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DJI potential for a rise! | 9th May 2022On the H4, with price expected to reverse off the ichimoku cloud , we have a bearish bias that price will drop from our 1st resistance at 33193 where the horizontal pullback resistance and 38.2% Fibonacci retracement is to our 1st support at 32422 in line with the pullback support. Alternatively, price may break 1st resistance structure and head for 2nd resistance where the horizontal pullback resistance. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
CBOT_MINI:YM1!Long
by FXCM
Stock markets in the era of high inflation part 2In my previous analysis I went deep into a lot of the fundamentals of what is going in stock markets in the current environment. At the moment the main theme is that the Fed will keep on hiking until the market crashes or something else breaks in the financial system. It is unknown how much time will it take for something to break, but it is probably going to happen in 2022. The current inflationary pressures seem extremely strong as they mostly have to do with issues on the supply side, however the Fed can only affect the demand side and they are determined to crush it. At least that’s their goal and it is unknown whether they will be able to do so. The problem is that inflation regardless of high or low interest rates, does a lot of damage on a lot of companies, as it affects both the consumers and the expenses a company has. Therefore, a lot of stocks started coming under significant pressure many months ago, something that wasn’t really visible when someone was looking at an index. The major US indices looked fairly strong up until recently, however by looking at ARKK it is clear that many of the more speculative stuff that don’t make money right now started going down since Feb 2021. That was exactly the point where inflation started going up. As inflation was going higher and higher, more and more companies/indices started peaking in 2021. Some in April-May 2021, others in September 2021 and others in November 2021, while many are now down more than 40-50%. For example, Meta (Facebook) is down 50%, and its current situation looks similar to late 2018 (major gap down and then continued lower), but worse. Another example is Netflix which is down 70% and looks like it could go a lot lower. What is interesting is how Tesla had a huge move up in October – early November, a move that was incredibly abnormal and all indicators were flashing extremely overbought conditions, and Elon Musk managed to sell right at the top while making his move public. This was pretty similar to when Charlie Lee, the founder of Litecoin, made public the fact that he was going to sell his Litecoin position, and his selling marked the top for Litecoin, which occurred a few weeks before the crypto market topped in 2018. What is even more interesting is how Tesla has done so well when many other tech companies have done so poorly, something that could be explained by the fact that finally Tesla is becoming more and more profitable, and on the 20th it announced its earnings which had a big positive surprise. However now these earnings could mark the top for the stock, as its chart is starting to look like a proper top. First an extraordinary blow off top, then failure to push higher or even fill the gap at the top. Then filled the gap at the top while also forming an SFP, and then fell a lot lower. Since then, the market recovered and several exhaustion gaps have occurred up until now, with the most important one being the one that occurred post earnings. When the market opened the day after the announcement, it immediately filled a little gap higher and got quickly slammed back down. These are not good signs for a bull market. Now I’d like to get into the 4 major US indices, with the S&P500 being the main focus. Here I will go deep into the TA in order to get a better idea of where we are and what is going on. The first one is an uncommon one, but one I really like, and that is the Russell 3000 (top 3000 US stocks). Both the topping and the bottoming processes were pretty clean, as at first the top occurred with a nice distribution pattern after the market had been slowing down. Then the bottom came after a 15% correction from its ATHs, and as the market retested its Feb-March 2021 highs which turned into support and right after it swept the May lows. Initially there was strong bounce, then retested the May lows which held and then it pushed higher. However once the market retested the September highs and swept the Feb 2022 highs, it got badly rejected and yesterday it had an awful close. So far this chart could have been the perfect guide for someone trading the US stock market, however it isn’t enough from now on. The next one we are going to look at is the Russell 2000, which had an insane rally in 2020 and early 2021, but since March of 2021 it entered a huge distribution phase. In September the distribution phase was confirmed as the market had a huge breakout that quickly failed and the