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🔥 Has Inflation Peaked? A Century Old Trend Suggests YesWith inflation rising, the FED is applying quantitative tightening to the US market and the Dollar, which has caused chaos in the market of 2022. The market fears that the FED is not doing enough to combat this inflation, which will cause higher inflation, which will eventually cause further chaos in the markets. However, looking at the chart it seems that inflation is currently at a massive "resistance" which has developed over the last 100 years or so. If inflation were to adhere to the trend, we can assume that inflation has peaked and will move down from here onwards, which would result in much better (bullish) market conditions. I'm aware that applying TA on fundamental data like inflation is generally speculative at best. I think that inflation will rise further as long as the FED is unable (or unwilling) to rise the interest rates further. Nevertheless, I think this analysis can shed a different light on on the most important piece of data of 2022. Time will tell. Do you think think inflation has peaked? Share your thoughts in the comments.
ECONOMICS:USIRYY
by FieryTrading
20
Here's Why the Tech-Led Selloff is Likely Over (for now)In this post, I will attempt to provide evidence to show why the tech-led selloff is likely to be over (for now). I will use the Nasdaq 100 (QQQ) and its inverse derivative, SQQQ, as my argument's basis. The inverse (short) ETF of the Nasdaq, SQQQ, has never closed a weekly candle above the Leading Span B of the Ichimoku Cloud (pink line in chart). Last week and the previous week, the weekly candle was very strongly resisted at this level. Now, the weekly and monthly momentum oscillators started to move in the opposite direction. This will not only make it much harder for SQQQ to pierce the line, but it could also result in SQQQ plummeting quickly, and therefore QQQ and the Nasdaq rebounding quickly. For comparison, many data points are covered in this chart, and there is a high statistical probability that the Nasdaq has bottomed. Not even during the peak fear of COVID-19, when the global economy shut down and governments feared millions of deaths, did SQQQ pierce the weekly Ichimoku Cloud. In December 2018 when the Fed was starting to rapidly roll off assets on its balance sheet and was raising interest rates, SQQQ still did not pierce the cloud. This fear is very similar to today's fear. Even further back, not even during the major flash crash in 2015 or on Black Monday in 2011 when the market crashed did SQQQ pierce the cloud. Today, hardly anyone remembers these episodes in stock market history. Similarly, in ten years or so, few people (except maybe those who sold all their positions at the market bottom) will remember what happened in May 2022. The NDTH is a chart of the percentage of Nasdaq 100 stocks that are above their 200-day moving average. It dropped to nearly 10 in May 2022, meaning almost 90% of Nasdaq 100 stocks were below their 200-day moving average. The last time this level was reached was in March 2020 right at the bottom of the COVID market crash. The NDTH has never dropped below 15 except during significant bottoms on the Nasdaq. There are many other examples in which the charts suggest, with high probability data, that we just experienced a significant bottom on the Nasdaq 100. (Eg. The Nasdaq 100 was supported on the monthly base line, the monthly candle is extremely bullish, the monthly EMA ribbon of the QQQ/SPY ratio chart strongly held the outperformance trend in place, inflation and interest rate charts are cooling. Although this may be a significant bottom, it does not mean a years-long bull span is ahead. Rather the charts suggest the panic selling has ended for at least the short to intermediate-term. To be fair, some charts suggest that the QQQ/SPY outperformance trend could be nearing the end of its decades-long run. (Credit to @Breakout_Charts for identifying this) If this occurs, then it could be the start of a new cycle, or even super cycle, whereby the Nasdaq underperforms for years. Finally, a point about market psychology. Bottoms occur when 'extreme fear' turns into just 'fear' (yes, there's actually an indicator that measures this). That indicator has moved significantly from 'extreme fear' towards 'fear'. With this said, there might be a lot of people who might comment on this post and say scary-sounding things about the state of the economy or stock market. If none of these fears existed among market participants, we would never even have gotten to this bottom. Never sell because of fear alone. Not financial advice. As always anything can happen. Just my thoughts. Leave a like if this was helpful and you'd like me to post more analyses. Please feel free to comment below if you have additional thoughts.
