Weekly Market Outlook: Bitcoin & S&P 500 — Full Transcript
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A new week for the markets. And today we're going to go through everything that is going to happen this week and my expectations for everything that is currently going on in the markets. So with that being said, let's directly dive into this. So first of all, let's look at the crypto market or more specifically, we only look at Bitcoin for now, as long as we don't have a clear direction for the crypto market, because this is the current state that we are in. Uhm, we have multiple interesting developments. So first of all, one of the, uhm, indicators that I built myself for analyzing the momentum is starting to go into the right direction. Obviously, this can, uhm, revert directly. So, uh, just because we see a positive development in this very short period doesn't mean that we will get a clear strategy signal to enter Bitcoin over the next couple of days. Uhm, but things are looking good, uhm, on top of that, uhm, my main strategy for Bitcoin is currently also still in, uhm, US dollars, so it is not allocated. And, uhm, we have seen, on the other hand, a very interesting signal from my, uh, DCA strategy because we saw the first real buy signal, uhm, in years, uh, for BTC, which is a very, very interesting sign. And, uh, I wanted to dive a bit deeper into what that means exactly. So, first of all, uhm, the strategy is looking at multiple factors. I will link the DCA strategy and the exact indicators that I'm looking at for that, uhm, in the description. So, uhm, so you can basically see it there as well. So, first of all, uhm, one of the signals that I'm looking at, or one of the indicators that I'm looking at, is the 200 weekly moving average. And we have seen that this is definitely one of the signals that if Bitcoin drops below it, and you still believe in the future of Bitcoin, this is a time where you want to think about buying, uhm, and not about, like, turning them back against crypto. and then the other side. The signal that I'm looking at is the realized price of Bitcoin, so this is an on-chain signal, uhm, I created my own indicator for that, just to visualize that in TradingView as well. Uhm, and what you see, or what you want to see, or what, like, a stupid buy signal for me would be, uhm, because I believe in crypto, and I believe in the long-term viability of it, is if we are below the 200 weekly moving average, and also below the realized price, and, uhm, we see something called a volatility crunch. So, uhm, those conditions right now align to some degree, so we saw that the price was below the 200 weekly moving average, not below the realized price, so it wasn't like a full, uh, send-it-to-the-moon buy signal for me right now, uhm, which is why I am currently not allocated to Bitcoin, and still sitting in cash. There would be a, like, if I would start to DCA now, this, in this current range, I would say it's not a bad period to start DCAing, if you would follow the real DCA strategy, uh, to 100% or to a dot, then this would actually be a good time to, like, think about DCAing, no financial advice at this point. Uhm, but overall, yeah, we see, uh, some positive development for Bitcoin. I would rather have it to not start, like, de-correlating with the S&P 500, uh, too much right now, uhm, because this would mean that we would see something similar, uhm, as previously. I mean, for short-term plays, this might be interesting, but for longer-term positioning, this might not be the best, uhm, period to continue DCAing. So, so, uh, I, I, I can see a future where we start, uhm, seeing some positive movement in Bitcoin right now, uhm, movements in Bitcoin right now in the short-term, but this doesn't mean that this will be the long-term bottom, because, uhm, this is something that I also looked at, like, also something that helped me back from going, like, all in, into the DCAing, uhm, process right now, because when we look at the, uh, uhm, previous, uh, period where I had, like, this indicator telling me to go in, uhm, it was a, like, I had two buy signals and it was a prolonged period, so I'm not feeling very stressed right now to start getting into Bitcoin. I would rather see it below 60k, but let's see, if this strategy, if my momentum strategy would, uhm, start to, uh, turn on, uhm, I would, I would definitely, uhm, allocate, uhm, depending on how fast or how this run continues. If we see some development like here where we continue to go up and, like, also stay, uhm, above all of my, uh, indicators, I would definitely, uhm, also increase that allocation, but for now I would rather play it. Uhm, but safe because, uhm, now we get into the big, uhm, into the big problem that I currently see, uh, for the crypto market, which is the S&P 500, uhm, I marked two periods right here, so let's first look at this, uh, chart before we go into the, uh, one at the bottom, uhm, what I personally