🗞 Weekly Market Newsletter | Edition No. 21
News Update + A Full Analysis of Major Indices Including Stocks, Crypto, Commodities, Bonds & Forex
Sunday, November 27th
Hello Friends,
As I sit here late Sunday afternoon to share my thoughts on the markets a wave of gratitude has flushed through me and I wanted to take a moment to sincerely say thank-you.
After years of sharing my perspectives on the emerging digital world of cryptocurrencies and blockchain, I committed in 2021 to building a short mini-course with a single vision - to interactively educate my audience and help them build a strong foundation of knowledge and skill on the subject of self-investing into the world of cryptocurrencies.
The success of my mini-course ‘A Journey from Barter to Bits’ led to my decision this past July to embark on the launch of this substack featuring weekly reports in addition to more long-form content and educational tidbits and I’m super proud of the community that is being built under BramwellFox MetaCapital and grateful that each week I have the opportunity to share my passion with you - so a big thank-you to each of you.
It’s been a low-volatility week for both news and price action across the markets but we have much on the horizon to close out the month of November and into the early weeks of December - don’t sleep on the last stretch of Q4 2022.
I’m not expecting much more ‘pain’ in the markets in terms of drawdowns across major indices; however, sideways action can be equally painful in its own right.
For those in a hurry today who may not make it through the entire episode, i’ll quickly brief you on my thoughts for the week ahead;
The U.S Dollar has been in a descending channel since the highs reached in September which has given equities room to breathe as shown by the rally in the S&P500, Dow Jones and TSX.
With that being said, the Dollar is resting on support with many of those respective indices above approaching their rally resistances which means we can (and should) expect a pullback across the board for stocks in the coming days / weeks.
Typically, dollar ‘up’ means stocks and crypto down and in looking at the charts (which you’ll see below) it appears that this week may be choppy at best.
I’m not expecting the DXY (Dollar Index) to strap a jet pack on and head into the skies, but I am expecting a bounce soon which may only allow for a tiny squeeze left to the upside for risk-on assets.
Investors will be seeking clarity from the December FOMC meeting which will be based on this weeks PCE release (personal consumption and expenditure data ie. consumer balance sheet update) and NFP release (non-farm payrolls ie. unemployment rate data) as both reports tend to show how broke and jobless the monetary policy has made U.S citizens.
Remember, the more *broke* and *jobless* everyone becomes, the faster the FED may pivot on interest rate hikes - which is absolutely painful to actually have to type.
With all of this being said you likely can deduce that if we factor in Holiday spending which is underway with the western-world-hallmark Black Friday event plus choppy market conditions in anticipation of December’s final FOMC meeting, its logical to assume there may be sell pressure on the markets for a few weeks.
That’s not to say I’m bearish, I’m just neutral with a smile on my face.
Enjoy edition 21, it’s been a pleasure.
- Bramwell
*ps. in the early part of this week I’ll be releasing Episode 3, A Journey From Barter to Bits - Learning The Basics of Technical Analysis. It’s going to be 🔥 and you’ll really enjoy it - keep your eyes on your e-mail for the publish.
📰 BramwellFox MetaCapital’s Weekly News Recap
You may press the 🗞 to read more about each headline.
Major News + Crypto Headlines
🗞 Proof of Reserves: ie. CEXual Audits
💭 Bramwell’s Thoughts…
In the aftermath of FTX’s collapse which effectively trapped billions of dollars of users funds, there has been a public cry from industry leaders (such as Vitalik Buterin, founder of Ethereum) as well as CEO’s from across the crypto space calling for exchanges to become impeccably transparent with their user deposits.
The concept is dubbed ‘Proof of Reserves’.
What is Proof of Reserves?
A Proof of Reserves (PoR) is an independent audit conducted by a third party which seeks to ensure that a custodian holds the assets it claims to on behalf of its clients. This auditor takes an anonymized snapshot of all balances held and aggregates them into a Merkle tree — a privacy-friendly data structure that encapsulates all client balances.
