Bitcoin $BTC has been surprisingly resilient. While other risk assets have been selling off after FOMC, Bitcoin bounced back strongly the day after to recover most of the losses. Was expecting Bitcoin to break to new lows, but price held firm.
Cryptos have held up better than expected (& better than stocks) following post-Fed sell-off. One leader on my focus list is CHZ. Bullish patterns driving price higher are 1) breakout from 3mth base in Aug & 2) flag breakout in Sep. Waiting for setup to ride the uptrend.
JPY is the wild card here. JPY has been the whipping boy within the G10 space as BOJ stubbornly refuses to raise rates. If inflation expectations are lowered, JPY may see burst of strength. USDJPY finding resistance at top of multi month channel.
Not all doom & gloom. Commod markets are starting to breakdown, which will likely lower inflation expectations going forward. WTI oil has broken down from 5mth distribution pattern & multi-month uptrend. Has inflation peaked? Even Russia-Ukraine tensions cannot lift oil prices
Spread between US10Y and US2Y widened, and became more negative after Fed rate hike yesterday. Aggressive rate hikes are causing markets to price in a recession, and the 10Y-2Y spread is now more negative than back in '89, '00, '07, and '19...
Putin orders partial mobilisation of troops on Fed day. Volatility on top of volatility. Defense stock $NOC looks primed to breakout after a long period of consolidation. Broke out from 4 month flag in Aug, and recently consolidating for a month.
Tesla looks the strongest of all the mega-caps, and is tracing out a multi month cup and handle pattern. Bullish on the stock only if price can breakout above the neckline. Either way, I think price action will resolve to either direction only after Fed meeting.
Follow through lower in Nat Gas. Price has now broken below neckline of head and shoulders pattern, which is bearish.
Big Fed meeting next week. Key chart to watch is the US10Y. Rising yields + strong USD have damaged risk sentiment. US10Y is now testing June highs. Path of least resistance is higher, but if it reverses sharply here, may bring a double top into play.
First Solar does not care. What correction? When market eventually turns higher, this stock is likely going to lead the charge out of the gates.
Many participants rushed into OXY because of Warren Buffett, and the Buffett-related spike on 19 August now looks like a trap to lure in latecomers into the oil&gas space. Any breakdown from a mini flag pattern could lead to a swift move to key $57 neckline.
Zooming into the daily charts, price tried on Wednesday to break back above a key neckline it broke down from, but was faced with fierce selling on Thursday, where Wednesday's gains were completely wiped out.
Natural gas looks in trouble. On the weekly chart, it has been building a massive broadening pattern, which tends to be unstable and leads to violent price swings. Price turned lower at the top of the channel recently.
Indices weak, but there are many strong leader and sectors out there bucking the trend. Lithium broke out yesterday, and I took a long position in ENVX as the stock broke out from a flag pattern (entry green dotted line, stop loss red dotted line). Focusing on the leaders
Gold now trying to break neckline of a 2.5 year distribution pattern. May not see any decisive move before Fed meeting next week. Let's see.
Despite strong CPI print, which should theoretically be positive for cyclical commodities, WTI crude continues to languish. In early Aug, price broke below neckline of a huge 5mth base. In late Aug, price re-tested neckline and was rejected, seeing further follow through lower.
Going into US CPI today, a handful of solar stocks are setting up to breakout higher. The sector has shown high relative strength, and one of the leaders in the sector is Enphase (ENPH). Broke out from 5-week flag on 7-Sep, and breakout level held after retests in last 2 days.