see right now is, uhm, a period where the S&P 500, uhm, is, like, forming this range, and usually when we see, like, uhm, a low volatility period without breaking all-time highs, uhm, or without seeing a consistent uptrend, this is not necessarily a good period, uhm, to, to be invested in the S&P 500, or this could more or less mean that we are heading into a direction, or into a future, or potential trend reversal, uhm, for multiple reasons that I will go into now. So, uhm, one of the things that worries me a bit is the rotation of momentum plays of investors in the S&P 500 from momentum plays into, lower or safe. Safe side, or safer assets, or safe haven assets. So, uhm, for me personally, this, the period that we are in right now resembles, resembles this period here, uhm, extremely, like, I, I see a lot of, uhm, similarities, uhm, to the period before the, uhm, when we think back a couple of crashes, uhm, like, to this period. This period right here. I would say we have less of a similar situation here. This was just exhaustion, uhm, and the oil war holding, like, the, the I*******. conflict holding back the S&P 500 from continuing to go up. But this right here was, in my opinion, like a real shocker, uhm, and I, I can see something like that happening. Again. So, uhm, in my opinion, uhm, this is a bit dangerous right now, uh, for the S&P 500 and for AI stocks in general, because this is what I basically measure with this indicator right here. This indicator tells you, uhm, if we are currently seeing a rotation from high risk to low risk, uhm, red is low risk, green is high risk. So I should turn this around. Basically, other colors are not in the proper direction, but basically what I want to show you is that we are currently seeing, uhm, rotation out of, uhm, safe assets into low risk assets, which are, for example, uh, utilities, ETFs, uhm, with low volatility and stuff like this. So those are things that I track with this indicator right here. Uhm, I will probably share it at one point, uhm, because there's also a software in it, but, uhm, not too much that I'm not happy to share with you guys. So, uhm, this is one thing that worries me a bit, but on the other hand also shows me that there is potential for rotation into other risk assets, and one of them being, or is, uhm, Bitcoin and crypto in general. Uhm, so what you see at the bottom is, uhm, a ratio of the Bitcoin to SPX ratio, uhm, where you basically shot them against each other. Uhm, I do that in order to understand flows from one risk asset class to another. And in my opinion, uhm, what we have right now are the, the period that we are, or the, like the financial world that we live in today, uhm, doesn't have cap you to one high risk asset class that has, uhm, high expectations for potential returns in the next couple of, uhm, months slash years. And, uhm, we live in a world where we have, like, also some things like Bitcoin and other cryptocurrencies. And, uhm, this is why I think that we are currently in a position where, uhm, you have a lot a lot of money already, uhm, that like is concentrated in high risk stocks. And I see a potential, uh, rotation into Bitcoin. This doesn't mean that Bitcoin goes through the roof. I just say that there are a lot of signs right now, uhm, pointing towards Bitcoin becoming more and more interesting. So we see, uhm, slow acceleration of, uh, momentum. We see the DCA, uhm, system of mine telling me that we are like in a good long-term positioning area, uhm, and also we see, uhm, the S&P 500 slowly rolling over, uhm, and investors going out of high risk assets into lower risk assets again. The situation that we are in will not change. I believe that we are still in a high inflation period. And, uhm, this is just getting accelerated by, uhm, the thing that we are going to talk about in a second. But, uhm, overall, I see just like a lot of potential for a rotation back into crypto over the next couple of months. So, uhm, this doesn't mean that if the S&P 500 market crashes, or that if the, if the, uh, stock market crashes, that crypto doesn't, uh, take a hit, but I think that this would mark a pretty, pretty decent time to get back into crypto. And if you would tell me now that you start to DCA, I wouldn't call you crazy. Uhm, so this is also something, uh, that I was thinking about a lot recently. So, uhm, let's talk about macro because macro is going to be interesting as well, especially with the, uhm, ceasefire that ended. That's between the U.S. and Iran. So, uhm, let's get into this. So first of all, uhm, we saw like directly after the news, uh, Brent oil going through, or Brent crude futures going through the roof again. Uhm, I personally believe that this is going to maybe continue for some time depending on, uhm, a report that is going to get released this week. We will talk about the releases in a second. Uhm, so Brent futures or Brent crude futures are currently going through the roof again. This is