Bearish DXY Pivot Month

Bull v Bear Battle is About to Heat Up

With less that a week left in August the DXY is printing a Red Bar and dipping into oversold. In the last 30 years this has lead to a minimum 5 to 10% correction from the opening price of the Red Bar month all but once out of the 8 times it has happened.

Bulls need to fight history and get pumping. If not, then 88 and 82 are the first targets.

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Bitcoin, the S&P500, and the Coronavirus

Correlation, and Case Loads

Though I could ramble on with nuance details about these 4 charts it’s actually a very simple relationship between Bitcoin, the S&P500, and the Coronavirus.

Chart 1 shows that during uncertain times Bitcoin and the S&P500 are very correlated.

Chart 2 shows the S&P in pullback mode with the supports & gaps outlined. The market is pulling back for 2 reasons. It has been in an unabated raise since the last bottom and American Coronavirus cases are spiking.

Chart 3 shows the rise in cases but no rise in deaths yet. I believe the market is pricing in a rise in deaths the last 10 days. The time it takes from transmission to death means that the death chart should start to rise this week if there is a correlation.

If the death chart does not significantly rise in the next 14 to 17 days then the markets will likely start debating a risk-on atmosphere again. A lack of significant rise would likely be attributed to the age group of those getting the virus.

What’s Driving the New Deaths Per Day Chart?

The Spring wave really impacted the elderly. This early Summer wave has an average infection age nearly 20 years lower than the spring. This has been attributed to protests in some areas, and in other areas not.

Generally speaking American youth are not taking the virus as seriously as their international counterparts and the data shows it. This is a Federal, State, Municipal, and Family problem. There has been little in the way of strong leadership across the board.

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The DOW

Gaps, Gaps, Gaps

The DOW has filled 4 of the 6 gaps created during the sell off including one yesterday.

Resistance is far strong over the next 5% compared to the last 40% up. Why? Only 1 easy gap is left to fill, it is at a “retail raid” zone, and inside the OTE. Risk takers should do better taking shorts in that range compared to the strong snap back move at the start of the bounce.

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Telsa Lawsuit, Factory Relocation, & Court Filings

Elon Musk seems set to wave good bye to California.

Policy Tweets

In a scathing rebuke of Alameda County and the State of California Elon Musk tweeted this morning that Tesla HQ would be moved from California.

In a Saturday morning tweet he said: “Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately. If we even retain Fremont manufacturing activity at all, it will be dependen on how Tesla is treated in the future. Tesla is the last carmaker left in CA.”

Later in the day he tweeted the following in regards to back to work restrictions: “I’m not messing around. Absurd & medically irrational behavior in violation of constitutional civil liberties, moreover by *unelected* county officials with no accountability, needs to stop.” This has been followed up by a lawsuit filing.

New Lawsuit

TESLA VS ALAMEDA COUNTY CALIFORNIA / COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF

Here is a link to the documentation: https://wholemars.com/alameda-lawsuit.pdf

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CBOE: 99% Volume Increase

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CBOE US Equities Volume +99.2% in April 2020

CBOE Global Markets April trading volume report is out and there was a blistering 99.2% increase in US Equities volume in April 2020 compared to April 2019.

April 2020 Volume Highlights

  • Each of Cboe’s four options exchanges posted gains in ADV over April 2019: Cboe Options Exchange (C1) up 20 percent, C2 up 39 percent, Cboe BZX up 104 percent and Cboe EDGX up 130 percent.
  • Cboe EDGX Options Exchange set a new all-time monthly ADV record with more than 1 million contracts traded per day.
  • S&P 500 Index (SPX) options ADV was up 5.7 percent over April 2019.
  • U.S. Equities total ADV across Cboe’s four equities exchanges was up 99 percent over year ago.
  • Cboe EDGX Equities Exchange market share reached a 52-week high, capturing over 6 percent of the market.

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Hang Seng Index (HSI)

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Follow The Leader

Asia was the first region to experience the Coronavirus and thus should be the first to see what impact lockdowns produced in markets.

What is the chart saying?

