🗞 Weekly Market Newsletter | Edition No. 15
News Update + A Full Analysis of Major Indices Including Stocks, Crypto, Commodities, Bonds & Forex
👋🏼 Hey Friend, it’s Bramwell here!
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Sunday, October 16th,
Hello Everyone,
Shh, be very quiet while reading this and don’t disturb the sleeping bears.
It’s 7:50 pm at the time of writing this edition.
U.S. equity futures markets are just waking up rubbing their eyes, all is calm and no one dares disturb the VIX (volatility index) which is snoring after a feast on the markets in August & September.
Forex markets across the globe will be awake in just hours from now with all eyes on how foreign currencies perform this week.
We’ll tip toe through a few breaking news headlines from last week to start our newsletter, but I’ll share a few words of insight before we dive in.
Come close, be quiet and do not wake the bears.
If you’re not dollar cost averaging your assets at these prices, you’re making a grave mistake. Wealth is built during bear markets - not bull markets. The prices across the board, both in stocks and cryptocurrencies, are extremely oversold and at any moment a turn in market sentiment may occur.
As macroeconomic-conscious investors, we must have a sticky note on our mirrors watching for the November 2nd and December FOMC meetings where anticipated rate hikes will be 75 bps and likely a second 75 bps. Remember, the market will front-run retail investors who are sitting on cash waiting for a bottom signal, it’s best to anticipate beforehand when the rates will slow down and a return to risk assets will occur.
The system is bending, a break will occur somewhere soon. Foreign pension funds are in trouble due to rising bond yields and crashing bond prices. Sovereign currencies have devalued to multi-year (some multi-decade) lows vs. the U.S. Dollar and this is troubling as inflation continues to show no mercy on purchasing power. Keep your head on a swivel.
Political tensions are boiling over. China this week guaranteed Xi Jingping an unprecedented third term and his remarks during the CCP convention foreshadowed trouble ahead. Additionally, Putin spoke just a week ago condemning U.S. sanctions on Oil and guaranteeing a WW3 should Ukraine join Nato. Lastly, the Saudi regime held its ground on Oil production cuts much to the dismay of the Biden administration, creating more beef between the two countries - a political boxing match is shaping up.
Keep these points on the forefront of your mind as in the coming weeks, the narratives will leave more clues to what may break first - it’s important you have your portfolios in order for when that time comes.
…and please remember, the focus I have for each weekly update is to triangulate the world news as it unfolds into logical narratives which help us navigate the financial markets and translate the storyline of what we see in the charts to provide probabilities of where asset prices travel.
You must keep in mind that the majority of the world is asleep and unaware of how all of these events are connected.
Most humans are financially illiterate as a byproduct of a substandard education system.
The citizens of the world react only to what is told to them in mainstream news and are late making independent financial decisions to the detriment of their wealth.
Feeling overwhelmed, many blindly hand over their investment portfolios to institutions that wash & rinse the markets dry, leaving only scraps of profit for their clients.
We live in a world controlled by the aristocrats who have long manipulated the share of resources and waved a wand of perception distortion over the people - but times are changing.
Becoming a student of common sense macroeconomics, a technician of gut-instinct intuition, a detective of high-growth disruptive technologies and a gatherer of aggregated news events will give you the magic touch to transform your understanding of investing into a practice that will last a lifetime.
But for now, be still and don’t wake the bears; we haven’t bottomed yet.
- Bramwell
📰 BramwellFox MetaCapital’s Weekly News Recap
You may press the 🗞 to read more about each headline.
Major News Headlines (+ how my brain activity responded.)
🗞 98% - The Odds of a Global Recession as per Ned Davis Research
💭 Bramwell’s Thoughts…
98% is a pretty convincing statistic, isn’t it?
My first thought when I read this headline was, “You mean we aren’t in a recession already?”
Affordable housing is a myth, consumer saving has plummeted, household net worth has been all but destroyed, core CPI (things we actually 'need’ vs. want) is still soaring and every store you enter is ‘hiring’ due to labour shortages (which is ironic because most can’t accept the wages that are offered due to sky-high cost of living - what a vicious cycle) and you’re telling me this isn’t the recession we’ve been waiting on?