index quickly retested its range lows. When the range lows broke, they then turned into resistance and have rejected the market twice. Currently the market is retesting the lows once again, which makes me think that they will be broken after being tested so many times. This area could be seen as a double/triple bottom that hasn’t been swept and therefore it is acting like a magnet. In my opinion the market will break the lows, and at best it will have a little bounce after sweeping them, as this pattern looks extremely bearish. After a year of distribution and multiple confirmations of it, it is pretty hard for the market to bottom quickly and therefore after breaking the lows it could collapse further. It looks like the minimum target from here is the 2018 ATH, while fully reversing the vaccine/election trade is pretty likely and means that the Russell could get to 1700 this year. The third index we’ll look into is the Nasdaq 100, and we will look at the spot ETF, not the futures. The reason why I want to look at the spot ETF and not the futures, is that the ETF has some major areas which are of interest, that don’t exist on the futures. In terms of the topping and the bottoming processes, there isn’t much to be said here that differs from what was said above or the futures, other than the fact Nasdaq had two major gaps down that haven’t been filled. This is clearly an indication that tech is being sold a lot harder than the rest of the stock market and that in the future these areas could act as resistance. Now the key area I am looking at, is the triple bottom in the first green zone which like the Russell 2000 bottom will probably be broken even it’s just to sweep the lows and then move higher. The second area is the second green zone which was major resistance in the past and has turned into support, and the third one is that major gap at 276 which could be filled. Another similar chart is that of the S&P500 spot ETF, which has two double bottoms waiting to be broken, and one of the double bottoms is right above a major gap. Like with all the areas mentioned above, these could simply be local bottoms and the market might just have weak bounces or no bounces there. However, I expect the test of 390-400 on the SPY to give a major bounce as it looks a lot like when the Russell 3000 retested its Feb-Mar 2021 highs, swept the lows and filled the gap. Before I zoom out to get better perspective of what is going on the SPX, I’d like to zoom in on the SPY and see how important these gaps and double tops/bottoms are. For example, the two most recent local tops occurred with a gap and by filling a gap, with the first one also sweeping a triple top. The major bottom at 410 occurred after filling a double gap (two unfilled gaps in the same area) and the second bottom around 415 occurred with an SFP. Therefore, you can see how important these patterns are. By zooming out again and using the major Moving Averages, we can see that they are giving us clear signals of whether the market is in an uptrend or downtrend, as well as clear signals of where major support or resistance levels lie. For example, the market bottomed at the 400 DMA, and recently topped at an area where the 100 & 200 DMAs were about to cross. Usually when a major MA is tested so many times, it eventually breaks (400 DMA about to be broken). So at the moment the market is in downtrend which might accelerate below the 400 DMA, which looks like it will get broken fairly soon. Then until it gets reclaimed, I assume the trend is bearish and we need to be cautious. By zooming out even more, the two other major MAs I am paying attention to are the 200 and 400 WMAs. At the moment, getting to the 400 WMA seems a bit far-fetched as by that time the Fed will have probably stepped in to save the day. Many are comparing the current hiking cycle with that of 2018, as the Fed kept raising rates until the market collapse and then it quickly stopped hiking rates, and in my opinion this is a decent comparison. Clearly not a perfect one as inflation is much higher, the Fed Funds Rate much lower, the Fed is about to start hiking by 0.5%, markets are more elevated and the global economy in a worse position than back then. The reason why I think this is a decent one and I want to compare it to 2018, is because I think the Fed is in a similar or probably worse position that back then, and therefore they will have to reverse course. Back then the market bottomed after a 20% from its ATHs and at the 200 WMA, which is currently 28% below the ATHs. On the chart below you can see what these corrections would look like when zooming out. I’ve also added what it would look like if we had a mega crash and the market retested the 2000-2008 highs, something I think is extremely unlikely at the moment. As our fiat system is crumbling, the Fed and the US government will be forced to print a lot of money, and therefore the stock market will keep going higher and higher, regardless of how bad the financial conditions are and how many deep corrections will it have.
