🗞 Weekly Market Newsletter | Edition No. 32
News Update + A Full Analysis of Major Indices Including Stocks, Crypto, Commodities, Bonds & Forex
Sunday, February 26th, 2023
Hello Friends,
The financial markets are currently in a tricky spot, where it seems like we're just waiting for the next FOMC meeting to happen before anything significant can occur.
It's important to keep in mind that the US Dollar being the global reserve currency for international trade means that every policy move made by the US Central Bank is closely monitored and has ripple effects throughout the global economy.
To illustrate just how far-reaching these effects are, I could easily list every financial asset index around the world and you would still feel the palpable sense of standstill.
Investors are hesitant to commit capital until there is enough clarity and direction provided by the US Federal Reserve.
It’s crucial to stay informed and cautious in such a volatile and uncertain market environment and that’s what I’m here to provide you every single week with updates on recent headlines across both traditional markets and crypto.
My technical analysis each week can provide some insights, but ultimately we must keep in mind that the markets can be unpredictable and subject to sudden shifts from geopolitical tensions to on-going monetary policy decisions.
A part of me wishes to say that ‘this will all be over soon’ and that the good times are on the horizon.
But in reality what do I actually think?
Well, I actually sit here each week thinking that (for the most part) every single headline I read points to the inevitable paradigm shift of a new world order ranging from artificial intelligence taking over human labour, to sweeping political ideology transformations from nation to nation.
Amidst mass globalization efforts and a failing fiat currency system hanging on a thread, I truly believe that we are not and never will return to life as we knew it pre-pandemic.
Let’s face it, the markets had already been especially volatile in recent years due to a variety of factors.
For example, the ongoing trade war between the US and China had a major impact on the global economy, causing uncertainty and volatility in the markets even leading into 2020, before the ‘pandemic’ struck.
As for the paradigm shift towards a new world order, there is evidence to suggest that this is indeed happening.
For example, the rise of artificial intelligence and automation is already having a major impact on the job market, with many jobs being replaced by machines.
In addition, there are major geopolitical shifts taking place, with the balance of power shifting away from the US and towards other countries such as China and Russia who are actively seeking to take over new territories and forge new trade alliances as we speak.
The failure of the fiat currency system is also a concern that many economists and analysts have been warning about for some time.
With the US dollar losing its status as the world's reserve currency, there is a growing sense that a new monetary system may need to be established to replace the current one.
Thus I honestly and wholeheartedly believe we are heading into uncharted waters of human life on earth and it will take more time than we wish to imagine to ‘sort out’ and become a new normal.
I feel most investors and people I talk to feel as if we’re all awaiting some big announcement that all is restored to normal and the question will be answered once and for all whether economic doom will occur or if this was all one big slight of hand to reorganize how the world works in the era of digitalization of life.
As we head into next week still stuck between a rock and a hard place, financially speaking, my best advice is to keep your mind clear and your body healthy.
A few more weeks will still be needed before we can accurately predict what will come next for our portfolios and we must continue living our day to day life feeling the absolute best we can while focusing on our purpose and passions.
Enjoy the edition,
- Matthew
📰 Fox MetaCapital’s Weekly News Recap
You may press the 🗞 to read more about each headline.
Major News + Crypto Headlines
🗞 Fed Minutes + Inflation still high af.
💭 Matthew’s Thoughts…
Remember that the Federal Reserve (‘Fed’) is the central bank responsible for setting monetary policy, including interest rates.
Thus the minutes from each of their meetings are closely watched by investors because they can provide insights into the Fed's thinking and future plans for interest rates, which in turn can affect financial markets.
(It’s the investor equivalent of watching the body language of a first date - except for this date is trying their best to rob you.)
The latest Fed minutes reveal that there may be disagreement within the Fed over the appropriate course of action regarding interest rates.
Some officials supported a more aggressive 50 basis points (bps) hike in interest rates, which could potentially signal a more hawkish stance from the Fed.