bad. Uhm, especially considering that there are the stockpiles around the world are slowly, uhm, running out. Uhm, the only player who might have enough oil for a prolonged period is the China. Uhm, but the U S and also other European countries are slowly running out of, uhm, stockpiles, which is definitely nothing that you want to see. And, uhm, the ceasefire situation in Iran is something that you need to monitor. And also depending on, uhm, how Iran, uh, is going to react to all of that, uhm, is going to be interesting. And we see, we see another like, uhm, pipeline getting blown up by Iran. Uhm, this could actually lead to, uhm, very dangerous, uh, situations where the West has no, uhm, oil reserves anymore. And then we would see a very big energy crisis, which would obviously be bad for all risk assets, not just for the stock market, but also for crypto. it. So, um, even if things are. Things are looking better and better and better for Bitcoin, I would be still, I would be still very careful when it comes to like active positions directly, uhm, especially if you, if you allocate like a big percentage of your portfolio, I would be very, very careful with that. So, uhm, overall, uhm, what we also see are 10-year bonds, uhm, and 30-year government bonds, or US government bonds, uhm, continuing to rise, especially the 30-year ones. Uhm, I heard a very interesting thesis lately that, uhm, they also rise because of increasing, uhm, returns out of the stock market, and US government bonds basically have to, uhm, like, give away such a high, like, pay out such a high return, uhm, on their, on their coupons. And in my opinion, this is, uh, definitely, like, I agree to some degree, I guess this is also partly true and partly, uhm, the reason why we see such a rise in yields for US government bonds, uhm, long-term US government bonds, but I also think that inflation expectations are just, uh, high, and people, like, especially in times like now where, like, it's not really clear in which direction we go, uh, in the Middle East, but also, like, in general for the US, uhm, inflation expectations are currently not cooling down, which is bad because right now, usually inflation, you would say, is a good thing, uhm, it really depends on the type of inflation and, uhm, especially, like, what stage of the macro we are currently at, and right now, people are scared of, like, interest rate hikes, uhm, because, uhm, unemployment is still relatively strong, and, uhm, the Fed would have the ability to raise rates, and this would be, obviously, pretty bad for the markets, because this would mean less liquidity, and less liquidity is usually a relatively connected to, uhm, yeah, to, to, to, uhm, to falling risk assets. So, So, which brings me to the releases of this month, or this week. So, as you can see, uhm, when we head to tradingeconomics.com, we currently have no, uhm, events yet. Scheduled that have a high impact based on their, uhm, measurements, but what we can see is that the U.S. will report their, uhm, crude oil stocks and also their gasoline stock exchanges. So, this is actually something that I would definitely be interested in watching, uhm, as we can obviously see, we have seen some declines, uhm, let me quickly zoom out a bit. So, we saw some of some declines, nothing too crazy yet, but if we are going to see a prolonged, uhm, period of, uhm, conflict in the Middle East, this would definitely change. Alright, then, besides of that, we have the classic releases, nothing too crazy, nothing too important to look at if you are not a macro investor, which we aren't, uhm, which is why we ignore that, because otherwise, we will focus on the wrong things. Now, let's look at the previous week, because there we had some interesting releases, and let's just talk about the numbers. Now, uhm, we have seen conflation coming down, uhm, coming in below, uhm, the consensus, which is, uhm, quite interesting, quite good to see, uhm, this excludes, uhm, food and energy. So this is also why you probably saw notes crazy impact yet on, uhm, the conflation rate, and also, uh, year over year we come in below the consensus, uhm, which is, again, something, uh, very positive, and also the inflation rate that the Fed is watching for their long-term decisions. So if we would have seen, uhm, an actual inflation or conflation above the consensus, this would have been a warning signal that we would probably see interest rates, interest rate hikes. Uhm, right now, it points more into the direction of holding interest rates, and then also air, uhm, more, more cutting, if we continue to see this trend, uhm, of decreasing conflation. Now, inflation rate overall, uhm, was also coming in below expectations. Also, the inflation rate year-over-year came in below expectations, all of that is very, very positive, uhm, for the market as of now. Then we had a very, uhm, bullish, uhm, Fetch-Wash testimony. Uhm, I personally am still, uh, thinking that