Stocks vs. Crypto and Commodities Top? | Market Update
The S&P 500 (SPX) has broken out an upward sloping channel. Many stock investors were recent bearish, yet SPX broke out on the upside.
Total Crypto Market Capitalization (TOTAL): Daily
Strangely, total crypto market capitalization has yet to follow stocks. TOTAL is still within its channel formation. Since corporate earnings will likely be impacted by higher input costs, lower margins, higher corporate taxes, Fed rate hikes, and an economy headed for recession, it seems strange that stocks should break out before crypto. If stocks continue to hold, crypto could have a massive catch rally.
Bitcoin is close to rentering a channel referred to as a “log growth curve.” The measure is shown here on a monthly chart of BTC. This calculation changes the axis values, so they will not match a regular bitcoin chart. This chart does show the recent pi-cycle bottom could propel BTC back inside the band and create a broader rally. This case is rare in which a long-term chart may provide short-term signals for the first half of August and all of September.
ETHE: Daily (updated)
This chart was published last week. It is still very relevant. The only change is that ETHE is moving above its 60-day exponential moving average (60d-ema; red line.) This seems very bullish. Here is the original write-up:
Looking at the Greyscale Ethereum Trust (ETHE), the change in seasons has frequently brought about a change in market direction. Specifically, whatever ETHE does heading into the Solstice or Equinox dates, ETHE turns and goes the opposite direction in the next season. Let’s use 2022 as an example. ETHE topped on the spring equinox (3/20/22) and bottomed shortly after the summer solstice (6/20/22). This chart pattern could mean a sharp rally could unfold into the fall equinox on (9/22/22). Gann’s work hits that the top of the next move could be the last days of September. Looking at the ETH chart, it seems possible for ETHE to rally from $11 to $38 by the end of September.
Commodities Research Bureau (CRB): Daily
CRB is a commodity futures index. CRB has recently broken its 60-d ema and retested that moving average. CRB failed at that moving average and has turned lower. This chart structure looks very familiar to the ones seen at the major top in commodities in 2014 (oil topped at $110) and the structure right before the covid lockdowns.
Crypto is a forward-looking market. The top in commodities will fuel the idea that a recession is coming. It will also fuel the idea that the last big rate hike by the Fed will come in September. A global Monkeypox outbreak will fuel fears of a further slowdown in economic growth. These developments could limit the Fed’s ability to do future rate hikes. These developments seem positive for crypto. Crypto may ignore the CPI statistics, rally in the first half of August, take a break in the second half of August and then rally sharply after the U.S. Labor Day holiday (9/6/2022).