which will be not easy to take down.

  3. Business activity comes down.

  4. Unemployment goes up.

  5. Earnings comes down.

  6. If this is the bottom, market capitalization has to occur. Which haven’t occurred so far.

  7. Yield curve is about to invert in 6-9 months.


Short-Term Market Outlook

  1. Market is playing the seasonality chart.

  2. Lot of bad news., so far known(Inflation at 8.2%, Rates at 5%) already priced in.,

  3. 5% rate hikes., Inflation is peaked., Rates peaked ., Everything is priced. Market is likely, telling 3500 is the fair price.

4. It will likely retest the low in the coming 2 weeks.

5. As of October 14th 2022, earnings is in progress., so this is the reason for the rebound.,

6. Once earnings completes.,there is a midterm headwind for the market along with the fed rate hike., which will mark the market bottom.


Important dates to watch:

October: 21 st Options Expiration

Prediction: Market will start the down leg from here.

Nov 2nd 2022- Fed Rate HIKE

Prediction: Market will likely bottom(+/-) 2 days.

Nov 8th : MidTerm Elections.

Market already started to go up by this date.


Analyst Overview:


Conclusion: Reposition the portfolio on October 28th or Oct 31st or Nov 1st. In these three days there will be a bottom.


What if the analysis is wrong and shift to bear market?

You will have the hedge do its job.and that is ok.

Portfolio Approach:

  1. To sell the 340/350 puts at 4$.

  2. To take the strikes., 15% apart for the one year time frame.

  3. 994*400= close to 4 lakhs at the above rate.


Important Note: All the Bad news for the Next 6-9 months already priced into the market.So look forward 1 year from the current s&p level.



Strong Hunch: On October 13th., it gave little time to react., for lot of investors.So it will likely, revisit the lows before moving next leg up.


Whether the next low is 348.20 or 340 or 350. Not Sure. We are close to bottom and are likely, seeing the trends for the rebound rally, which will take up-to 420 level in the markets.