I’m unsure what could get any worse.
But if I had to bet, I’d be preparing for higher utility prices as the cold Winter arrives, lagging supply chains in energy (gas) and food sectors with a prolonged period of small businesses getting wiped out due to labour shortages and a credit crisis.
2023 is shaping to be a year of struggle for many if this study has any merit.
🗞 Google Partners with Coinbase for Cloud Services Payments
💭 Bramwell’s Thoughts…
On the innovation side, this was phenomenal news.
It’s important to remember that cryptocurrency prices are dictated by network usage, or utility - a very different story from legacy markets where stock prices are dependent on a company making profits.
When news events break that major companies such as Google may allow users to pay with crypto, this opens the flood gates for increased adoption globally, and generally, we will look to legally compliant cryptos to see an influx of capital as investors speculate which will be poised for mass adoption.
$XRP.
🗞 SEC Launches Investigation into Bored Apes Yacht Club Founder
💭 Bramwell’s Thoughts…
The SEC has been on a fishing trip of trial and error lawsuits attempting to catch a big Tuna to be used as precedent in the court of law, which will govern how all digital assets are litigated and regulated.
This was an unfortunate jab at one of the largest NFT projects in the space but quite a predictable move by Gary Gensler and his SEC henchmen.
Is a JPEG truly an investment contract with the expectation of profit and the ownership of an enterprise?
It’s doubtful.
*right click, save as powerhungry.jpeg*
🗞 U.S. Inflation hits 8.2% in September, hotter than expected; war on financial assets continues.
💭 Bramwell’s Thoughts…
The markets threw a temper tantrum this morning the CPI data was released.
They sulked for an hour as a massive sell-off occurred, followed by a HUGE rebound which sent the markets green on the day.
This feels to me like market manipulation at the highest level.
Retail investors panic, and sell everything at a loss expecting the apocalypse - whales pick up cheap assets at bargain prices and drive the prices up, creating FOMO for retail to buy back in later the day at a premium - rinse and wash.
That being said, the big picture here is that inflation data is not pretty.
It’s not what the Federal Reserve wants to see, nor what the Government wants to see.
The cost of living is simply out of control, prices are not slowing down and FED will have no other choice but to continue to make consumer spending a cardinal sin.
We need an economic contraction to the point where all but locked back in our homes with Netflix memberships cancelled, eating Mac & Cheese and cuddling over a wood stove for heat because gas and Oil cost more than Gold.
This will likely be our bottom signal.
…and I’ll have to manually deliver the weekly update to all of you via wax-stamped letter as I’ll be too insolvent to pay for my internet bill.
We look for next months FOMC meeting to hear how J. Powell discusses the FED’s strategy, we anticipate two more hikes in 2022 of at least 75 bps and hope that by some miracle, the DXY doesn’t go to the moon and our asset prices fall further into despair.
(I’m personally banking / expecting government intervention or something to break which will end the rate hikes prematurely.)
🗞 U.S. Treasury contemplating a bond buyback?
💭 Bramwell’s Thoughts…
Well, this headline was convenient.
Just as I had expected, an intervention may be looming.
In September, we saw the World Economic Forum, IMF and other global organizations plead with central banks around the world to slow down their rate hikes due to the terrible effects on purchasing power and cost of living.
Now, this week, the U.S. Treasury contemplates a bond buyback to slow the bleeding of bond prices and cap the soaring yields, which is increasing the demand for the U.S. Dollar at record paces.
While this is still in speculation mode, it’s worth paying attention to see what actions the U.S. Government will take heading into the midterms in November.
BramwellFox MetaCapital’s Weekly Market Review & Technical Analysis
📈 The Week Ahead in Charts
Symbols 📈 or 🐂 = Bullish / Positive | 📉 or 🧸 = Bearish or Negative
📈 DXY(U.S Dollar) + 📉 Canadian Dollar
💬 📈🐂 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
Last Weeks DXY Path Prediction ⚖️ : The DXY consolidated all week between 112-114, no significant bearish / bullish change.
In the early part of the week I believe the DXY will flex a little strength as many foreign currencies are close to bottoming at important areas of support - but have not yet hit those bottoms.
