Market Seasonality Be Damned
Market Seasonality Be Damned
The S&P 500 index and Bitcoin continue their rallies.
Be sure to catch the latest episode of my Friday Market Breakdown…
…and my weekly podcast Beards and Bitcoin airing on Wednesdays at 11 a.m. CST as Andrew and Tillman join me each week to discuss Bitcoin price, news, miners, and institutional insights.
Unleashing the Market Beast: Bitcoin, ETFs, and the Fed's Next Move
Hey there, fellow traders! Welcome to another edition of our newsletter, where we dive deep into the world of trading and finance. Whether you're just starting out or you're a seasoned pro, we've got the insights and strategies you need to sharpen your skills and boost your profitability. Let's get into it!
Bitcoin's RSI Signals a Surge: Dive into the latest analysis on Bitcoin's weekly RSI, hinting at a potential price surge to $85K. Are you ready for the ride?
Dow Jones Futures and Big Tech: Discover how the bulls are eyeing Meta, Apple, and Tesla as they enter buy zones. Is it time to make your move?
Fed's Price Gauge in Focus: Get the lowdown on the Fed's favored price gauge and what it means for the market's next big move.
SEC Greenlights BlackRock's Bitcoin ETF: The SEC has approved options trading on BlackRock's spot Bitcoin ETF. What does this mean for the crypto landscape?
Bitcoin ETF Options and Volatility: Bitwise weighs in on why Bitcoin ETF options might not tame the market's wild swings. What's your take?
BlackRock's $3.5 Trillion Strategy: Uncover BlackRock's quiet preparations for a potential Federal Reserve crisis and how Bitcoin could ignite a price boom.
Will a bullish September lead into an even stronger October?: Where do we currently stand and why might we still see Uptober.
Bitcoin, Ethereum, Stock Indexes, Gold, and DXY charts as well as the chart of the week: The markets’ health as understood through these charts plus a potential macro bottomed chart.
Stay sharp, stay informed, and let's make those trades count!
Bitcoin's RSI: Is an $85K Surge on the Horizon?
Ever wonder what the Relative Strength Index (RSI) is whispering about Bitcoin's next big move? Well, it might just be hinting at a jaw-dropping surge to $85K. Yeah, you heard that right! The RSI is a tool traders use to gauge momentum, and right now, it's flashing some intriguing signals.
So, what's the buzz all about? The weekly RSI is climbing, and when it hits certain levels, it often means a price jump is in the cards. But, of course, nothing's ever set in stone in the crypto world. Still, with Bitcoin's history of wild rides, this could be a thrilling time to keep your eyes peeled. For more on how RSI works, check out this Investopedia article.
Curious to dive deeper into this analysis? You can read the full article on Cointelegraph here. Stay tuned, and let's see where this rollercoaster takes us!
Big Tech in the Spotlight: Are Meta, Apple, and Tesla Ready to Soar?
The bulls are back, and they're eyeing some big names: Meta, Apple, and Tesla. These tech giants are hitting buy zones, and investors are buzzing with excitement. Could this be the perfect time to jump in?
With the Dow Jones futures showing promise, these stocks are catching the attention of savvy traders. But, as always, the market's a tricky beast. Timing is everything, and knowing when to make your move can be the difference between a win and a miss.
Curious about the details and what this means for your portfolio? Dive into the full analysis on Investors.com here.
Fed's Favorite Price Gauge: What's the Buzz?
The Federal Reserve's got its eyes on a key price gauge, and it's making waves in the market. This tool, known as the Personal Consumption Expenditures (PCE) Price Index, is a big deal for understanding inflation trends.
Why's it so important? Well, the PCE gives the Fed a snapshot of consumer spending habits, which helps them make decisions on interest rates. It's like having a crystal ball for the economy, and right now, it's showing some interesting signals.
Want to know more about how this could impact your investments? Check out the full scoop on Yahoo Finance here.
SEC Greenlights Options Trading on BlackRock's Bitcoin ETF
Big news from the SEC: they've given the thumbs up for options trading on BlackRock's spot Bitcoin ETF. This move could open up a whole new world of trading strategies for crypto enthusiasts.
So, what's the big deal? Options trading allows investors to hedge their bets or speculate on price movements without owning the actual asset. It's like having a Swiss Army knife for your investment toolkit, offering flexibility and potential for profit.