From there, the auditor obtains a Merkle root: a cryptographic fingerprint that uniquely identifies the combination of these balances at the time when the snapshot was created.
*thanks Kraken for the easy to digest explanation.
@CZ_Binance was the first major exchange to publish their own ‘Merkle Tree’ however the document was criticized by the CEO of Kraken', Jesse Powell, who claims a PoR is useless without a full list of assets including exchange liabilities.
My big take-away from this news event is as follows:
If Blockchain were to really be the solution to centralized entities such as ‘banks’ who have long defrauded the system, citizens and monetary policy for their own profits, then it’s to be expected that the recent events seem oddly in alignment and very par for the course as a stress test for crypto.
If blockchain solves the PoR problem, this could be game changing for the global financial system which puts an end to the fractionalized reserve banking system that has been the main issue of global meltdowns for decades if not centuries.
I’m more bullish than ever on crypto ever since these discussions have been fostering increased transparency.
🗞 Bankruptcy Domino’s
💭 Bramwell’s Thoughts…
FTX was the platform that many crypto exchanges such as BlockFi and Genesis both held their crypto capital as well as assets in the form of accounts receivable via loans to FTX.
With FTX bankruptcy well underway, the contagion spread has infected some of the largest lenders, fund managers and institutional brokers in the space including the crypto giant Genesis.
This week Genesis warned that without an influx of capital, they too may be on the chopping block next.
*As this event is already in the news, I believe it’s safe to assume the risk has been priced into current crypto prices; however, that’s not to say that a formal bankruptcy announcement will not rattle the markets further - head on a swivel.
🗞 A Bullish thesis for Blockchain? Can BTC reach $1,000,000?
💭 Bramwell’s Thoughts…
Interesting…
Cathie Wood is the American hedge fund CEO of Arkk Invest and famous for her forward looking investment strategies into disruptive technologies.
In a recent interview she stood by her stance that Bitcoin will be valued as digital gold and experience record highs into the second half of the 2020’s, which would be a 50x ROI from current prices.
Then, in a timely fashion this week, Putin of Russia also declared his interest in blockchain by calling for an alternative settlement system that siderails legacy banking payment routes including the SWIFT system currently in use.
If only there was a major blockchain player focusing on international settlements
*cough*
*ripple*
Prices may be down, but crypto isn’t going anywhere.
This isn’t a technology bubble, it’s a speculation bubble.
The tech isn’t going to zero, the 99% of projects that have no future are.
Few understand this.
🗞 FTX Drama
💭 Bramwell’s Thoughts…
I’m not going to allocate too many text characters to this headline because Genevieve is crushing the FTX journalism, but trust me the story keeps getting more corrupt the more you dive in.
🗞 Bitcoin Miners Capitulation
💭 Bramwell’s Thoughts…
It’s important to remember that the Bitcoin network reaches consensus, or ‘trust’, using a Proof of Work algorithm.
Because of this flaw code design, supercomputers are now used in the race to solve the cryptographic puzzle and be rewarded in Bitcoin for its hard *work* keeping the blockchain running slow smoothly.
The problem here is that these supercomputers require a 💩ton lot of electricity.
So if you think your monthly housing costs are high, imagine a farm of supercomputers…
As the price of Bitcoin falls, their reward becomes dimished.
Thus, not only is it becoming harder to solve the cryptographic puzzle over time, but the reward is getting less and less turning miners bankrupt on their operations.
This is known as miner capitulation which means increased sell pressure on the open market.
We must keep this in our minds in the event BTC continues to fall in price.
🗞 Retail Panic Selling, Whales Panic Accumulating
💭 Bramwell’s Thoughts…
In contrast to the above headline, it’s important to also understand that Bitcoin’s market price falling does not mean that its intrinsic *value* is also diminishing.
I’ve long speculated that Bitcoin was designed as a closed loop network by a conglomerate of nations as a supply-scarce decentralized digital hard money source to which digital assets can be pegged.
