TL;DR
- The DXY breaks its Triple Top
- Last week, we identified a topping pattern on the DXY and it broke as expected
- The result was a nice rally in equities
- S&P 500 bear market rally could be nearing its end
- After the 2008 GFC, tech stocks took 6 to 8 years to recover and reach their previous highs
- Energy stocks, on average, recovered much quicker – in 3 to 6 years
- After 2020, energy companies have enjoyed a bull run without the downsides we’ve seen from tech stocks
- This should signal where priorities are for investors and consumers during recessions
- Energy companies like ConocoPhillips and Chevron remain long term holds for me
- Lumber stocks have been slumping – a clear sign that your home may not be worth what you think it’s worth
- After the 2008 GFC, tech stocks took 6 to 8 years to recover and reach their previous highs
- Crypto remains unstable
- As the FTX story unfolds (and becomes increasingly insane), investors continue to lose faith in crypto markets
- Bitcoin rallied after Elon Musk tweeted that it will eventually recover – but I still believe price will go lower to $14k range
Dollar Index / $DXY
- Broken triple top formation
- I’m expecting the index to go back up this week as investors take profits on equities
- The bottom for stocks (and even crypto) is very close – if not already here
- But this doesn’t guarantee a bull run
S&P 500 / $SPY
- Price is approaching overbought levels and – coincidentally – the main line of resistance from all-time-high
- Overbought levels tell us price strength is starting to wane and we’ll see a topping formation soon
- This is a signal for me to start selling many of my positions
- Other stocks are printing a similar story
- Tech/ communication stocks are rallying but some commodities are crabbing or dipping
- This could be a good time to sell tech at profits and buy commodities like copper, energy, and agriculture at cheaper prices
- Tech/ communication stocks are rallying but some commodities are crabbing or dipping
- Recession signals
AT&T / $T
- Nice v-shaped recovery from its $14 low
- But price is overbought here at $19 (this is a sell signal) – likely dip back down to support at ~$17 to get us back to oversold levels
ConocoPhillips / $COP
- I’m waiting for price to test the uptrending red support line to add to my position
- Keep this on your radar
Louisiana-Pacific Corporation / $LPX
- It’s not a coincidence that lumber stocks have been dipping with home prices
- And also not a coincidence home prices have been dipping with every Fed interest rate hike
- I expect LPX to continue this downtrend
- Increased unemployment coupled with inflation (see Misery Index) means homeowners will not have the extra spending cash to upgrade their homes
Bitcoin / $BTC
- Bitcoin price is back to following the downtrending resistance line from ATH
- Technicals aside, I do not see a substantial recovery until one of two things happen:
- Faith in exchanges is restored with full transparency:
- Crypto exchanges need to understand they are not fractional reserve banks; they’re wallet holders
- A flash crash triggered by another exchange going insolvent
- A sudden crash in price (I’m predicting $14k range) will trigger investors to jump on the opportunity to buy
- Faith in exchanges is restored with full transparency:
Ethereum / $ETH
- Ethereum flipped support to resistance – a bearish move
- This is another example of price strength slowly waning in the crypto market
- Price is having difficulty breaking through the ~$1265 line
- I am not buying until we get some answers on FTX, Cypto.com, and other exchanges wrapped in the Sam Bankman-Fried ponzi scheme