Welcome to my weekly Macro report. First, we'll dive into the BIG PICTURE Technicals for stocks and crypto. Then we'll cover this week's Economic Data and end with my closing thoughts.Technicals Today we're going to evaluate the Nasdaq and Bitcoin charts.
Nasdaq Technicals
The Macro Forces are telling us something 🤔
The RSI (relative strength) measures buying and selling pressure. NDX is approaching the top of the range, which means the price will be over-bought, and we can expect a meaningful pullback. However, there is still more upside momentum given the following Tailwinds
- #1 Better than feared earnings = FOMO (fear of missing out)
- #2 The Golden Cross - The 26-Weekly-MA is about to cross above the 40-Weekl- Ma
- #3 Short Squeeze Potential - S&P short positions are at a 13-year high. Good news can easily trigger a squeeze.
Bull Market technicals remain intact. A scary pullback doesn't change my view. My view changes when the trend breaks, and scenarios #2(RANGE) or #3(NEW LOWS) start to play out.
The Nasdaq is bullish in the face of another rate hike. Markets believe this is the last hike, so they've already priced 5% - 5.25 Fed Funds.
This Chart worries me the most. If energy cost goes up, we will experience stickier inflation. However, as the economy weakens, so should oil demand. lower demand = lower prices = lower costs = lower inflation = lower rates
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Bitcoin Technicals
The last time we saw Bitcoin technicals hit the following sequence, the price exploded over the next 6months.First, the bear market trend breaks, followed by a Golden Cross, and finally, 60 days of consolidation. We are looking at about 30 days of consolidation. Keep your eye on the Macro Forces I mentioned at the beginning of this article. If they keep breaking lower, Bitcoin will soar. It's the fastest horse in the race.
Economic Conditions
Economic weakness is adding Pressure on the Fed to Pause. This is partly what's fueling asset prices..."The End of the Hiking Cycle"
Inflation Trends lower
Inflation continues to come down on a YoY basis.
The Fed's favorite inflation gauge just saw the largest year-on-year drop from the peak. Despite the stickier core component, the Market will feed off the broader softening inflation picture.
- Core Inflation Remains Sticky; however, this is being dragged higher by lagging Shelter Data.
Shelter appears Sticky. However, real-time price inflation is falling like a rock.
- Case- Shiller home prices
- Redfin real-time rent inflation
Zillow Real-time rent inflation
GDP
The economy is slowing but not collapsing. We are not in a recession, and the Fed's rate hikes are working without crushing growth...so far!
Economic Activity
Manufacturing remains in recession territory. As it worsens, we get closer to the Pause.
Employment
Jobless Claims have been rising for 15 months. This puts the Fed in a tight position as they know more hikes will accelerate this trend, Putting more Pressure on the Fed to Pause
Housing
4/5 Leading housing market indicators show housing rolling over. As we've stated before, rates are just too high to see any meaningful boost in housing sales. As credit tightens, we should see some more blow-ups in Real Estate, leading to the Fed Pause.
The Consumer
Consumers are " Bracing for recession." We see spending slow while savings rates rise. This behavior will slow the economy without seeing the consumer completely collapse as they build their savings.
Closing Thoughts
If the Macro Forces (Dollar, Oil, Yields, Volatility) continue to trend lower, this creates a RISK-ON environment for the Market. And we see this playing out as Nasdaq, S&P 500, and Crypto remain bullish from the October lows.Economic conditions are also slowing but not collapsing while inflation trends lower. This puts Pressure on the Fed to stop hiking rates which is exactly what the Market wants to see as it prices at the end of "rising interest rates."I hope this informs your trading or investing decisions! Upgrade your subscription to receive a deeper analysis of my convictions and why. You'll also see exactly which investments I think will benefit the most.🔥👇🏽👇🏽👇🏽
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