NASDAQ:TSLA
by BitcoinMacro
1
Stock markets in the era of high inflation part 1As inflation prints are coming hotter and hotter, and the bond market keeps tumbling lower, there is a lot of debate on whether the stock market remains a good ‘hedge’ or ‘bet’ under these conditions. Well, this isn’t an easy debate and there are no easy answers, but in this analysis, I will try to outline certain important things I am looking at. I will also provide both a short term and long-term outlook by using both fundamental and technical analysis, however I will split the analysis into two pieces. This is part one and you will find part 2 in the links below. First of all, I’d like to look at the big picture and then start zooming in, as it is good to have an idea of where the global economy is right now and how that affects stocks. Well, the global economy is not in a good place as there is too much debt in the world, supply chains have all sorts of issues from the China lockdowns to the war in Ukraine, the population is aging, Covid created a lot of negative imbalances and the underinvestment in commodities has create a lot of shortages. Now all these are occurring after stocks had reached insane valuations in 2020-2021, inflation is at multiyear highs and at the same time the Fed wants to hike rates by 0.5% on every meeting in 2022 in order to fight that inflation. Their goal is to reverse the wealth effect it created in 2020-2021 in order to fight deflation, and they might keep hiking until the stock market collapses. When someone looks at all the above, he must be thinking that shorting stocks is a great idea and that the market will collapse soon. However, the truth is that the US economy is in a much better shape than many others as it produces a lot of the commodities it needs, US companies have been strong and earning prove that, while several companies substantially benefit from the current inflationary circumstances. For example, consumer staples and commodities producers are greatly benefiting from all the shortages and therefore their stocks have gone up. Of course, not all companies are doing well, as many of the more unprofitable/speculative companies are suffering greatly due to their profits being reduced or the debts repayments being increased. Higher inflation is eating away from the profits of some of those companies, while higher bond yields have increased the borrowing costs for others. These in turn have a negative effect on the stock prices at best some of these companies pay less dividends, while many companies might be pushed to bankruptcy if they can’t repay their debts. You might now be thinking: ‘If so many companies are doing poorly and bond yields are going higher, shouldn’t we be worried? If the 60/40 portfolio is getting crushed, couldn’t that create a larger crash? If the Fed is ‘telling us’ that it wants stocks to go lower, shouldn’t we get out?’ Well, during all the previous hiking cycles stocks mostly rose at the beginning and fell towards the end, and in our situation the Fed has barely begun hiking. Bond yields going higher means that bonds are being sold, and some of that capital could redirected into the stock market. Stocks are much more of hard asset than bonds are, as companies can profit from bad situation and investors can dump the losers to buy the winners, while the government usually ends up borrowing more and more, diluting the value of existing bonds. The market might have taken yields to 2.5-3%, but based on my analysis this is close to the point where I believe bond yields are going to top (bonds bottom). The more the Fed is raising rates, the more I believe they will create a recession and this in turn could make inflation come down. Inflation won’t go away, though it could be much closer to 3-4%, than 8-9%. In my opinion getting back into a disinflationary trend would greatly benefit stocks, and therefore in case stocks dip because of the Fed, I am a buyer. My reasoning is that if the Fed keeps raising rates, something will break and they will then be forced to the cut rates and start buying bonds. Essentially based on the current set of circumstances stocks could keep going up for a while, then crash, and then the Fed will be forced to step in to prevent the financial system from melting down. However, one thing is clear and it is very clear. There is so much leverage in the system, there is so much debt, there are so many issues in the economy, that the only way out is by devaluing the dollar, not by making it stronger. Raising rates to crush demand isn’t what ordinary people who can’t pay their rent need. They need cash in order to buy stuff they need, yet can’t afford. Politically this is the only politically acceptable way moving forward, and at the same time is the best outcome for the stock market. It will of course exacerbate the inflation and increase the liquidity in stocks which has been lacking recently. Actually, since Feb 2021 things have started deteriorating for stocks as governments stopped supporting businesses and banks cut down on lending, hence if they resume this would be pretty bullish. Oftentimes we see stocks do well in nominal terms during bad times, as the currency is losing value and people are trying to escape the devaluation. In real terms investors might be underperforming, but it might be better than holding fiat. Hence even if stocks have topped for now, it doesn’t mean the bull market is over, because the devaluation of fiat isn’t over. Another interesting thing to note here is that real rates have gone back to 0, as they were deeply negative before. These deeply negative rates definitely benefited the stock market as investors were trying to escape cash and bonds, but now cash and bonds have become somewhat attractive again. My belief is that inflation will start slowing down in the next few months and that the Fed is already too late, hence real rates will probably increase even more. This could be either seen as a positive if you believe that the Fed will slow down its rate hikes as they realize they don’t need to hike as much or it could be seen as a negative if you believe that they will completely ignore future inflation prints and raise rates until prices go down or something breaks.