NASDAQ:SQQQEducation
by SpyMasterTrades
5
5 Years of the Yield Curve 2018 - Flattening curve throughout the year with some slight inversion towards the end. 2019 - Complete inversion early in the year lasting awhile. Entire curve beginning to fall. 2020 - COVID Fed response slams the short end to the ground with the longer end having a pretty muted reaction. 2021 - Curve starts to stretch with short rates being extremely low and long rates showing pretty strong upside. 2021 - So far, the short rates have become unhooked from the 0 line and launched towards long rates. The curve has inverted again and there are no signs of slowing on the short end.
TVC:US01Y
by Seth-Goldberg
🔥 Bitcoin: Fundamental & Technical Analysis Signaling BullishIn today's analysis I want to give a comprehensive analysis on why I think that we're about to see a mini bull-run in the coming weeks. It's going to be a longer than usual read, but it will be worth your time 😊. Contents: 1) FED Interest rate hike on 04-05-22 & BTC bear-flag 2) SP500 3) DXY (dollar index) 4) VIX (SP500 volatility index) 5) Concluding remarks 1) FED Interest rate hike on 04-05-22 Tomorrow, the FED will announce the new interest rate. The expectation is that they're going to hike the rates by 0.5%. The FED has been signaling this hike for the last couple of weeks, so I'm expecting the FED to keep their word on it. There's currently a lot of fear in the markets, so if the FED decides to hike more than expected we can expect a strong sell-off. This contradicts the FED's "soft-landing policy", hence I'm expecting they won't deviate from the +0.5% hike. The last time the FED hiked the rates was at 15-03. Back then there was also a lot of fear in the markets, but the fact that the FED has kept their word led to a big run-up in both stocks and crypto for several weeks. During periods of high fear (like now), neutral news = good news = bullish price action. Lastly, BTC is trading near a very important support at the moment. The fact that we haven't fallen through yet means that the market is still indecisive of the near-term trend. If the FED news will be positive we can expect the support to hold, leading to further continuation of the pattern. 2) SP500 After the initial March run-up, the SP500 has given back all gains made during that time. Reason behind this fall is a further deterioration of the market outlook in the long-term due to rising interest rates and inflation. In the picture below you can see that the last rate hike on 15-03 has led to a huge bullish move. During the current sell-off, the price got slightly below the support area. This fake break-out has now trapped many bears who were eagerly waiting for the price to fall through the support area. If the price keeps rising, said bears will have to cover theirs shorts, leading to further bullish pressure. 3) DXY (dollar index) A lot of analysist (me included) have been talking about the DXY recently, so I'll keep it brief. A bullish dollar means that investors are flocking to safety, which leads to bearish pressure on risky assets like BTC and tech-stocks. At the moment, the DXY is severely overbought on the weekly chart. Furthermore, the DXY is trading inside a strong 5-year resistance area. See the chart below. Personally, I think that we're long overdue to some sort of correction and that we need some weeks to cool-off. This will be bullish news for risky assets like BTC. 4) VIX (SP500 volatility index) The last chart of the day will be the VIX. The VIX measures the volatility in the SP500 index. A rising VIX usually means bearish price action. If you're unsure what the VIX is and how to analyze it I'd advice you to take a look at my analysis below where I talk about how to time Bitcoin bottoms with the VIX. If we take a look at the current value of the VIX you can clearly see that we're (again) trading in a very important area of resistance, see picture below. The area between 35-40 has been an area of reversal for the last couple of years, so chances are that this area will hold and that the VIX will see some kind of reversal. A bearish VIX is bullish for stocks and therefore for crypto. 5) Concluding remarks In the long-term, I'm still bearish until proven otherwise. In previous analyses I wrote that I still expect one more capitulation below $30k before we can safely assume that the Bitcoin bottom is in. However, that doesn't mean that we can't have another 2-4 green weeks. I doubt whether this will be the moment that we're going to $50k, but in the end no one knows. Don't use this analysis to go make bullish entries already. Wait for the market to react to the FED rates and adjust your game-plan.