what, like, the thing that is going to happen is that he will change the way how inflation is being measured, uh, using his task force, uhm, over the next couple of months, slightly. Flash years, and then the U.S. will have more reason to cut, or, like, it is not as, like, like, Wash won't be seen as Trump's puppet, then, if he is, uh, using his task force as an excuse to change the way inflation rate is being measured, until then, he will be, a Fed chair who was going to play the role of a real Fed chair, he will say, ah, inflation is too high, we will not cut if inflation is not coming down, and then they change the way how inflation gets measured, and, oh, let's cut interest rates, and then, uh, it won't be viewed as him being a puppet of Trump, you also see that Trump is less aggressive, uh, regarding, like, the, the way how Wash is doing policy, so, I believe that is pretty much the thing that is currently going on. Retail sales, month over month, is also, like, at consensus, so nothing too crazy there, uhm, and the rest is not that important for us, specifically, doesn't say, doesn't mean that it's not important, but, for now, nothing too crazy. So, let's look into next week, because I would like to see if there is anything currently going crazy coming out. Yeah, the Federal interest rate decision, obviously, this is something to watch. I, I would be very surprised if we see any surprises in either direction, so I think holding is the most likely outcome right now. Uhm, I would be very surprised, as I said, if, if anything happens in either direction. Then, uh, GDP growth rate is going to be interesting. I think, uhm, if we continue to see GDP, uhm, growing, uhm, even with the current, uh, macroeconomic environment, this is definitely something which would be a prolonged reason to hold, uh, interest rates, in my opinion. Uhm, only if unemployment is controlled. It's continuing to go down and the economy in the U.S. is continuing to stay strong, uhm, while, uh, long-term inflation expectations are not, uhm, going up. So, if we see those rates, uhm, to, to stick in this range and go down, this could lead to potential interest rate hikes. Bye. But I don't believe that this is actually going to happen. Now, uhm, let's go into our last important section, which is earnings because we have some earnings this week that you should monitor. Uhm, not because of, uhm, like trading earnings. I don't think trading earnings has any edge, uh, whatsoever as a retail investor. Um, but it gives you a good idea of what is going to happen. To those stocks that we are going to look at. So first of all, on Wednesday, uh, we have, uh, Google announced, uh, earnings, which is, uh, quite a very important release. I think that they will do quite well, but let's see. Um, Alphabet, uh, Tesla is going to, uh, release earnings as well. Um, it is one of the magnificent seven. So it definitely is something that you should watch out for. SK hynix, um, is going to release earnings. This is going to be interesting. Their first EPS, uh, release after, um, being listed on the NASDAQ. And, um, yeah, with that being said, those are like the companies that I would watch out for if we see any crazy surprises for SK hynix, this like, again, in either direction, this could definitely move the market. Um, but more in the direction of that, the market would be in shock. Um, so like if it, if it would be really bad, uh, report, if it's a really good report, I would be like, what I would be watching out for is if it's a really like crazy beat of estimations, um, and the market is not reacting to that at all. That is, that would be like a really, really like, this would support my top pieces for the S&P 500. So if we see, um, um, SK hynix beating expectations by, um, by big length, that this would definitely mean for me that, um, SK hynix or that the market, especially the semiconductor market, um, is going to go into a prolonged period of, um, not being as, as a crazy investment as it was a couple of months ago. So, um, this is my, my, my, I mean, on Wednesday, then we have Intel again, very big corporation that I would watch out for, um, in the semiconductor space. Um, if they report earnings, beat expectations by a lot and surprise, or surprise to the upset by a lot, we don't see any, um, any crazy stock, uh, reaction for Intel. That would mean my opinion that we see. That we could see a prolonged period of capital rotation out of high-risk stocks into lower-risk stocks and potentially into crypto. Um, on the other hand, if it's a negative surprise and we don't see any further, um, sell-offs for those companies, this would, uhm, not directly contradict with my thesis, but, uhm, where I'm also not support it. So this would mean that we probably saw a bottom for them because when we look at their price action, they actually, uhm, went down quite a lot. So, uh, let's quickly check that out. So when we go into AI, same, no, not ETFs. One second. When