This Monday we look at Silver, S&P500, BTC and the VIX. The VIX is known as the “fear index” and its a good gauge of market sentiment.
Checking the Charts
- Silver Futures
- BTC / USD
Silver had an immensely strong pump on the tail of DXY pulling back over the last two months. It could be a backtest of the previous range, either way, not a great place to be entering. There were several hindsight bottom signals, but the bullish divergence was very strong and produced a sizeable bounce.
S&P 500 – The Standard and Poor’s 500
The SP500 is an enigma to most right now. People are waiting for some signal of a bottom and we printed the first weekly bullish divergence since 2008, which was our last major cycle bottom for the stock market.
So far we have been bouncing with great strength, but we are still trapped within the structure that has been dominating all of 2022. The fed has signaled a mild softening on the rate of hike increases, but they will still been increasing.
This setup has potential to break out and bait some bulls before a violent reversal. As soon as the market prints a predictable structure to play, it will violate it to harm the greatest number of participants.
VIX – Fear Index
The VIX, otherwise known as a fear index is a useful tool for examining the sentiment of the market based on the volatility of SPX options. In a nutshell, if VIX is vertical, the market is having a bad scary time.
While most people do not do technical analysis on VIX, it’s still a worth asset to pay attention to so you can place your bets on future price action/sentiment. While this marked box we’re currently entering has been a historical place for VIX to reverse all year.
We should find out over the next few weeks if the market is about to top for this impulse.
BTC – Bitcoin
Bitcoin is still doing the thing Bitcoin always does. Marking down 85%. While we are enjoying a nice micro bounce so far, tradition still sends us lower. An 85% correction sends us to ~10k. There is a major difference this cycle.
Bitcoin’s first recession. We may exceed tradition and go even deeper, especially if any more bad news drops on us in relation to FTX, Genesis, or regulations at large. The big brain play at this point to me is to DCA once we start flirting with -80% or otherwise show signs of accumulation.
The market will do everything possible to make you think Bitcoin is dead forever, and then one day it will head to 100k. With recession comes other risks that may extend our bear market, or change the height of our pump.
Either way, the game for now is wait. You will know it’s time for a pump when we stop putting in lower lows and instead flirt with higher highs. Patience pays.