INDEX:BTCUSDLong
by FieryTrading
9
EuroDollar Futures CurveThe EuroDollar futures market is pricing in rate hikes as seen by the upward slope on the left, but the peak of the curve (contracts which expire in June and September of 2023) suggests that investors believe rates will reach their high and then go down after that and keep going down well into the foreseeable future. This is an ominous sign that the Federal Reserve, and likely central banks all over the world, will be forced to abandon their current monetary policy tightening cycles and go back to near zero or zero rates once again (and likely quantitative easing of an unprecedented magnitude as well. $200B per month in treasuries?). Bottom line, the downward slope in yield marks the approximate time of the next recession, according to the bets that are currently on the table. As always, anything can happen and opinions can change. Buy the dip < Sell the rip
G
by The_Arena_Trader
9
The #1 Chart to WatchLadies and Gentlemen, please take your seats. (...the music stops) Okay, thanks for playing. Good luck to all of you! The investment strategies that have worked for the last 40 years will no longer work. The true bear market is here. This will absolutely 100% NOT be a recession that will be forgotten easily. It most likely will be a depression via stagflation which we have never really experienced long-term. Our leaders won't admit it but *News Flash* the Supply Chains are NOT getting fixed like they were before. China has no incentive or interest to fix them and we are the world's biggest debtor. We got 20% of all our imports from them in 2021. That doesn't sound like a lot but that 20% is involved in the supply chains of 70-80% of our goods. The Chinese gov has already warned its people of the incoming food shortage and have been far more honest with their people than our Western leaders have been. Good luck in the New World Order! Courtesy of the World Gov. Summit 2022, the IMF, World Bank, etc. (Not Financial Advice, Just what I see.)
TVC:US10YLong
by MonetaryRebel
1
🔥 Bitcoin & The Federal Funds Rate: An Easy ExplanationEver since the FED has been talking about interest rates, I see questions popping up on social media where investors ask why the federal funds rate (also known as the FED interest rate) is so important for the stock and crypto markets. With this post I'd like to write an easy understandable explanation on what the FED funds rate is and why it is important. What is the FED funds rate? The FED funds rate is the interest rate set by the FOMC (the committee of the FED). This interest rate targets the rate at which commercial banks in the USA can lend and borrow excess money to each other. Higher rates means it's more expensive to borrow money for banks, lower rates make it cheaper. Why is it so important? The FOMC changes the rate in order to control inflation. Higher rates reduce the money supply because money is more expensive to get (borrow), whilst lower rates increase the money supply because it encourages spending. The latter has happened during the 2008 Financial crisis and the more recent Corona crisis. Encouraging people to spend money generally helps the economy. Rule of thumb: if the economy is in good shape, higher interest rates are needed to control inflation. If the economy is in bad shape, lower interest rates will encourage people to spend and can help turn things around. Should I be afraid of it? Generally, no. As seen on the BTC chart above, the only time that the FED has increased the rates it did not have a bearish effect on BTC. However, this was done during a period of lower inflation than we currently have. To combat the current inflation rates, the FED needs to increase the rate at a much faster and higher rate than what we have seen in the past 30 years. During the 1980's the interest rate was set to 20% in order to combat strong inflation, I'd argue the FED has to do that as well if they don't raise the raids much faster this year. The imposed rate hikes of 0.25% every meeting are not enough to reduce the 10% year-over-year inflation. In case the FED decides to raise the rates with big steps (>1% per meeting), this can definitely have a huge impact on the stock- and crypto-markets. It will become much more expensive for banks to borrow (and invest) money since money will become more scarce. There's no immediate danger for the markets. However, if inflation spirals out of control because the FED decides not to act (keep the rates low), they'd have to increase the rates much higher and quicker than everyone anticipates, which will trigger a big sell-off in the markets. In my view, this will be the start of the next crypto bear-market. The FED interest rates are most definitely an interesting, but also difficult topic. If you think that I've skipped an important part, please share your knowledge in the comment section. The more people know about it, the better.
