pebblewriter

Tag: bitcoin

  • The Bond Market Finally Woke Up

    For months we’ve been warning about the coming inflation problem, wondering when the bond market would notice and/or care.  The immediate problem in a nutshell:

    One of the most highly correlated components of CPI with the headline rate is the price of energy, and gasoline in particular.  If prices were to remain where they are now, the base effect will result in a 40% increase YoY in April.  Historically, this has produced headline CPI in excess of 2.5%.The Fed points out this base effect bump will be transitory and should be ignored, but the recent rise in interest rates tells us that the bond market is not ignoring it. In fact, recent beats in economic data and sharp price increases across the commodity complex underscore the notion that the rise in inflation will not be transitory. The pop we could see in April would be only the beginning.

    As we approach $30 trillion in debt with more stimulus on the way, markets have to wonder what to make of CPI of 2.5-3.0% or higher. In our opinion, the US has no choice but to follow in the BoJ’s and ECB’s footsteps and repudiate higher rates until the end of time.

    10Y note futures reached a level at which we have felt would represent critical support. A drop below this level, we reasoned, would sound loud alarm bells. As we wrote yesterday: “This is quite possibly the Fed’s last chance to avoid a real mess in the bond market.”

    Bottom line, don’t be fooled by the Fed’s ability to repeatedly bail out equities at the last minute.

    The algos have learned well to respond to moves in VIX, currencies and oil/gas when they are so instructed. It’s no surprise that yesterday’s plunge was arrested at our previous SMA downside target.

    The problem is bigger and more difficult to cope with than most – including, apparently, the Fed – can imagine.

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  • 500 Miles High

    Thinking of the late great Chick Corea this morning as I survey the sky-high equities market…  Futures have regained about half their overnight losses, spurred by a timely dip in VIX and pop in 10Y yields (testing Monday’s highs.)

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  • Charts I’m Watching: Feb 9, 2021

    Futures are off modestly as the algos have backed off their assorted breakouts and breakdowns now that the bearish H&S Pattern has been busted.continued for members… (more…)

  • BTC: Musk’s Plus One

    See if you can spot the point at which TSLA disclosed its purchase of $1.5 billion in BTC.

    Yes, in a world where seemingly everything is making new highs, BTC joins the party – courtesy of Elon Musk.

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  • Update on Bitcoin: Jan 12, 2021

    Quick note:  BTC backtested the top of the broken pink channel as detailed in our Jan 7 post [see: Jan 7 Update on BTC.]

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  • Update on Bitcoin: Jan 7, 2021

    It seems like just yesterday BTC reached our last upside target range at 29,890-30,108. Actually, it was Monday [see: Jan 4 Update on Bitcoin.]

    If it can hold these Fibs, the next major Fib target to the upside is the blue 2.24 and red 3.618 at 40,180-40,138.

    Go figure.

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  • Update on Bitcoin: Jan 4, 2021

    BTC reached our next upside target at 29,890-30,108 [see: Dec 22 Update on BTC.]  Had it remained in either the rising pink or purple channel, it might have taken quite some time. But, as we discussed last month, it broke out of both channels and topped the Fib target at almost exactly the time forecast by our cycle model.

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  • Update on Bitcoin: Dec 22, 2020

    In our last regular update on BTC [see: Nov 17 Update], we noted that it had reached our Inverted Head and Shoulders target of 17,150 well ahead of schedule and was due to test the .886 Fib at 17,780.

    Note that the red IH&S target at 17,150 is only slightly below the blue .886 Fib at 17,780. So, there’s plenty of overhead resistance here which, combined with a somewhat bearish RSI chart, argues for at least a breather. On the other hand, BTC has clearly popped out of the rising pink channel from its March 13 lows – always a positive from a momentum standpoint. If I thought DXY [92.30] was done dropping, I’d be inclined to take profits here. But, I don’t think it is. [Our forecast remains a] drop to 91.358 or even 89.88.

    Whenever we get conflicting signals like that, it’s fairly likely that an alternative upside target will serve as a backtest target after the breakout.  That’s exactly what happened here. As it broke out of the pink channel, BTC rallied for another week before taking a 16.6% breather, ultimately backtesting 17,780 on Dec 9 and Dec 11.