Want to know how this could shake up the crypto market? Check out the full story on Bitcoin Magazine here.
Bitcoin ETF Options: Volatility Here to Stay?
There's a lot of chatter about Bitcoin ETF options, but don't expect them to calm the stormy seas of crypto volatility. According to Bitwise, these options might not be the magic bullet some are hoping for.
So, what's the scoop? While ETFs can offer more ways to trade Bitcoin, they don't necessarily smooth out the wild price swings. It's like adding more lanes to a highway; it might ease traffic, but it won't change the weather.
Curious about what this means for your crypto strategy? Dive into the full analysis on U.Today here.
BlackRock's Bold Move: Bracing for a $3.5 Trillion Fed Crisis
BlackRock's making waves with its quiet prep for a potential $3.5 trillion Federal Reserve crisis. And guess what? Bitcoin's in the spotlight as a potential game-changer.
So, what's cooking? BlackRock's strategy hints at Bitcoin sparking a sudden price boom, offering a hedge against economic turbulence. It's like having an ace up your sleeve when the stakes are high.
Curious about how this could impact the financial landscape? Dive into the full analysis on Forbes here.
Will a bullish September lead into an even stronger October?
Historically, September is the weakest month for the S&P 500 and Bitcoin. But I warned at the end of August that there was a strong chance we would see a rare positive September instead. With the month now nearing a close in just over a week, the S&P 500 and Bitcoin, both, find themselves in positive territory.
As seen in the two charts above, the fourth quarter of the year is notoriously bullish. October kicks off the quarter with a strong positive push after the usual September doldrums. There is little reason to believe that this October will be any different in spite of the potentially positive September (we still have just over a week left where anything can happen so no counting our chickens before they hatch). But why is October often so bullish?
There are a number of reasons why October can be considered a bullish month for the S&P 500 and Bitcoin. Not every October follows through with this trend, but based on historical data and contributing factors, people view October as a recovery or bullish month. Here's an overview of why that might be:
1. The Demise of the "September Effect"
September seasonal weakness: That September weakness is seasonal, indeed, and it has been one of the weakest months for equities and cryptocurrencies. Normally, that decline is a good time to buy once valuations turn favorable.
October rebound: Many times, investors rethink their portfolios and reposition themselves after the September downturn; the net result is often one of a rebound effect in October.
2. Earning Season Boost
Corporate Earnings Reports: October is the first month of Q3 earnings reports for many companies. A positive surprise in earnings or strong forward guidance from the corporate world can lead to strong investor confidence and push the markets higher.
Sector Leadership: A strong bottom line from major sectors can give impetus to the larger market, of which the S&P 500 is a part.
3. Institutional Rebalancing and Fund Flows
Quarterly Rebalancing: Mutual fund houses and pension fund investors rebalance their portfolios at the beginning of every new quarter, and this is typically a good reason for increased buying.
Inflow of funds: Most mutual funds begin their new fiscal in October and hence see fresh inflows, which tend to give an upward bias to the market price.
4. Reduction of Market Uncertainties
Economic and Policy Clarity: Confusion about economic policies, fiscal budgets, and monetary policy decisions that are generally discussed in Q3 clears up by October. This clarity helps in a reduction of anxiety in the market and invites investment.
Resolution of Seasonal Market Anomalies: Events like U.S. budget approval or geopolitical events see resolution or clarity many times in October, hence reducing volatility.
5. Affective and Behavioral Factors
Psychological Change of Guard: October has traditionally been a month in which markets crash, such as in 1929 and 1987, so at the beginning of the month, sentiment is usually cautious. If the market holds its ground or acts strong, then this psychological change of guard can turn fears into optimism, creating a bullish trend.
Resumption of trading activity after the summer: During the summer months, trading volumes are usually at their lows; by October, institutional investors and traders are fully back, increasing market participation and liquidity that can support a bullish trend.
6. Bitcoin-Specific Factors
Halving Cycle Effects: In Bitcoin's history, the month of October has always marked its run-up with halving cycle timing. Post-halving periods tend to be bullish due to reduced supply and increased demand.
Rise in Institutional Participation: Increasing institutional participation, combined with positive regulatory developments, might be expected to drive Bitcoin's price action in the second half of the year.
Key Takeaway
This fact is not set in stone for both the S&P 500 and Bitcoin when it comes to October usually being more bullish. Traders would do well to look at economic data, earnings reports, monetary policy, geopolitical developments. Yes, historical patterns do set some sort of context, but each year does have its own set of circumstances.