Editors' picks
INDEX:BTCUSD
by FieryTrading
88
TLT BreakThe iShares 20+ Year Treasury Bond ETF (TLT) tracks an index composed of U.S. Treasury bonds with maturities greater than twenty years. The price of TLT goes down as interest on 20+ year U.S. treasuries goes up. High inflation is driving interest rates ever higher . If inflation does not slow soon, a decades-long trend could end, as this chart is warning. The monthly exponential moving average (EMA) ribbons have experienced their worse violation in the fund's 20 year history. Typically the monthly EMA ribbons act as very strong long term support. The lower 55 month EMA band can act as a low risk to reward long entry. The price at which the monthly candle closes is determinative. Fortunately, there is roughly an 80% chance that the 20-year bull trend in the price of TLT will hold in March 2022. (This probability comes from the standard deviation from the monthly mean). So for now, at least, the trend is likely to continue. However, the chart suggests that the decades-long trend is dangerously close to breaking.
NASDAQ:TLT
by SpyMasterTrades
4
BTC Update W1 ChartBitcoin has been showing big volatility last two month becuase of FED interest speculation and Russia vs Ukraine crisis. But weekly chart still bullish and indicates BTC can have a big rally in next 12-16 weeks. RSI showing bullish divergence, MACD showing low sell pressure like June 20221 and stock RSI indicate market can give bounce with short term noise. First resistance on W1 chart is $45k then $53k while support is at $36k and $29k. Try to understand chart and trade between the lines. Major events: Russia/Ukraine and FED interest speculation. Trade safely :)
Long
by sebastianjohansen
MSFT Put And Call Options Investors in Microsoft Corporation (Symbol: MSFT) saw new options begin trading this week, for the October 21st expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 245 days until expiration the newly trading contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the MSFT options chain for the new October 21st contracts and identified one put and one call contract of particular interest. The put contract at the $280.00 strike price has a current bid of $22.40. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $280.00, but will also collect the premium, putting the cost basis of the shares at $257.60 (before broker commissions). To an investor already interested in purchasing shares of MSFT, that could represent an attractive alternative to paying $289.44/share today.
NASDAQ:MSFTLong
by Chelsea24815
Real Estate Is Rolling OverToday we are taking a look at the Case Shiller Home Index on a year-over-year chart as well as a price chart and using basic, long-term technicals to identify issues and opportunities. I believe we are heading into a recession over the next few years but we will have to see what crazy government program is created to fight that recession that maybe boosts housing back up. Don't forget in 2009 they were printing a ton of money and it didn't save the housing market. I believe home prices on a national level will fall between 25-30% by July 2025 and July 2026. This will depend on if we get UBI, a war, or major hikes in interest rates to fight inflation. Although, I don't believe the FED can hike rates too high because we can't afford the interest on the debt then due to the short-term rollovers. Overall, I am bullish on cash flow real estate in growing areas with growing incomes that have freedom in mind. These areas are experiencing growth at a high rate but some of them are getting overheated. On a national level, I expect this all to play out over 3.5-5 years. Make sure you comment below. Argue your points with others, like, follow, and watch an ad if one pops up to support free information. It only costs you a few seconds.
