Caution in risk; Bitcoin short?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Yesterday I mentioned the dramatic reversal in silver after a breakout above resistance was reversed, eluding to a similar fractal in stocks that I had cautioned about a few weeks ago.
Below is an update of that same chart of S&P futures. Again, note the clear breakout above resistance.
Thus far, a test of the breakout line is successful, as evidenced by last week's candle; However, with momentum turning down and likely to reach into oversold conditions and the 200-week MA directly below as obvious support – I don't think bulls should expect upside acceleration anytime soon. In fact, I would not be surprised to see downward sideways action, perhaps leading to a minor breach of that trendline and perhaps the 200-day MA again. In that scenario, longs should be on high alert, in my opinion.
Overall, stocks have done extremely well repricing new terminal interest rate expectations on the back of Powell's "very hawkish" testimony before congress this week. How hawkish does Powell have to be to drive the S&P down to 2950 at this point? I continue to think the real economy gets crushed with higher rates (as officialdom paints the rosiest possible picture) before stocks do.
Whereas weighted stock indices may hold up in the face of rate hike repricing – Individual risk assets may not- EG Bitcoin, which I think has a setup for a short down to 19000. Below is a weekly chart showing support post-reversal from the 50-day MA.
And if BTC should break below its October 2022 low, then look out! Below is a logarithmic monthly BTC chart which I think speaks for itself - that blue line is absolutely key.