In the most recent FOMC meeting, the Fed held rates unchanged, which was no surprise, and it meant that this liquidity-driven long-term bull market in stocks and crypto will continue running.
Stocks and crypto are actually pretty correlated, and the biggest danger to the uptrend is if yields start rising.
In this post, I’m going to do an overview of the stock and crypto market, as well as review some of our recent trades.
Covid updates
Before we go into the markets, let’s take a quick look at the Covid situation, with a focus on vaccination.
As you can see from this chart, vaccination rollout globally is progressing slowly, with less than 10% of the world population having at least one vaccine dose.
In addition, numerous variants have been detected globally, such as Britain’s B117 strain, Brazilian P1 variant, South Africa’s B1351 and India’s “double-mutant” variant called B1617.
This does not bode well, and we can see a large disparity between the richer and less affluent countries.
Nevertheless, the financial markets seem to disjointed from the real world, as asset prices continue to climb.
Earnings & Employment (NFP)
If we look at the daily trends, the crypto market, stock market, and even the oil market are all in a strong bull trend.
And with the recent earnings season, a record 87% of S&P 500 companies have beat earnings estimates, and earnings look to be growing by more than 46%, according to Refinitiv.
Credit Suisse’s chief U.S. equity strategist, Jonathan Golub, has raised his forecast for the S&P 500 based on strong earnings.
He wrote, “we are raising our 2021 S&P 500 price target to 4600 from 4300, representing 9.2% upside from current levels, and 22.5% for the year.”
This coming week, we will also see the data from the NFP (non-farm payrolls), which will tell us how good the job market is amidst the US recovery from Covid.
Stock Market Targets Hit
In my previous market analysis posts, I predicted the breakout of the S&P 500 with the first target of around 4120 and the second target of 4215.
On 13 April 2021, it hit the first target of 4120, and in the Telegram screenshot above, I said that it would continue to the next price target of 4215.
Just a few days ago, we saw that exact target being hit. Congrats! ???
Bitcoin: 24% profit in 7 days!
Bitcoin was very exciting because we traded it downwards, and then upwards, and both trades were very proftable!
We spotted this rising wedge in Bitcoin, which was bearish, so we took a short position, and from here we saw a 25% correction from its all-time highs.
Following that, I pinpointed a rebound for Bitcoin, with uncanny precision.
Within just 2 days, we saw a sharp rebound of 17% from the lows, but we were still not done.
Finally, after 7 days, we took profit at the resistance level, netting a 24% profit in 7 days. Ka-ching! ???
Dogecoin: 38% profit in 5 days!
Dogecoin admittedly was a more volatile creature, so we had to be more careful in finding trading opportunities for this.
Finally, we spotted a huge pin bar (bullish hammer candle), and this was the perfect opportunity for a long trade.
From there, it went up 38% in the next 5 days, and it still looks like it can continue going up, so we are still holding on to this. ??
Ethereum: 50% Profit in 13 days!
I mentioned in my previous market analysis post that Ethereum is even more bullish than Bitcoin based on the chart, and now you can see why.
In just 13 days after hitting the support level (great place to buy), we netted a profit of 50%, and the price still looks to be heading higher.
At this point, I won’t be too greedy and will take most profits and wait for the next pullback to enter again.
Here’s some feedback from one of my new students, and I’m glad to see they are profiting from the Crypto bull run as well.
I have come to the end of this market analysis.
Now that I have shared my views on the various markets, do you think the markets will continue going up, or will it be a case of “sell in May and go away”?
Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.
As countries around the world roll out their vaccine plans, we can see different industries and different countries recovering at different rates.
However, only a small percentage (about 5%) of the global population is vaccinated, so it might take a while before we start to see the results of the vaccines kick in to reduce new Covid cases.
If you look at the graph of new cases, it is still on the rise.
Given such a scenario, how does this affect the financial markets, and what are some of the investment opportunities we can look at?
Stock Market Surge
On 31 March 2021, I shared this important snippet in the public Telegram channel, because I felt that S&P 500 was going to have a breakout.
“Following up on the S&P 500, it is still within the range, but now the odds are much higher that it will continue going higher.
If I had to guess, I would estimate 70% bullish and 30% bearish.
This means it’s a good low-risk opportunity to add long positions, with a SL just below the recent swing low (around 3840).
Shared this with my students a few days ago, will tonight be the night the S&P 500 makes a new high?”
That very night, stocks broke to a new high, and has been steadily heading up for the past 1-2 weeks.