ECONOMICS:USCSHPIYYLong
by DefyingFinance
Inflation, bond yields, the dollar and the Fed! Macro series pt1Part 1 Hello everyone! It's been a few weeks since my last update on the markets, and this one is going to be a very special one. Will go through many different aspects of most major markets, by using both technical and fundamental analysis. It will be an in-depth analysis with lots of charts of several instruments, that have the potential to give us a clear picture of where we are and what is going right now in the global landscape. Because there are so many things I'd like to mention, I've broken the analysis down in different parts, all of which you will be able to find on the links down below. The first and most important pieces of the puzzle are the US Dollar and interest rates, as together they are one of the largest components in essentially every market as they partially determine the liquidity and demand, by ‘setting a price for money’. In 2020 many forecasters predicted that the value of the dollar would collapse and said it was dead as it had lost 10-15% of its value relative to other fiat currencies. Yet they were very wrong in 2021 as the dollar bottomed and started rising along with interest rates, despite inflation skyrocketing in the latter part of the year. At the same time many claimed that the bond market would collapse, yet even though long term US bond yields had been rising from Aug 2020 up until Mar 2021, just to barely get to pre-pandemic levels where bond yields were already really low. Then went sideways until the end of 2021, where they started rising again. During that time short term US bond yields were close to 0 and only started rising at the end of Sep 2021 as inflation started climbing fast and the market started anticipating the Fed raising rates. Therefore, as those yields were rising due to inflation going up, so did the USD which might seem counterintuitive. Why would it go up if it’s losing purchasing power? Well fiat currencies are trading against other fiat currencies and the world is heavily interconnected, so it’s a relative game and inflation wasn’t just US phenomenon. However most importantly it was clear that inflation didn’t come due to the Fed doing QE or lowering rates, but due to several other factors. To name a few 1. Government spending, 2. Credit creation during Covid, 3. Deferred loan/rent payments, 4. Wealth effect due to stocks/housing going up, 5. Supply chain issues, 6. Supply shortages due to labor shortages or businesses closing, 7. Pend up demand, 8. Higher demand for goods than services, as well as demand of new types of goods, and finally and most importantly 9. Issues in the energy sector and particularly due to the fact that many oil and natural gas wells got shut and weren’t reopened. Now you might be thinking ‘wait a second, where does QE fit into all of this?’. Unlike what most people believe about QE or low interest rates, the Fed doesn’t print money. It simply creates reserves which the banks can’t use to buy anything and low interest rates are a sign that the economy is in trouble as banks aren’t willing to lend to anyone other than big institutions. QE isn’t inflationary as it is just an asset swap and the Fed doesn’t determine anything aside from short-term rates. So, what does the Fed actually do? Essentially, they are trying to push banks to lend, yet banks refuse to do so, and in turn the Fed tries to manage expectations. It all boils down to the Fed making people believe they know what they are doing and that they are a powerful institution that can either create or fight inflation. Therefore, in the list of factors there is another one (no. 10) which is that the Fed convinced everyone that they flooded the world with cash and that affected the spending/investing habits of the people that believed them. Yet there was a market that hasn’t really believed them, and that is the bond market. The bond market keeps indicating that we are stuck in a low growth environment where inflation isn’t a long-term issue, just a short term one. It is also telling us that there is too much debt and too many problems, many of which policy makers haven’t been able to solve. Not only that, but many of the policies have been making things worse and worse, and that in 2022 it looks like inflation is probably going to slow down. Hence if markets and the data are telling us inflation isn’t going to be a major issue in 2022 and the sources of inflation are elsewhere, why will the Fed raise rates? Can it raise rates? By how much? What impact will that have on the economy? For the first question there are some pretty clear explanations. One of them is that Fed wants to raise rates is so that people keep believing in that they can control inflation and that they aren’t just there to pump the stock market. Many believe in the Fed put, which is the belief that the Fed doesn’t want to do anything to upset the markets and that if things go bad the Fed will support the stock market because it can. However, another one is that there are also many people who are upset about inflation and want someone to do something. These people demand the Fed to act, as the Fed itself claims to have the tools to fight inflation and that it created the inflation in the first place. Hence at the moment the Fed is stuck between a rock and a hard place, as markets