FX:SPX500
by BitcoinMacro
THE NEXT ECONOMIC CRISIS IS IN FRONT OF USTo see what will happen in the economic world, we must look more broadly at what has happened, but in this analysis I will use technical analysis patterns to predict what will happen. What happened?/b] 1. Gold is clearly visible in the cup and handle pattern An uptrend followed by a cup and handle pattern in technical analysis means that the price will continue to rise at least it will touch the height according to the cup height. 2. The S&P 500 is already too high After the COVID-19 pandemic which caused a severe crash on the stock market, it turned out not to be as bad as I imagined, the market was actually getting faster to an all time high level. It has gone too high and needs to be restarted again. 3. Bitcoin is still too high and needs a little correction In the 10x rally that occurred in bitcoin in 2020 and then followed by a crash with a decline of more than 50%. But it turned out that bitcoin touched its all-time high again and fell again, but when I saw the bitcoin chart, it seems that bitcoin should need a long correction before rallying again. Conclusion By looking at some of the factors above and supported by various fundamental factors such as inflation that is too high, world wars are everywhere and several other factors, investors will move their money to safe heaven assets, namely gold which is supported by cup and handle patterns. At that time bitcoin and other cryptocurrencies will be slightly corrected, when gold has surpassed the all time high, bitcoin and other cryptocurrencies will immediately crawl up and touch their all time high. I don't care about your laughing at this nonsense analysis. But this is my personal analysis that I share with you. I am not a financial advisor. Thank you
TVC:GOLD
by dhiyaulhaqza
1
Bitcoin & Pre-Market - Reasons to remain cautiously optimistic!Traders, We have tested our multi-year support yet again! As you know, this is something I did not want to see us doing. However, our support remains incredibly strong and thus, we have bounced yet again off of that support. This is now the 16th or 17th time (depending on what one classifies as a touch) that we have tested our support. Currently, Bitcoin is forming a bullish hammer candle. Let's to a quick review of our charts here. ⛓️ 🔗 Useful Links 🔗 ⛓️ (see below)
INDEX:BTCUSDLong
by stewdamus
US10Y-US02Y Time To Pay AttentionEveryone is talking about yields inverting and the recession that follows it. Here I am going to do a quick rundown on how to actually use this information to your advantage. It is not the yields INVERTING that is cause for concern. This is only the first step of a potentially long process. It is when yields start STEEPENING that there is real cause for concern. There is no question that yields inverting is a recession signal, it has historically proven itself to be since the 1970s. But if you think the market is ready for a recession right at this moment of inversion, you are misinformed. Pay close attention to when the yield first inverts, to where/when the market actually enters a recession. It is not until after yields STEEPEN is when there is real downside. Now, this brings us to the chart, where we are potentially seeing the first signs of steepening. Not only from the yields themselves but from the Bullish Divergence on the RSI. As yields have inverted (gone down), the RSI has trended up, showing a clear divergence. Also, notice how far yields have deviated from the 200MA. If you compare it to 2000, it is potentially showing a very similar picture Even in august of 2019 we see the same divergence which signaled yields to begin rising. Which told us it was really time to pay attention in the coming months. These are just a few insights to hopefully help you understand what this all means in the bigger picture. Right now more than ever is the time to pay attention and to stay vigilant. Hope this helps! Here is my initial analysis on yields tightening, as well as the Yield Inversion in relation to the SPX:
TVC:US10Y
by NoOneWhoIsSomeone
S&P 500 - Futures by CryptoTradersWWThe S&P 500 futures have been a leading indication for BTC price direction since this morning. The stock market has gained strength over the last two days, with prices currently nearing the top of the range. If we witness a breakout above, it's possible that this will spill over into the crypto market. Today is also the FOMC Fed meeting, which is expected to hike interest rates. Historically, this has resulted in stock market volatility, which could lead to instability in the crypto market. <----------------------------> ☑️ Follow, Comment & Like ☑️ Create a civil and healty discuss in the comments and share with me your thoughts Thanks and Happy Trading!
CME_MINI:ES1!
by CryptoTradersWW
Breaking down where the stock market is goingLooking at the daily chart on the ES futures contract (S&P) Today was a big day with price pulling up and holding the lows form Feb 24. The market has been on a crazy bull run since March 2009 so seeing this pullback is no surprise really, in fact I am surprised it didn't come earlier. Of course there was the pretty short-term collapse in 2020 but then the strong reversal we see in the chart here. 4800 was the highs and now resistance, along with 4700. You can see on Jan 18th price breaking down from the trendline and really confirming a trend change. For the bulls it is very important what happened today but we will need to see price taking out the 4300 and 4400 walls for me to be confident that the market is turning bullish again. Last week we saw a similar move only to see price pullback again. The key though is holding that Feb 24th low. Let's see if price is above 4300 by the end of this week.
CME_MINI:ES1!Long
by Dancharles