“Following up on our last post, the market is surging up as predicted. Congrats to those who followed! ???“
As of Friday last night (9 April 2021), the S&P 500 has hit our first price target of 4125, giving us close to 4% gain so far.
We have taken half profits, and there might be small pullback where we can add positions before gunning for the next price target.
Not Much Upside for Oil Markets
On 27 March 2021, I shared a chart on the long-term outlook of the Crude Oil market, and I felt that that most of the post-Covid recovery has been priced into oil, and since it won’t be going up much, I suggested taking a long-term short position on it.
“Looking at the long-term chart of Crude Oil, we saw it bottom around April last year, before recovering all the way to previous highs in a 2-legged move.
Something interesting to note is that the 2 legs of the 2-legged move are exactly the same length.
Now that it has reached the pre-Covid highs, I do not see much more upside for Crude Oil.”
“Following up on Crude Oil, it has started turning down as predicted. Possible short entry for the next leg down.”
Since then, prices have started to turn down a little, and I will continue to hold my short positions for another possible leg of price movement downwards.
Will USD Become Bullish?
On 27 March 2021, I noticed that the USD was picking up strength, which was surprising, considering how much money the US has been printing.
My guess is that currently, the US is recovering faster from Covid as compared to many of the less developed countries.
“Looking at the US Dollar Index (DXY), it seems like after a multi-year downtrend, the USD is picking up strength.
It has broke the long-term bearish trendline, formed a small double bottom, and is now challenging the 200-EMA.”
Looking at the larger chart of the US Dollar Index (DXY), you can see that price has formed a double bottom, however the size of this pattern is not that convincing since it is comparatively small.
Price is now fighting in the middle of the EMAs, and we will need to see if it can emerge victorious and stay above all the EMAs.
Relative Strength of Forex Pairs
Let’s take a look at the other currencies and their relative strength.
This shows the current ranking of different currencies, from strongest to weakest.
“Stocks continue to surge as predicted, and because the JPY is weakening, all pairs of /JPY are very bullish too.”
This shows the trends of the different currency pairs, stocks indices, commodities and bonds.
From these 2 tables, we can see that JPY & GPY are bearish, while USD & CHF are bullish.
Crypto: Bitcoin & Ethereum
Cryptocurrencies are really heating up right now, and I’ll be focusing on the 2 major ones – Bitcoin (BTC/USD) and Ethereum (ETH/USD).
Looking at the chart of Bitcoin (BTC/USD), it is still staying nicely within the uptrend channel, with a nice ascending triangle building up for more bullish pressure.
It is very likely that it will break new highs this weekend.
Looking at the chart of Ethereum (ETH/USD), it is possibly even more bullish than Bitcoin, after a breakout of a ascending triangle, a pullback to test the breakout, which also formed a bull flag.
That is already a confluence of 3 bullish factors.
Needless to say, I will be holding on to this as well.
Market Summary
In this post, I have covered many markets, and the key things to note are:
Bullishness of the stock market
Long-term bearishness of Crude Oil
Potential bullish reversal of the USD
Bearishness of JPY & GPY
Bullishness of USD & CHF
Bullishness of cryptocurrencies
Now that I have shared my views on the various markets, what do you think is the best investment at this point of time?
Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.
https://synapsetrading.com/wp-content/uploads/2021/04/draft-2-market-analysis-what-to-buy-now-e1618222224862.jpg6081080Spencer Lihttps://synapsetrading.com/wp-content/uploads/2019/10/logo.jpgSpencer Li2021-04-10 18:51:112022-03-08 11:56:07Stock Market Surges As Predicted – What to Buy Now?
On Monday (March 22nd 2021), the S&P 500 will be replacing 4 of its current holdings.
This reflects the current market trends and new economy, and I am eyeing it closely because I have quite a lot of my portfolio in the S&P 500 ETF.
This should result in bullish pressure of those stocks added, while being bearish for those removed.
But before we look at those companies, do you know what the S&P 500 index is?
What is the S&P 500 Index?
The S&P 500 stock market index, maintained by S&P Dow Jones Indices, comprises 505 common stocks issued by 500 large-cap companies and traded on American stock exchanges (including the 30 companies that compose the Dow Jones Industrial Average), and covers about 80 percent of the American equity market by capitalization.
The index is weighted by free-float market capitalization, so more valuable companies account for relatively more of the index.
The index constituents and the constituent weights are updated regularly using rules published by S&P Dow Jones Indices.