are at ATHs, housing at ATHs, the economy is slowing down and overall is in a pretty bad place, while for most people the costs of living are up by 10-20% compared to 2 years ago. By the Fed’s own mandates and admissions, inflation above 2% is high (CPI was at 7% YoY) and their reasoning for QE + low rates has been their goal of full employment… and as we’ve reached a point where unemployment is very low and there are even labor shortages as many people haven’t gotten back to the labor force since the pandemic begun. This in turn puts pressure on wages and inflation, hence the Fed has to act based on its own ‘goals’. Yet if they act, and especially if they act quickly, the markets could crash and this could have even more implications on the economy. It is pretty clear that they have to walk a fine line, except it’s also pretty much impossible for their actions not to affect the markets which are overleveraged and are showing signs of weakness. On the one hand they need the markets to come down a bit, in order to slow down the wealth effect which affects inflation, as well as prevent excess speculation from going even further… and on the other hand they must not overdo it because the whole system could grind to a halt. Keeping all of the above in mind, it seems pretty hard for the Fed to significantly raise rates. Yesterday when Powell started answering questions, he was pretty hawkish because people aren’t taking the Fed seriously, but there is a long way between them talking about being serious and them actually doing it. Doing both QT and raising rates more than 3 times this year, something that the market seems to be expecting at the moment seems a bit farfetched. Like Alex Gurevich said on his recent appearance on ‘The Market Huddle’ podcast (and I am paraphrasing a bit), the most likely scenario for the Fed is to raise rates once. In his view they could do one and not hike again for a decade. Maybe they get two or more, but 1 is more likely than 2, and 2 are more likely than 3… and so on. He also mentioned that he thinks we in the late stages of this cycle, and I happen to agree with both views. My reasoning is that the inflationary factors mentioned earlier seem to be weakening substantially and slowly giving their place to the disinflationary/deflationary factors like supply chains issues being slowly resolved, less government spending, debt accumulated during the pandemic having to be repaid and so on. Inflation in 2021 was really high, though towards the end of the year several data points started showing that it was slowing down and in 2022 we could have 2-3% inflation or even outright deflation. To sum it all up, the Fed will start raising rates too late, as real rates have already started coming up and could go up even higher inflation starts going lower. The impact this could have on an overleveraged market is substantial, something that could force the Fed to stop raising rates and even stop its talks about reducing its balance sheet… or maybe even force them to go back into cutting rates and doing QE. Up to this point we’ve only talked about rates, but haven’t mentioned anything about the USD and how it could affect entire financial system. This is another very important factor that the Fed needs to be aware off, even if they haven’t been explicit about it recently. The USD is the global reserve currency and most of the world’s debt is denominated in USD, which means that when it goes up relative to other currencies, then debt repayments become harder especially for those who don’t earn USD. At the same time when US interest rates go up AND the USD goes up relative to other currencies, that creates immense pressure on the financial system. That’s because people/institutions have to pay more interest on their loans, while the currency they are earning and need to convert into dollars to repay their debt, is worth less and less. These two factors create some serious deflationary pressures as someone might be forced to cut their spending or even outright sell assets in order to keep up with his obligations. Of course, in a situation where the entire globe is doing well and rates go up because the economies are booming, debt is low, and it just happens that the USD is going up as it happens that the US is doing better than other countries, then the dollar going up isn’t really an issue and neither are rates. However, the dollar going up, especially along with interest rates really is an issue when the world is drowning in debt, economies aren’t doing well, markets are overleveraged and optimized to work well in a low-rate environment. Another thing to keep in mind is that the dollar going up might create a vicious loop by accelerating the sell-off in traditional markets as more and more people sell in order to meet their obligations, or take a risk off stance or to take advantage of higher interest rates or to take advantage of its rise relative to other currencies. At the end of the day the US isn’t an economy that functions in isolation and it isn’t the only one that uses or CREATES dollars. That’s something crucial that many people forget, as even if the US economy is doing great and higher rates might be appropriate for the US, the actions by the Fed could create issues in other parts of the world, which in turn could damage the US economy.
AMEX:SPY
by BitcoinMacro
2