- 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
If you enjoy reading these posts, consider sharing ‘The Rebel Economist‘ with friends and family!
I dedicate a considerable amount of time researching the markets, so new subscribers are always appreciated (buying me a coffee is probably appreciated even more, so you have an option to donate a couple dollars every month if you enjoy the content). You can use the link below to share with a friend or on social media.
Your investment strategies could differ from mine based on your risk tolerances, research, and time horizon, so I encourage you to do your own research as information provided by The Rebel Economist or Breaking Metrics should never be considered financial advice.