Although called the S&P 500, the index contains 505 stocks because it includes two share classes of stock from 5 of its component companies
Here are the company profiles of the incoming components:
1. NXP Semiconductors N.V. ($NXPI)
NXP Semiconductors N.V. offers various semiconductor products. The company’s product portfolio includes microcontrollers; application processors including i.MX application processors and i.MX 8 family of applications processors; communication processors; wireless connectivity solutions, such as near field communications, ultra-wideband, Bluetooth low-energy, Zigbee, and Wi-Fi and Wi-Fi/Bluetooth integrated SoCs; analog and interface devices; radio frequency power amplifiers; and security controllers, as well as semiconductor-based environmental and inertial sensors, including pressure, inertial, magnetic, and gyroscopic sensors. Its product solutions are used in a range of applications, including automotive, industrial and Internet of Things, mobile, and communication infrastructure. The company markets its products to various original equipment manufacturers, original design manufacturers, contract manufacturers, and distributors. It operates in China, the Netherlands, the United States, Singapore, Germany, Japan, South Korea, Malaysia, and internationally. The company was formerly known as KASLION Acquisition B.V and changed its name to NXP Semiconductors N.V. in May 2010. NXP Semiconductors N.V. was incorporated in 2006 and is headquartered in Eindhoven, the Netherlands.
Penn National Gaming, Inc., together with its subsidiaries, owns and manages gaming and racing properties, and operates video gaming terminals. It operates through four segments: Northeast, South, West, and Midwest. The company operates live sports betting properties in Colorado, Illinois, Indiana, Iowa, Michigan, Mississippi, Nevada, Pennsylvania, and West Virginia; Barstool Sports, an online sports betting app in Pennsylvania; and online social casino, bingo, and online casinos under the iGaming name in Pennsylvania and Michigan. It also owns and operates horse racetracks in West Virginia, Pennsylvania, New Mexico, and Ohio; and harness racetracks in Maine, Ohio, Pennsylvania, and Massachusetts. As of December 31, 2020, the company owned, managed, or had ownership interests in 41 gaming and racing properties in 19 states. It owns various trademarks and service marks, including, Ameristar, Argosy, Boomtown, Greektown, Hollywood Casino, Hollywood Gaming, Hollywood Poker, L’Auberge, M Resort, and MYCHOICE. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1972 and is based in Wyomissing, Pennsylvania.
Generac Holdings Inc. designs, manufactures, and sells power generation equipment, energy storage systems, and other power products for the residential, and light commercial and industrial markets worldwide. The company offers engines, alternators, transfer switches, and other components fueled by natural gas, liquid propane, gasoline, diesel, and bi-fuel; and batteries and inverters. It also provides residential automatic standby generators ranging in output from 7.5kW to 150kW; air-cooled engine residential standby generators ranging from 7.5kW to 24kW; liquid-cooled engine generators with outputs ranging from 22kW to 150kW; and Mobile Link, a remote monitoring system for home standby generators. In addition, the company offers various portable generators ranging in size from 800W to 17.5kW; engine driven power washers; water pumps; outdoor power equipment, such as trimmers and brush mowers, log splitters, lawn and leaf vacuums, and chipper shredders; and clean energy solution under the PWRcell and PWRview brands. Further, it provides light towers, mobile generators, and flameless heaters; light-commercial standby generators ranging from 22kW to 150kW and related transfer switches providing three-phase power for small and mid-sized businesses; and industrial generators ranging in output from 10kW up to 3,250kW used as emergency backup for healthcare, telecom, datacom, commercial office, retail, municipal, and manufacturing markets. Additionally, the company sells aftermarket service parts and product accessories to dealers. It distributes its products through independent residential dealers, industrial distributors and dealers, national and regional retailers, e-commerce partners, electrical, HVAC and solar wholesalers, catalogs, equipment rental companies and distributors, and solar installers; and directly to end users. Generac Holdings Inc. was founded in 1959 and is headquartered in Waukesha, Wisconsin.
Caesars Entertainment, Inc. operates as a gaming and hospitality company in the United States. The company operates casinos, including poker, keno, and race and online sportsbooks; dining venues, bars, nightclubs, and lounges; hotels; and entertainment venues. It also offers staffing and management services; accessories, souvenirs, and decorative items through retail stores; and online sports betting and iGaming services. As of December 31,2020, the company owned, leased, or managed 54 domestic properties in 16 states, consisting of approximately 54,600 slot machines, video lottery terminals, and e-tables; 3,200 table games; and 47,700 hotel rooms. Caesars Entertainment, Inc. was founded in 1937 and is based in Reno, Nevada.
