Money Monday: FOMC this Week!

Volatility Incoming:

• FOMC Meeting is this Wednesday, November 2nd – Jerome Powell is expected to raise rates another 75bps
• Over $100 billion dollars was added to the crypto market in the last 5 days
• Ethereum and Dogecoin were clear winners of the market pump leading up to and immediately after Elon Musk buying Twitter on Friday

How Markets Will React to FOMC:

• 75bps is expected, so the market is likely to have this priced in
• If Powell raises rates by only 50bps, we’ll see a strong bear market rally
• If rates are raised to 75bps, the rally or dip will ultimately come down to the tone set in Powell’s announcement – will the fed remain hawkish or pivot dovish?
  • Seeking Alpha seems to think there won’t be a dovish pivot

S&P 500 / $SPY:

• Last Monday and Wednesday we identified a new line of resistance on the $SPY and watched price action test that level

• On Friday, that resistance line was tested and price action during pre-market this morning tells us it’s unlikely we’ll get a clean breakout
• This price level here could be a good place to sell ahead of FOMC on Wednesday (possibly a good position to de-risk depending on your risk tolerance and time horizon).
  • RSI is overbought
  • MACD is peaking

Tech Earnings vs. Commodities:

• Tech stocks took a major hit last week after Q3 earnings performed poorly for Microsoft, Meta, and Amazon
• Meta is down roughly 70% from February 2022, taking price back to 2015 levels
  • 6 years of gains liquidated in 8 months
  • This is the market responding to Mark’s Zuckerberg’s focus on the “metaverse” versus improving products like Facebook and Instagram
• Commodities are holding strong
  • Agriculture stocks like MGP Ingredients and Archer-Daniels-Midland continue to perform well
  • Exxon Mobile and GM are both up

Crypto / Total Crypto Market Cap:

• The breakouts over the weekend confirm this is an accumulation phase
• Ethereum and Dogecoin led the market, but Doge beat Ethereum in price action
  • With Bitcoin lagging, it’s difficult to see this as bullish
  • Ethereum beating Bitcoin (in price strength, not market cap) means the market is betting on proof-of-stake alternatives to Bitcoin’s proof-of-work
• All other altcoins severely lagged behind Ethereum (and Doge)
  • Either Ethereum was coupled with the Doge pump around news of Elon Musk buying Twitter
  • Or Ethereum is where smart money is placing its bets for the next bull run

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Altcoin Thursday: Ethereum Takes the Lead

Crypto Tuesday: Depression Phase

Money Monday