pebblewriter

Tag: BTC

  • Update on Bitcoin: May 13, 2021

    In our last update on Bitcoin [see: Apr 13 Update] we noted that BTC would likely reverse at the Fib extension at 62,977.

    It is fitting that BTC chose the day the latest CPI data is released to reach our next upside target [f]rom Bonds Not Buying It on Feb 23…

    As always, our approach is to look for a pullback upon reaching these major Fib levels, but be prepared to be stopped out if/when it pushes through them. It has required nerves of steel, but has also been an exercise in patience.

    As it turned out, BTC worked very hard to unnerve us, pushing through 62,977 for three more days before reversing hard. It reached our initial downside target of 59,010 on the 18th and the channel bottom at 48,837 a few days later.

    By the time that bounce reached the channel and cloud top on the 29th, however, the technical picture had eroded. From Not Transitory:

    Bitcoin’s cloud problems are confirmed by its RSI. It’s perhaps time for the channel to finally break down and for BTC to start eyeing its SMA200.

    This catches us up to today, as BTC’s channel indeed broke down, allowing it to tag our 46,433 target earlier this morning.

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  • PPI Confirms Hot Inflation

    It comes as no surprise that PPI confirmed yesterday’s hot CPI print, coming in at a whopping 6.2%.

    We’ve been beating the inflation drum for so long, it feels a bit anticlimactic to acknowledge that it’s finally here and even slightly greater than we anticipated.

    As regular readers well know, I expected central bankers to preemptively head off the problem of higher inflation and higher interest rates by crashing oil/gas prices as they have many times before.

    I was surprised to see them pass on this approach and roll the dice with inflation. But, it made more sense once it became apparent that they had essentially taken control of the bond market – the one market that had always “told the truth” about economic conditions. No more.

    As strong as yesterday’s equity selloff was, the 10Y barely budged, rising from a high on Tuesday of 1.63% to a high on Wednesday (after CPI was announced) of 1.69%. Today, yields are actually dropping.  An orderly channel like the one below is all you need to confirm that yields are being carefully managed.

     *   *   *

    Speaking of carefully managing things…I can only imagine the panic around the Fed, the Treasury and the White House when the Colonial Pipeline fiasco popped up the other day. Higher oil/gas prices had helped get stocks to their recent highs, but it was time for the market’s caretakers to take their feet off the gas lest inflation be even more alarming.

    A shutdown of the nation’s largest fuel pipeline certainly wasn’t part of the plan – though I wouldn’t be surprised if the hackers had placed some well-timed bets on oil/gas prices in advance. With markets going crazy over inflation, something had to give.

    I had the following conversation on this very topic with a very good friend who happens to be both brilliant and an excellent trader. But, he’s nowhere near as cynical as I am. We chatted just after the close.

    Less than ten minutes later…

    RBOB futures are off nearly 6% from Friday’s highs.

     *   *   *

    With futures having already dipped below the SMA50 to tag a key target earlier this morning, the bounce should continue given the algo action focused on VIX.

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  • Charts I’m Watching: May 6, 2021

    Futures are flat after tumbling to and holding our backtest target yesterday morning. But, pay no attention to stocks just yet. They should continue to be under pressure, with the real action in oil and gas.

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  • Update on Bitcoin: Apr 13, 2021

    It is fitting that BTC chose the day the latest CPI data is released to reach our next upside target.  From Bonds Not Buying It on Feb 23:

    BTC even managed a proper backtest of the last major Fib level, opening the door to the next upside target at the purple 3.618 extension at 62,977.

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  • 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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