While I’m not net long on Bitcoin from a maximum ROI standpoint, I am net long on the trust that Bitcoin’s network has upheld.
No downtime, not one reversed transaction - purely gold.
If we look at on-chain analytics, as shown below by one of my good friends @CredibleCrypto, it appears that the crux of selling has been by retail investors meanwhile whales (institutions, governments, wealthy private individuals) have been accumulating at a vicious pace.
Always remember that there are two sides to every transaction, so if the market has been in a selling phase for nearly a year, who is buying?
Them.
BramwellFox MetaCapital’s Weekly Market Review & Technical Analysis
📈📉 The Week Ahead in Charts
Symbols 📈 or 🐂 = Bullish / Positive | 📉 or 🧸 = Bearish or Negative | ⚖️ Ranging or Low Volatility
FOREX
⚖️ 📈 DXY(U.S Dollar) + ⚖️📉 CAD
💬 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
I’m expecting the U.S Dollar to range between 105 - 108 leading into mid-December.
In the descending channel below you’ll notice the dotted red line marking the channel mid-range as well as I’ve drawn a horizontal channel which works well for identifying the possible highs and lows of a trading range.
I’ve reverse engineered approx. December 15th as a point of max pain for the markets across the board.
This scenario would be that the DXY reaches the major resistance of the descending channel (~108) teasing risk-on bulls with a possible rejection and teasing risk-on bears with a possible breakout to the upside.
Technical Note: I am nevertheless expecting selling pressure heading into the monthly close of major indices across the board as the monthly candlestick should, for optimal technical analysis, have a wick atop the candle showing selling pressure at the monthly high.
For this reason, I expect a choppy start to December and the DXY to follow the green path.
Featured Chart DXY 1D (click to enlarge photo)
To some degree, all forex will be affecting by the strength of the U.S Dollar including Maple Leaf coin.
The Canadian Dollar has experienced a nice rally off the backs of strong economic data and dovish Bank of Canada policy decision this past month; however, what’s in store for December may create a hiccup in the continuation of this leg up.
For every low time frame rally in the DXY I’m expecting the inverse for the $CAD, thus a choppy distribution range between .735 and .755 is anticipated until we get clarity from the FED in December.
I’m bullish on maple syrup, but perhaps the pancakes we ordered get burned by the FED.
Featured Chart CAD 1D (click to enlarge photo)
Equities
⚖️ ⚠️ S&P500 + ⚖️ ⚠️TSX
💬 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
The flagship index for U.S stocks is walking a tightrope in the 4000 range and at the time of writing this edition futures have opened up red (😭) to start the week.
There are two possibilities from here;
We breakdown from the current two month trend line likely revisiting 3650 to test demand.
We start the week red yet finish strong with a small squeeze to the upside and a brazen attempt at a breakout above 4100.
It’s worth noting here that Goldman Sachs released their 2023 outlook and their bright minds believe the U.S markets will continue to crash further by 10% heading into the Q1 23’ and they’re technically not wrong - but I wouldn’t call it a further crash as much as a pullback from a bi-monthly midterm rally.
Not overly concerned here with either path but will keep head on a swivel of any further developments.
Featured Chart S&P500 1D (click to enlarge photo)
The TSX has shown relative strength vs. the S&P and I’m expecting much of the same price action for the maple leaf exchange.
We’re so close to major resistances across the board that it’s only healthy for a pullback to occur as many investors will take profit for shopping consumerism during the Holidays and/or for tax relief to close out the year.
The real question is how ‘deep’ will the corrections go?
I’m expecting no further than 19,250-19.5 for the TSX before another attempt at a breakout above 20,500.
Featured Chart TSX 1D (click to enlarge photo)
Treasuries
📉 US2YR & 📉 US10YR
💬 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
Seldom will I report on the Treasuries market unless they’re indicative of a potential triangulation for supporting evidence on risk-asset movement.
