Macro Market Analysis October 2022
S&P 500
The S&P 500 continues to put in lower lows and higher lows thus remaining in a downward trend. Although there has been a move to the upside we are yet to see if bounces off the downward trend line. I am watching and waiting to see if it breaks and then retests the downward trend line and whether it bounces off the longterm upward trend. Regardless of whether analysts and investors propose this is similar to the 1940’s or the 1970’s inflationary climate the principle is that we are most likely in for a volatile 5 - 10 years and this could see us into the 2030’s. With that in mind perhaps treading with caution and not fomo’ing in on every buy the dip opportunity. There just may be enough liquidity in the market to see the S&P 500 bounce off the pre-pandemic peak of 3398.33 which means there could be another 10% draw down from current prices.
NASDAQ
The above image is from a previous newsletter analysis and I’ve not really revised it since. We can see the NADAQ has bounced off the longterm upward trend line from 2009. The yellow circle could be a potential buyzone if the NASDAQ moves above and then retests the downward trend line. As this is the monthly chart it could take some time to get there but there is no rush when it comes to investing rather than trading.
META
META is investing huge sums of money in the Metaverse, coupled with recent decline in advertising revenue as companies cut expenditure sees the company 75% off its all time high prices. Who said that crypto was volatile?
Meta has smashed through two key macro support levels dropping below the covid-19 crash and 2018s pull back. Currently touching 2016 prices of $97 next support level on the monthly is $90. Is there still big money to be made by investing in META? Time will tell.
ALPHBET - GOOGLE
39% down from the all time high prices which is a bigger drop than the pandemic drop. Is this evidence that FANG stocks are returning to pre-pandemic levels?
Is this is a good buying opportunity? Google continues to be in a downward trend putting in lower lows and lower highs. Recent revenue report was bearish being lower than projected as companies pull back on advertising.
NASDAQ Golden Dragon Index
The NASDAQ Golden Dragon China Index is a modified market capitalization weighted index comprised of companies whose common stock is publicly traded in the United States and the majority of whose business is conducted within the People's Republic of China.
China is fast becoming the worlds largest economy so it’s prudent to take note of what’s happening with companies conducting business there.
The Golden Dragon has currently touched off July 2012 lows however since 2008 the market has been in a long term bull market. This is partly because China’s growth is partly due to the fast debt increase in history or quantitive easing. Whether or not this level of debt is sustainable is yet to be seen.
The presidents no-covid stance has meant that large parts of the country have continued to be in lockdowns not only affecting the Chinese economy but also adding to the supply and demand/inflationary pressure around the globe.
The RSI is showing significantly oversold on the monthly chart but overall the market remains in a downward trend but given Xi’s recent re-election and China’s autocratic government this market could bounce back quicker than others. A large caviate would be any potential invasion of Taiwan which would throw a large spanner in the works of the global economy.
in my view, a world retreating from globalisation plays into the hands of Bitcoin, decentralised blockchain technologies and other crypt assets.
The crypto markets have been churning sideways, ranging from $25k - $18k roughly since June/July 2022. Lets take a look at the daily, weekly and monthly BTC charts to see if the recent breakout is anything to write home about.
Bitcoin Daily
The 14 day RSI is close to oversold but there may be a couple of days upward however when applying the fib retracement tool we see that BTC is not above the key 50% price target therefore signs of weakness remain. I’ll be keeping an eye on to see if it can close above $21,500 but may find resistance at $22,700.
Bitcoin Weekly
The 14 day RSI is moving up from being oversold but whether or not this can push up on the weekly in a bear market is yet to be seen.
Using the 50% retracement on the higher time we can see that $32k is a key level and there is some way to go before BTC reaches that, especially with several resistance levels on the way.
The volume is yet to return to 2020 - 2021 levels as retail gets bored with crypto and many face the reality of a high inflationary environment.
A long term diagonal trend line dating back to 2019 cutting through the covid crash in 2020 remains in tact. In principle BTC has been putting in higher lows. However, with the FED announcement on November the 2nd a downward turn could be just around the corner.
Bitcoin Monthly
Bitcoins monthly close in September was $19,426 so a monthly close higher would be a step in the right direction. September experienced highs of $22k which we have not reached thus far in October so there may be a green few days ahead. However it is nothing to get excited about just yet.
October volume is yet to reach the same level as September which is not a good sign for a prolonged bullish move. The monthly chart starts to look like the beginning of an accumulation period rather than the launch into a bull-market up to new all time highs. Hold your horses, there’s possibly more pain to come.
The 7 day RSI close remains in a downward trend but could be turning upward however, this will most likely take months to shower a clearer upward trend. The wedge trendiness are converging around January 2023 so lets see what the remainder of 2022 has to offer before 2023 offers a more hopeful year, possibly.