For example you’ll see the $CAD chart below exposing a small drop possible before a potential falling wedge breakout.
We may see the U.S Dollar retest the range highs of 113.75-114 which may drag down stocks and crypto until mid week.
On the 12-hour chart, you’ll notice the DXY is sitting mid-channel with two potential paths to travel. The red path being the bearish of the two with the upside strength risking a financial meltdown should the DXY poke it’s head above the 116-120 range. The green path would allow markets a breather as the DXY tests the bottom of the channel into the 110 region as investors pray for a channel break to the downside targets of 109.50.
Featured Chart DXY 12HR (click to enlarge)
The orange vertical line is the November 2nd FOMC meeting and I fully expect the DXY to be at a decisive region leading into the event.
If the DXY is low into the event it could spark a volatile rush to the upside should the FED surprise markets with a 1% hike. Should the DXY be hovering around the top of the channel perhaps the FOMC meeting confirms what is already priced in and we see a peaking U.S dollar ready to fall over.
Featured Chart CAD/USD 12HR (click to enlarge)
📈 U.S Treasuries
💬 📈🐂 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
It’s important to remember that when the US2YR yield > US 10YR yield this is referred to as an inverted yield curve, a signal that an economic recession is on the horizon.
Ideally we would want to soon experience a fundamental news headline that slows the bleeding of bonds, sending yields into a corrective formation.
In the 1-Day chart below you’ll see I’m expecting a possible top on the US2YR near ~5% with a corrective target around 3.5%.
For this to occur I want to see demand for the U.S Dollar softening, be that a bond buyback from the U.S Treasury or strengthening of foreign currencies due to intervention - or a hail mary surprisingly dovish tone from the FED during the FOMC meeting.
Should the 2YR lose strength faster than the rate of change of the 10YR, we may see hope restored to the economic outlook should the inverted yield curve change direction - but this may be too wishful of a speculation given the 98% recession study I quoted above.
Featured Chart US2YR 1D (click to enlarge)
Featured Chart US10YR 1D (click to enlarge)
📈 S&P500 & 📈 TSX
💬 📈🐂 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
I’m certainly not full blown bullish on the stock market given the enormous evidence to be pessimistic, but I do think the markets may deviate from the bottom of the range soon with buying support coming back in as speculators front run their contrarian plays ahead of important economic dates ahead.
There’s two scenarios we can play out. The bullish path requires a softened demand for the U.S Dollar and expectations of interest rakes hikes to slow down in Q1 23’ to spark a flurry of cash deployment back into equities. The bearish path assumes that the current economic conditions are as bad as they look and that the S&P500 is about to break through the mid-channel range falling through it’s October 2020 highs and breaking the weekly 200MA - not good.
You’ll notice I like to use horizontal trading ranges on a high time frame and place an identical range below, called a standard deviation. Typically, when an asset or index breaks below the support floor of one range, it will target the midline of the next range as a potential bounce. It just happens to be that the midline of the range below lines up with the February 2020 highs, meanwhile the bottom of the range is very close to the purple weekly 400MA - a terrifying drop from where the markets are today and an apocalypse of a moment should the S&P500 fall through.
Featured Chart S&P500 1W (click to enlarge)
Featured Chart S&P500 1D (click to enlarge)
The Canadian Markets are completely oversold as well with the indicators flashing buying signals on the daily chart.
I am slightly more optimistic on the TSX deviating sooner back up to its midrange (dotted red) vs. further capitulation occurring.
I’ll be looking for positive news in the headlines related to Canadian housing, labour, CPI and or central bank policy to add a little fuel to my bullish bias for the short term.
Featured Chart TSX 1D (click to enlarge)
📉 VIX (Volatility Index)
💬 📉 🐻 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
“In the Jungle, the mighty Jungle, the VIX bears sleep tonight.”
I heard a stat the other day that every bear market has ended with the VIX tapping 45 - and I’ll be damned if the channel range doesn’t show the possibility of that unfolding in the coming weeks.
This week I’m expecting the VIX to remain decently flat or retrace slightly to the channel bottom. From there we edge closer to the FOMC meeting when volatility is likely to spike. Should the VIX rise above 32.5 we begin entering the danger zone of the 2001 Dot-Com bust and 2008 Financial Crisis.