Both the U.S 2/10YR yields have low timeframe bearish sentiment and I’m expecting them both to correct further into the single standard deviation range below marked by the red path.
This would be bearish for the USD and setup bottom confirmation for stocks & crypto.
Featured Chart US2YR 1D (click to enlarge photo)
Featured Chart US10YR 1D (click to enlarge photo)
Cryptocurrencies
📈 Bitcoin & BTC.D + 📈 XRP & XRP.D + 📈 Total Crypto Market Cap
💬 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
Bitcoin followed last weeks path perfectly aside from a slightly deeper correction than I had anticipated forming new yearly lows close to $15K.
As you can see on the daily chart, we’re in the discount half of the trading range but volume is falling which is a concern for any upside potential.
What may be required is a day or two of falling prices to revisit the high 15K region to spike up open interest in fresh longs across the board.
It’s a catch 22 as in this region the fear is that BTC breaks below the range support and free falls into the 10-13.8K demand zone which would be the Santa Claus equivalent of getting coal in your stocking for crypto investors.
Let’s see how the week plays out, but my two paths are as follows with my intuition saying we re-test 17.5 before possibly heading lower if sentiment or monetary policy shits in our stocking spooks the market.
Featured Chart BTC 1D (click to enlarge photo)
For a minute it’s worth observing how close Bitcoin is to falling below yearly support on the dominance chart.
The dominance chart is a simple fraction of Bitcoins Market Cap / Total Crypto Market Cap in the form of a percentage.
Bitcoin falling *could* mean that investors are piling cash into altcoins OR the total crypto market cap is shrinking as Bitcoins market price falls more aggressively than the capitulation on altcoins.
This is a must-watch chart right now.
Featured Chart BTC.D 1W (click to enlarge photo)
Speaking of the total crypto market cap, here we see a bullish divergence forming as the RSI on TOTAL is rising as the price has fallen, indicating a possible reversal looms near.
I’m targeting a rally into the $1 Trillion range for TOTAL by Q1 2023.
Featured Chart TOTAL 1W (click to enlarge photo)
To be honest I’ve been waiting on an XRP pullback into the .33-.37 range to re-load a cash position back into the asset.
Here we can see a rising wedge forming on XRP and at the time of writing this late Sunday it has fallen into my first target area of .375 where I had my first order set. *cha ching*
What I’d like to see occur here is XRP to fall out of the rising wedge and re-test the .35-.37 range with bulls stepping in to defend any pullbacks with high volume.
As I mentioned in previous editions, the capitulation range on XRP is .25 cents and we cannot forget that a collapsing BTC may trigger this downfall.
We also cannot forget that the Ripple lawsuit resolution may end in a settlement any day now.
I’d rather be positioned in XRP and face further downside than sell my position in fear and bullish news break.
Featured Chart XRP 12HR (click to enlarge photo)
It’s worth noting that BTC.D looks terrible whereas XRP.D looks bullish, just keep this in mind.
Featured Chart XRP 12HR (click to enlarge photo)
Commodities
📉 Oil + ⚖️ Gold & ⚖️ Silver
💬 Bramwell’s Commentary, Analysis & Prediction for the Week Ahead:
I’m absolutely loving watching the Oil chart these past few weeks and every time I hit the pump I say that I’m ‘buying the dip’ on Oil, lol.
In fact, Oil is forming a Head & Shoulders pattern and I’m expecting this week for the support to break and Oil to fall into the $67.5 per barrel range.
Featured Chart Oil 2D (click to enlarge photo)
Gold is still chugging along in its bullish formation yet still hasn’t touched down on my demand zone for a re-load on the shiny metal we have loved for thousands of years.
Expecting a re-test of the low 1700’s before the next leg up - perfectly timed with the potential of a falling DXY.
Featured Chart Gold 1D (click to enlarge photo)
In addition, Silver is super bullish right now as well and should be added into any portfolios looking for a safe haven against inflation or due to it’s utility in the semi-conductor market.
Featured Chart Silver 1D (click to enlarge photo)
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