The was a recent Bear Div at the top of the price channel followed by a move towards, but not into, oversold. There is a lot of room to slosh around in that channel. Which is OK because the idea here is not a short but mid-term idea.

If momentum (StochRSI) can chop into, and then across, oversold conditions while also putting in a Higher Low on the price chart then a risk-on mentality should creep into the market.

The price chart and human sentiment would begin to rise as the momentum leaves its sideways chop for an upward incline over the 50 line on the StochRSI on its way to over bought.

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Capital Flight & Bitcoin

People often talk about “capital flight”, Bitcoin, and China.

But is it true? If it is then it must apply to Hong Kong too, right? Well…

This could be a 10K word essay, however charts tell a more detailed story with far less words.

The theory is this: Currency issues and/or restrictions in a country (notably China in the past) force the average person to seek shelter in more safe assets. One of those happens to be Bitcoin at times. So they say.

While it is true that CNY devaluations often happen with BTC prices rising, it is not true that the average citizen of a nation is trying to protect their savings.

We will quickly examine China & Hong Kong vs Argentina & Venezuela.

The first chart is Hong Kong. It shows no large deviation from the BTCUSD price chart. For comparison the second chart, Singapore, was added. It looks much like Hong Kong’s. This does not indicate that the average citizen is using Bitcoin as a channel for capital flight or as a safe haven.

The third chart is China. It shows even less interest as a safe haven. China and Hong Kong are seeing just the ripples of turbulence in their currency. Argentina and Venezuela is what happens if the damn breaks. In those countries we can clearly see Bitcoin is used by the public and is a safe haven. (see below)

Is Bitcoin a safe haven asset? Yes, but only once it’s too late. Maybe there’s a lesson to be learned here??

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Tesla Stock Takes a Beating

Tesla Stock Chart, Tradingview, TA
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Tesla (TSLA) Stock Weighing on Elon’s Future Plans

The main thesis of the chart is based on something I have heard a fair amount regarding Tesla, Elon Musk, and debt obligations. Which is that a combination of TSLA stock price near $150 & Elon’s debt serving obligations would force him to sell about 15% of of his shares.

When looking at the chart he probably doesn’t even want to think about that. Unfortunately for him in less than half a year the price has been cut in half and is now in an accelerating selloff into a critical support level.

If this current level breaks there is open air to $140. Bears and Tesla critics would love to spend every dime they can to push that level and crush the company and its founder.

Elon knows this. So there must be great news and/or capital being raised for release asap or else Elon is forced to sell at the break of support so that bears do not break him when he is down another 30% from here.

This is the first time the current level has been tested. Bears are fiesty and they’ll likely been adding to positions. Therefore a short squeeze off this level would not be out of the ordinary.

The deciding factor is Elon himself. If he knows there is minimal capital and news to work with then he has to sell some. If that happens then traders will see it on the chart. Have conditional orders set and ride the short bus down to pound town.

Technical Bounce and/or Short Squeeze Looming?

Price has seen a 50% reduction in half a year into accelerating momentum the last couple weeks. A 50% retrace is a juicy Gann number, as is the previous support level wich has never been tested until now. Cocky Bears often add to positions on the way down, so the possibility of a short squeeze off of support is fairly common the see in an accelerated market.

It is crucial that Elon create some hype and financial support for a bounce or else he will personally feel it. We are essentially betting on his ability to save his own rear end. Good Luck!

You can trade TSLA with BTC at SimpleFX by clicking here

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VISA

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Visa is up well over 1000% from its lows during the 2008/9 financial crisis. The chart is a clear parabola and has shifted into top gear.

The corrective phase will begin in an environment of rising rates. This will result in the currently over leveraged public to tighten spending and thus reduce corporate profits. If the credit crunch continues this will lead to defaults and result in another leg down on the chart. How The Fed plays the first major corrective wave in the stock market will determine the health of credit companies, banks, and financial stocks.

The major takeaway from a chart like this is to newer traders is to a) buy the dips in times of major crisis b) average out of a position c) keep a small holding of profits in case the chart goes parabolic. This is exactly what good traders do with altcoins and what you should also do with stocks.

 

 

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Disclosure: The author has no positions open on Visa.

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