Here are the company profiles of the outgoing components:
1. Flowserve Corporation ($FLS)
Flowserve Corporation designs, develops, manufactures, distributes, and services industrial flow management equipment in the United States, Canada, Mexico, the Middle East, Africa, the Asia Pacific, and Europe. It operates in two segments: Flowserve Pump Division (FPD) and Flow Control Division (FCD). The FPD segment offers custom and pre-configured pumps and pump systems, mechanical seals, auxiliary systems, replacement parts, upgrades, and related aftermarket services, including installation and commissioning services, seal systems spare parts, repairs, advanced diagnostics, re-rate and upgrade solutions, retrofit programs, and machining and asset management solutions, as well as manufactures a gas-lubricated mechanical seal for use in high-speed compressors for gas pipelines. The FCD segment provides engineered and industrial valve and automation solutions, including isolation and control valves, actuation, controls, and related equipment, as well as equipment maintenance services for flow control systems, including advanced diagnostics, repair, installation, commissioning, retrofit programs, and field machining capabilities. This segment’s products are used to control, direct, and manage the flow of liquids, gases, and fluids. The company primarily serves oil and gas, chemical and pharmaceuticals, power generation, and water management markets, as well as general industries, including mining and ore processing, pulp and paper, food and beverage, and other smaller applications. The company distributes its products through direct sales, distributors, and sales representatives. Flowserve Corporation was incorporated in 1912 and is headquartered in Irving, Texas.
Xerox Holdings Corporation, a workplace technology company, designs, develops, and sells document management systems and solutions in the United States, Europe, Canada, and internationally. It offers intelligent workplace services; and digital services that leverage its software capabilities in workflow automation, personalization and communication software, content management solutions, and digitization services. The company also provides desktop monochrome, and color and multifunction printers; digital printing presses and light production devices, and solutions; graphic communications and production solutions; and IT services, such as PC and network infrastructure, communications technology, and network administration, as well as cloud and on-server support services. In addition, it provides FreeFlow a portfolio of software solutions for the automation and integration to the processing of print job comprises file preparation, final production, and electronic publishing; XMPie, a personalization and communication software that support the needs of omni-channel communications customers; DocuShare, a content management platform to capture, store, and share paper and digital content; and CareAR, an enterprise augmented reality business that offers live virtual assistance technology focused on modernizing field service, customer support, and other IT Services. Further, the company operates a network of centers that digitize and automate paper and digital workflows; and sells paper products, wide-format systems, and software and IT services. The company sells its products and services directly to its customers through its direct sales force, as well as through independent agents, dealers, value-added resellers, systems integrators, and the Web. Xerox Holdings Corporation was incorporated in 1906 and is headquartered in Norwalk, Connecticut.
SL Green Realty Corp., an S&P 500 company and Manhattan’s largest office landlord, is a fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of December 31, 2020, SL Green held interests in 88 buildings totaling 38.2 million square feet. This included ownership interests in 28.6 million square feet of Manhattan buildings and 8.7 million square feet securing debt and preferred equity investments.
Vontier Corporation engages in the research and development, manufacture, sale, and distribution of critical technical equipment, components, software, and services for manufacturing, repair, and servicing in the mobility infrastructure industry worldwide. The company offers a range of solutions, including environmental sensors, fueling equipment, field payment hardware, remote management and workflow software, and vehicle tracking and fleet management software solutions for traffic light control and vehicle mechanics’, and technicians’ equipment. Its mobility technologies products include solutions and services in the areas of fuel dispensing, remote fuel management, point-of-sale and payment systems, environmental compliance, vehicle tracking and fleet management, and traffic management; and diagnostics and repair technologies products comprise vehicle repair tools, toolboxes, automotive diagnostic equipment, and software, as well as wheel-service equipment for automotive tire installation and repair shops, including brake lathes, tire changers, wheel balancers, and wheel weights under the AMMCO and COATS brand names. The company markets its products and services to retail and commercial fueling operators, commercial vehicle repair businesses, municipal governments, and public safety entities and fleet owners/operators through a network of franchised mobile distributors, as well as direct sales personnel and independent distributors. Vontier Corporation was incorporated in 2019 and is headquartered in Raleigh, North Carolina.
Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.
https://synapsetrading.com/wp-content/uploads/2021/03/penn-national-gaming.jpg466700Spencer Lihttps://synapsetrading.com/wp-content/uploads/2019/10/logo.jpgSpencer Li2021-03-16 21:44:552022-03-08 11:56:48Changes to the Components of the S&P 500 Index (NXPI, PENN, GNRC, CZR)
After the sharp run-up in stocks from last year’s March lows, some people are starting to wonder if the market has got a bit too bubbly.
In this post, we will compare the different stock indices, as well as some other products, to see if there are any good opportunities.
The Meteoric Rise of Bitcoin
When placed on the same scale, the epic 700+% returns on Bitcoin (BTC/USD) dwarfs everything else, and has also provided some of the best returns for my portfolio last year.
Looking at its strong trend, it does look like there are a few more legs for it to go, so I will hold onto it for now.
To see the rest of the products, I will now remove Bitcoin from this comparison.
Overview of Various Markets
The top 3 you see are the 3 indices of the US stock market, and the one in candles is the S&P 500. The other 2 are the Dow Jones Index and the NASDAQ.
The Nasdaq had the sharpest recovery at the start, but the other 2 recently caught up, especially in the last few weeks where the NASDAQ corrected sharply.
So in terms of percentage recovery, all 3 indices are roughly at the same level.
Next if we look at the line in dark purple (2801), which is one of the China Stock ETFs which I invest in, it had a good run, and just earlier this year it was on par with the NASDAQ.
However, in recent weeks, it has corrected sharply and is now below the 3 US stock indices.
The STI Index (Singapore market) was pretty much lackluster last year, but has picked up in recent months, making it one of the top performing stock markets this year.
The last line on the chart is Gold (one of the Gold ETFs to be specific), and it seemed to have hit its recent peak in August last year.
Will Rising Rates Kill the Stock Market?
Historically, rising yields have led to recessions, but the lag time could be years, so it’s not like we won’t be able to see it coming as it happens.
Looking at the charts of bond prices (which are an inverse of interest rates), we can see that it peaked around the same time the stock market bottomed (March 2020), and in recent weeks has been dropping faster.
This in itself it not necessarily a bearish indication for stocks, because it is more of a sign of potential rising inflation, but as long as inflation remains low, then it may not necessarily be bad for stock prices.
Which means the best way is still to check out the charts of the stock indices.
Chart Analysis of S&P 500
In summary, the stock indices are currently trading within a sideways range after a long run-up, so it won’t be surprising if there is some medium-term correction before the trend continues.
Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.
https://synapsetrading.com/wp-content/uploads/2021/03/is-the-market-heading-for-a-correction-thumbnail.jpg7201280Spencer Lihttps://synapsetrading.com/wp-content/uploads/2019/10/logo.jpgSpencer Li2021-03-09 17:28:412022-03-08 12:00:43Is the Stock Market Heading for a Correction? (While Bitcoin Surges…)
As January comes to a close, the main stock indices plod on, Bitcoin starts to correct, and we start seeing extreme action on some lesser-known counters.
We also conducted a market poll to see what our readers think.
About 2/3 of those polled are bullish on the stock market, expecting the S&P 500 to make new highs.
In a similar vein, about 1/2 of those polled think that Bitcoin will make new highs.
Historically, the crowd is usually wrong, so let’s see how these predictions turn out! ?
Let’s take a look at the general market trends:
The stock indices (NASUSD, SPXUSD, R2000USD) and the Pound (GBP) are all very bullish, whereas the Euro (EUR) and US dollar (USD) are very bearish.
Profit-taking on Bitcoin
In last week’s blog post, I warned people that the parabolic move of Bitcoin to $40,000 was not sustainable, and a correction was due.
Bitcoin has corrected about 30% from its recent highs, and now remains rangebound.
I will monitor for an opportune moment to enter.
GameStop (GME) Saga – What Exactly Happened?
As a business, GameStop, which primarily sells video games and gaming consoles, has been on a slow decline for some time.
That is why many large funds have huge short positions on this stock, giving it one of the highest short interest.
The r/WallStreetBets community on Reddit, which has more than 2 million subscribers, decided to come together to buy up the stock and push up its price.
As the price of the stock increased, this caused more funds to close their short positions (by buying the stock), thus further pushing up prices.
This is called a short squeeze, and it can cause prices to spike up.
Here is the daily chart:
And here is the 15-minute chart:
The GameStop stock jumped more than 60% after hours as Elon Musk tweets out the Reddit board that’s the hyping stock.
Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.