All eyes on the VIX movements this week and hope for a channel break to the downside (green arrow).
Featured Chart VIX 12HR
📉 Bitcoin & Total Altcoin Market Cap
💬 📉 🐻 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
While it’s certainly possible for Bitcoin to lead the markets as a safe haven from fiat currencies, the technicals are also showing a huge potential downside risk unfolding.
Bitcoin had a bearish re-test of its rising channel and is pressing against its diagonal resistance heading into the week. It’s likely another flush to the downside occurs should the DXY show strength early in the week with a further re-test of the 18.5-19K range - however we do NOT want to see Bitcoin hang out down here for much longer without a strong reaction or we open up the possibility for further capitulation.
I’ve mapped out a bullish (green) path that Bitcoin could take requiring 21.5K to be re-claimed as support, i’ll be watching the BTC.D (Bitcoin Dominance) chart as well to see how its performing relative to the alt-coins should a rally take place.
Featured Chart BTC 6HR (click to enlarge)
Speaking of Bitcoin dominance, I wanted to bring your attention to this chart which shows the Total Altcoin Market Cap (Total Crypto Market Cap - Bitcoin) and you’ll notice that TOTAL2 is resting on a green support line.
This support line is the previous all-time high and we had a great reaction in June when we touched it. Should the crypto markets fall further, i’ll be looking for a bullish divergence to form on TOTAL2 and for the market cap to make a higher low than in June to maintain bullish structure and my bias of the green path.
Should the bulls lose strength, it’s possible that the next region of support is tested ~250B (a fairly big drop down for alt-coins) but the upside to this scenario if you’re macro bullish on crypto would be the formation of a bear trap.
TOTAL2 dipping this low would have the market cap fall out of the bull flag range (black channel support) and a full blown market reversal could occur quite sharply should the dip be short lasted.
Featured Chart TOTAL2 1D (click to enlarge)
📉 XRP
💬 📉 🐻 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
XRP has shown some of the most impressive strength in the market over the past few weeks and it may be time for XRP to cool off.
I’ve drawn a trend-line below where I expect XRP to potentially touch off of which coincides with the 1D 200MA (red).
All dips from this point on are for buying and should XRP reach the .4-.42 range I’ll be reloading more cash into the asset.
Featured Chart XRP 1D (click to enlarge)
Featured Chart XRP 6HR (click to enlarge)
📈 Gold
💬 📈🐂 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
For Gold to remain bullish I’ll be expecting to see a higher low maintain market structure from the bounce in late September.
I’ll be keeping my eyes on news headlines potentially alluding to softening demand for the U.S Dollar or a dovish pivot on monetary policy.
A speculation I have is that if the FED cannot reasonably expect inflation to cool to 2%, they may move the benchmark and accept higher inflation for a period of time which may be bullish for Gold.
Featured Chart Gold 1D
📈 Oil
💬 📈🐂 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
The political chess match is unfolding and it’s been a crazy drama over the past few weeks between OPEC+ and the U.S Government.
With Oil production cuts in the works, one can only speculate that Oil prices rise and take the bullish green path. This matches expectations released by JPM in previous weeks of $100 barrel as Q4 unfolds.
The charts confirm a breakout on Oil followed by a mild retest last week. Should Oil break back down under this resistance I’m going to hedge short on Oil into Q4 and look for fundamental news events to confirm this narrative as I target $68.5-72.5 per barrel.
Should Oil continue its strength upwards, we can fully expect the price to test the horizontal range high before breaking into 1 standard deviation above and head for the mid line (approx. $100 / barrel)
Featured Chart Oil 1D (click to enlarge)
📉 Commodities
💬 📉 🐻 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
The last chart brings us to the commodity index which is important should we want to forecast where consumer prices are headed.
The Dow Jones Commodity Index has been in a falling channel since June and attempted a breakout recently before getting rejected. With this type of rejection I would expect the index to re-test the mid-line of the channel which also happens to be the horizontal range low as well.
Losing the horizontal range low would be a sign that commodities are falling and potential catalyst for market bottom signals.
Featured Chart Dow Jones Commodity Index 1D
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