Stock Indexes
The stock indexes closed last Thursday looking like they may have topped. But there was no strong bearish Friday close. In fact, after an initial pull back, all three indexes rallied back up and closed near the day’s high or even positive for the day. This keeps things interesting and suggests that we may see the indexes follow through higher this week. Overall, as mentioned last week, the structures remain bullish and we should see the Nasdaq following the lead of the DJI and S&P into new ATHs.
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Bitcoin ETF Flows
The ETFs did indeed follow through with a good week of inflows. As a matter of fact, there was only one day of net outflows - Wednesday. It’s looking like now that the summer is done and over with ETFs are resuming their positive inflows as we ramp up for Uptober.
Bitcoin
Price rallied another ~7.75% this past week. In doing so it has nearly broken out above the wave i extreme.
Price broke out above the wave ((B)) extreme at 61202 on the Bitcoin All Time Index chart which signals that wave ii is likely complete and that wave iii is in progress toward a minimum expected target of 82478. The larger degree wave ((v)) has a target of 93654 based on the height of wave ((iv)).
If this cycle is to end like every cycle before, then we should expect wave ((v)) to overextend much higher. Based on previous cycles, we should also not expect it to end until Q4 of 2025. However, there’s a lot of things that need to happen in the meantime to make that a reality so we will continue to trade the chart as it prints rather than tell it what it needs to do.
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Ethereum ETF Flows
The ETFs have continued their bleeding out, though the bleeding did slow a bit this past week. Nonetheless, the net outflows have risen to $607.6M. I don’t believe this will continue infinitely, but as long as Grayscale’s ETHE prodcut continues to see an exodus of holders there’s little hope that the we will see much in the way of shrinkage in the net outflows for now.
Ethereum
I hope you bought some Ethereum after the last newsletter. We saw Ethereum’s price rally over 15% this past week. In doing so, it broke out above the 2597 level which gives us the first clue that wave ((iv)) may be complete.
As mentioned last week, it looks like price is printing a diagonal with wave ((iii)) terminating at the cycle high of 4093.88 and wave ((iv)) possibly being complete at 2116.02. Breaking down below that low will keep wave ((iv)) alive with an initial target of the weekly pivot at 1970 or secondary target of 1787.
Wave ((v)) has an expected target of 6160 based on the current height of wave ((iv)).
Gold Futures (GC1!)
rallied $34
We saw price rally another $34 this past week. This puts price just over $90 away from the minimum expected wave ((iii)) target of 2741.90 to finish out a possible ending diagonal. Breaking down below wave iv at 2502.70 will indicate that wave v is likely complete. Further breakdown below the wave (iv) extreme at 2351.90 will confirm it.
The US Dollar Index (DXY)
We did get a brief dip below the local swing low a few times. The DXY continues to look heavy as it siting on the 100.617 support. Overall, we shouldn’t expect that support to continue to hold. Instead, we should be focused on the target of the next swing low at 99.589.
Big movements take time to develop.
— Jesse Livermore
Chart of the Week
The Dollar General (DG) chart looks like it may have completed a 2 year 5 month bear market decline at the S1 pivot on the weekly time frame. This one is definitely worth keeping on eye on.
We can note the capitulative-type of volume on the final large weekly candle that carried price nearly to the S1 pivot. That kind of volume coming at the end of a multi-year decline most often suggests the end of that trend. Based on Elliott Wave analysis, we would need to see a break out above the wave ((B)) extreme of 168.07 at the blue pivot to add confidence to the count and signal that wave III was likely in progress. However, a monthly close above 115.98 will go a long way toward indicating that the low is likely in.
Locally, a break out above 86.75 should see price targeting a minimum of 89.70.
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DISCLAIMER: This newsletter is intended solely for educational purposes and should not be construed as financial advice. It does not constitute an investment recommendation or a solicitation to buy or sell any assets. Please exercise due diligence and conduct your own research before making any financial decisions.
The Market Breakdown newsletter does not operate as a registered investment advisor. This document is provided purely for informational purposes and does not constitute an offer or invitation to buy or sell any financial instruments. The viewpoints expressed are derived from historical data analysis and are deemed reliable, though their accuracy is not assured. Readers are entirely accountable for any decisions made based on this information.
CFTC RULE 4.41 - These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.