Tag Archive for: bitcoin

Spencer Li

Stock Market Surges As Predicted – What to Buy Now?

draft 2 market analysis what to buy now e1618222224862

 

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.

Stock Market Surges As Predicted

Stock Market Surges As Predicted 2

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.

 

Stock Market Surge

“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.

 

Stock Market Surge 2

“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.

 

Stock Market Surge 3

 

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.

Upside for Oil Markets

“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.”

 

Upside for Oil Markets 2

“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.

 

USD Become Bullish

“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.”

 

USD Become Bullish 2

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.

Strength of Forex Pairs 2This shows the current ranking of different currencies, from strongest to weakest.

 

Strength of Forex Pairs 2

“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).

 

Bitcoin & Ethereum

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.

 

Bitcoin & Ethereum 2

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?

Let me know in the comments below!

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Spencer Li

Is the Stock Market Heading for a Correction? (While Bitcoin Surges…)

is the market heading for a correction thumbnail

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

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

 

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?

 

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.

 

Kill the Stock Market 2

Kill the Stock Market 3

 

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

 

Chart Analysis of S&P 500

Chart Analysis of S&P 500 2

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.

Stay tuned for more real-time market updates in our Telegram channel:
?? https://t.me/synapsetrading

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Spencer Li

Bitcoin Spikes up $2500 in One Day – Any Reasons Why?

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Yesterday, we saw an incredible spike in Bitcoin of close to $2500, which is 40+% move.

Even though price has corrected slightly, it is currently still up by about 30% from its recent lows.

Bitcoin Spikes

Although no one really knows the reason for such a sudden move, many people have attributed it to remarks by the Chinese President, Xi Jinping, who said the country needs to “seize the opportunity” afforded by blockchain technology.

Speaking as part of the 18th collective study of the Political Bureau of the Central Committee on Thursday in Beijing,  he said that blockchain technology has a wide array of applications within China, listing topics ranging from financing businesses to mass transit and poverty alleviation.

Although he was talking about Blockchain technology rather than cryptocurrencies, traders seem to have felt that it would still have a positive effect, at least based on what the market is reflecting.

For a technical perspective, the chart is starting to look more bullish medium/long-term, with the breakout of the falling wedge pattern.

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Spencer Li

Bitcoin – Breakdown from Triangle Pattern!

Breakdown from Triangle Pattern

After months of consolidation, Bitcoin has broken down from its triangle consolidation price pattern.

The interesting thing is that if you look carefully you will see both a symmetrical triangle (neutral) and a descending triangle (bearish), so overall the odds of it breaking down was higher than the odds of it breaking up.

The next support level is around the $6800-$7000 level, so we might see a small pullback, followed by more bearish movement downwards.

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Spencer Li

3 Major Catalysts for Cryptocurrencies in the Future

market cycle

Since the highs in December 2017, Bitcoin and most cryptocurrencies have seen a sharp decline, and agile traders/investors have mostly exited to await better buying opportunities.

This includes myself, and after cashing out my profits in early 2018 (after the double top reversal), I have started to accumulate small amounts of Bitcoin for my long-term portfolio when prices are low.

Despite the volatility, I am still optimistic for the long-term potential of Blockchain and Cryptocurrencies, hence it is important to know which catalysts will likely move prices in the future.

1. Increased Regulation

At first glance, this might seem like a bad thing, as many countries around the world (China, Australia, Taiwan, Philippines, US, etc) start to clamp down on Crypto-related activities, or impose some kind of restrictions and controls. And prices reacted to such news of regulation negatively as expected, with a prolonged downtrend lasting several months.

However, what most people don’t realise is that such regulation is actually a good thing in the long run, and necessary for Cryptocurrencies to become more “mainstream” and widely adopted. Which means that while we can expected prices to fall, it is also a good catalyst to enable us to buy these assets at lower prices in the future. Timing is key.

2. Institutional Funds

Once their is sufficient regulation and prices are low enough, institutional investors (hedge funds, asset managers, etc) are likely to come into the market. This is where the big moves are going to come from, as we saw from the dotcom boom. And recently, we have heard some news/rumours that big names like George Soros, Rothschild, Rockefeller, etc are starting to come into the market.

If we look at the graph below, we can see that a major trend is usually driven by institutional investors, which means that despite the meteoric rise of Cryptocurrencies over the past few months, it is still nowhere near a bubble, since the “real big money” from institutional investors have not started to pour in yet.

Imagine a future where fund managers and pension funds all include Cryptocurrencies as one of the asset classes in their portfolios, together with stocks, bonds, gold, etc. This will definitely create a huge demand for it, and push up prices faster than we have ever seen.

valuation
3. Scale & adoption

One major debate is whether Bitcoin (and other cryptocurrencies) can serve its purpose as a global currency with a stable store of value, and cheap & fast transactions. Currently, it is not there yet, and how fast it can get there will depend on how well the product can be improved. The volatility will naturally decrease over time as the market cap increases, but the speed and cost of transactions will depend on innovations and improvements from developers.

 

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