    Because DXY hadn’t reached support at 91.358 much less 89.88, though, BTC wasn’t done. As we noted on Dec 4:

    USDJPY threw its hat into the bullish ring with a backtest of its broken TL, theoretically slowing DXY’s descent and still leaving a path for BTC to reach its 1.272 at 24,166 around the end of the year.

    For those patient enough to let DXY’s decline play out, we were rewarded a few days ago with a tag of 24,166.BTC is now up 5.3X since its March lows. There are those calling for 100,000, 500,000 and even 1,000,000. Can it keep up this pace?

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  • Update on Bitcoin: Nov 17, 2020

    Almost 8 months ago I posted our first outlook on BTC [see: FOMC Embraces MMT.]   We noted at the time that the FOMC was “officially in the short-squeeze business” after ES came within 19 points (trading was halted there) of our 2155 target and the Dow was set to test the Nov 8, 2016 (election day) lows.

    This was the perfect time to assess what unleashing massive amounts of liquidity might do to crypto.  We noted at the time that BTC should bounce from its triangle bottom (on the arithmetic chart) and return to test the top trend line at around 9,925. We also noted that BTC had rebounded back above a TL on its log chart – an encouraging sign that supported the fundamental outlook. We left off with the note:

    If you believe that BTC will necessarily rise (as gold will) as QE explodes, the charts support a continuing bounce. If you believe the FOMC will do whatever it takes to support the USD and crush surrogates such as BTC and GC, then keep an eye on that TL (5,000ish) as a fairly clear stop level.

    As it turned out, BTC did return to the triangle top where, as we noted in our May 28 Update on Bitcoin that it had an important decision to make. Having reached 10,074, it had held an important trend line on its arith chart…

    …but had failed to break out above a fan line on its log chart.Our outlook at this point was that price action should determine the next move.

    Is BTC a buy here on a potential breakout? Maybe. But, given the fact that it’s barely off its April highs, cautious types might want to wait for an actual breakout. If it occurs, there would be a small opportunity loss from not getting in here.  But better to give up a few percent than lock in a trade with a lot more downside.

    The alternative for more nimble types: go long but watch that rising TL from Mar 16 on the arith chart like a hawk. If BTC drops below it, run for the hills.

    It took over three weeks, but BTC eventually broke out and, in the process, completed an IH&S pattern we’ve been watching and, just this morning, tagged the pattern’s 17,150 target well ahead of our target date in mid-December.After exploding 2.65X since Mar 23, what’s next?

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  • Update on Bitcoin: May 28, 2020

    I’ve only posted about BTC once before, back on Mar 23 in response to a member request [see: FOMC Embraces MMT.]  The Dow was about to test its 2016 election day lows and, not coincidentally, the Fed had just unleashed QEinfinity.

    The post went as follows:

    Two major chart patterns jump out at me: first, the obvious triangle pattern on the weekly arithmetic chart (it isn’t there on the log chart) suggests BTC should bounce from here and return to the top trend line (which failed, BTW, to hold a recent tiny breakout.) It currently stands around 9,925.Second, the daily log chart shows a TL was broken last week but BTC has since rebounded back above it. For those wondering, the retracement of the rise from the Dec 2018 lows to the Jun 2019 highs reached about 81%. Had the TL held, we’d be looking at a Fibonacci 78%.

    If you believe that BTC will necessarily rise (as gold will) as QE explodes, the charts support a continuing bounce. If you believe the FOMC will do whatever it takes to support the USD and crush surrogates such as BTC and GC, then keep an eye on that TL (5,000ish) as a fairly clear stop level.

    Having spent a few hours studying Bitcoin, I promptly forgot about it.  I don’t really follow it, and believe it’s at least as heavily manipulated as everything else. Probably more. But, thanks to member John K., I was encouraged to take another look.

    As it turned out, BTC did continue its bounce and went on to test the top trend line, reaching 9917.25 on May 8.  It was an impressive 100% move from the March lows.

    Of course, now it’s back at overhead resistance – the same trend line from December 2017 which halted the 2017 and 2019 rallies.We’ll take a look at the potential for a reversal or a breakout.

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