we look at I don't think I have Intel open right now, right here, because when we look into those stocks right now, we saw that they retraced like quite a lot of their previous move, but also like sometimes in an uptrend, when you have a clear uptrend, this, those retraces also help also healthy. so it could mean that we see like a rebound here but yeah, I would be very careful to call that right now, based on that little price action that we have seen. Uhm, this could also just be over-leveraged investors having to sell their position, uhm, or buy back, uh, or short, short sellers, uhm, buying back their positions and taking profits, but let's see. Uhm, overall, I think, uh, AI could top out right now, quite easily, depending on, like, and the earnings will give you just, like, more information, uhm, on that thesis. So, on Thursday, I think, yeah, Thursday was Intel, then we see some other companies, uhm, releasing their earnings as well. Uhm, for me personally, uh, again, one of the ones that I look, uh, at the closest is, uhm, Alphabet, Tesla, SK Hynix, and on Thursday, we have Intel. They're reporting their earnings as well. T-Mobile is also some, uh, one that I am looking at, uhm, just to see how, uh, software companies or, like, communication companies are also doing, uhm, because this will also give you some clues into, like, uh, potential, uh, SpaceX developments over the next couple of years, uh, months. So, with that being said, uhm, this is mostly it. In crypto, we had no crazy developments, uhm, in the, uh, recent days. We have seen a release of the new AI model, uhm, Kimi K3, which is going to be, uh, quite relevant, uhm, for, for the for like when Anthropic is doing their IPO. So this is something that I would definitely, um, be watching out for, like, especially the sentiment around the model now, like them releasing their benchmarks versus people actually using it and liking it are two different things. So this is something that I would watch out for social media just to see like how people are actually, if people are actually starting to use it. Um, and switch over from Anthropic and OpenAI over to those, uh, to this open source model, which is again, something that I personally, where I personally say it's, it's really hard for those AI companies to, um, keep their customers. else. And, in my opinion, that is another sign that those companies are just extremely overvalued. Because like competitors, to come in, create something which maybe has a better customer experience and, um, a very similar model and it's cheaper and switching over to this new model doesn't cost a lot. So like in terms of like things that you lose, um, especially if the interface is very similar to the interfaces that you already know so keeping customers for those very high valued companies is something which is like, which makes me believe that those companies are just overvalued because let's say also like when we think about Google, um, like obviously Google has a lot of income streams, but as a user of Google like switching your whole mail from Google to whatever new provider, um, or using a search machine, which is not Google, Google search machine or, um, posting ads, um, on, on a different like search machine like that. Google has just like just a monopole above the market and it's such a strong company. Um, and people will not switch from Google as a provider for whatever service they provide to something else. Uh, same is true for maps and so on and so forth. And I don't see that with AI companies, um, because their software is like so easily, like, like you can change or switch from open AI over to cloud very easily. Um, so it's like crypto in my opinion. so you have like a blockchain and the blockchain is as good as long as it's cheap and you have, you can do the things on it that you want to do on it. And, uhm, with those open AI models, or with those AI models, I basically view it exactly the same. So if a model becomes really strong in a competitor, you just switch over to the competitor. You cancel your subscription and start a subscription at the other provider. But, yeah. Thanks. So, in my opinion, uhm, it is definitely nothing that I would, like, if they IPO, I would be very careful with holding those. I think, I think, actually, I would, I wouldn't buy them, uhm, simply for that reason. The, the, the stickiness of their product is very low. Uhm, then, again, yeah, we have seen, we have talked about crypto, uhm, starting to bottom out. And, yeah, with that being said, I think that is mostly it. If you guys have any questions or things that you would like to see in those weekly recaps, let me know. Uhm, I will talk about them in the, in the future. Or we will probably take your feedback and, uh, improve those, uh, weekly recaps. Uhm, and, yeah, with that being said, I see you in the next video. Uh, tomorrow is going to be, hopefully. Another video. Let's see. And, uh, yeah. See you then. Bye-bye.