This means that depending on the data reports between now and March 22nd, they may be more inclined to raise interest rates higher than what has been priced in to curb inflation, even if it means slowing down economic growth.
Speaking of economic vitals, the U.S. economy is still facing inflationary pressures, as evidenced by the higher-than-expected January core PCE price index, which rose by 0.6% on a month-on-month basis.
This figure released mid week was higher than the estimated 0.4% and the previous month's 0.3% which indicated that inflation in the US is picking up and could be a cause for concern in March.
If inflation continues to rise, the Fed may need to raise interest rates to keep it in check.
This could potentially lead to a stronger dollar, which could have a negative impact on cryptocurrencies, as they tend to perform better when the dollar is weak.
Keep all of these factors in mind when you review this weeks technical analysis of the DXY, Bitcoin, Stocks, Treasuries and Gold.
🗞 The importance of Hodl’ing.
💭 Matthew’s Thoughts…
Imagine being Greg.
In 2011 he sold his 1,700 Bitcoin for $510, a 500% profit from his .06 entry price.
Had he waited 10+ years, that same 1,700 BTC would have been worth $117,000,000
That’s the equivalent of being paid $11,000,000 per year to have patience.
What is your patience worth to you?
I always advise the investors I consult that their crypto investments must be capital that they are willing to be patient with and ultimately live without for an extended period of time.
If this advice is not followed, emotions will almost always overtake logic and improper financial decisions acted upon in the heat of the moment.
I ask all of you to remember Greg forever and remind yourself that as a long term blockchain investor it’s your patience that will compound your yield.
🗞 Lead Counsel for Ripple reminds the United States of it’s innovation roots.
💭 Matthew’s Thoughts…
Stuart Alderoty has been on a tweeting storm these past few weeks, and I'm loving it.
With each tweet, Stu appears to be taking subtle jabs at regulatory agencies such as the SEC, reminding them that innovation has been a key driver of economic growth and prosperity throughout the history of the United States.
If the USA wishes to maintain its position of leadership, it will require continued investment in emerging technologies like blockchain, which have the potential to transform the industries of the future and create new opportunities for businesses and individuals.
Remember that Ripple is a US-based FinTech firm, and many of their board of directors and C-level executives have held positions within the highest levels of government and top corporations in America.
Perhaps they have a candidate for Subtitle H.
🗞 U.S will NOT ban Crypto, rather they’ll just tax regulate the 💩 out of it.
💭 Matthew’s Thoughts…
In the never-ever ending global debate over cryptocurrency, the US Treasury Secretary Janet Yellen this week assured us all that the US is not planning an outright ban of cryptocurrencies.
Instead, a robust regulatory framework will be put in place to create a unified framework for digital assets.
It's important to note that a complete ban on cryptocurrency is unlikely to ever be possible in the US.
Why?
Because Cryptocurrencies are decentralized data networks and can be traded across borders, making it difficult for any government to completely eradicate them - it’s literally computer code and it’s unlikely they ban data anytime soon.
Rather, congress requires more time to develop a strong regulatory framework that will be a more pragmatic approach to manage the risks associated with cryptocurrencies.
The proposed regulatory framework may include measures to ensure investor protection, such as requiring exchanges to implement Know-Your-Customer (KYC) and Anti-Money Laundering (AML) procedures which are pretty standard measures even in the traditional financial system.
The framework may also establish standards for custody of digital assets, as well as require reporting of certain transactions. These regulations will provide greater transparency and accountability, while protecting investors from fraud and illicit activities.
Taxation will also likely play an important role in any regulatory framework for cryptocurrencies as governments around the world have a vested interest in collecting taxes on income generated through cryptocurrency transactions.
Thus until there is a clear and effective way to tax cryptocurrency transactions, it is unlikely that governments will fully embrace the industry.
And that’s what we’re waiting on, not regulations, but taxation measures.
🗞 Crypto has lost the Battle against Fiat Currency, but will likely win the War.
💭 Matthew’s Thoughts…
While it's important to be aware of recent comments by the head of the Bank for International Settlements (BIS) regarding cryptocurrency, it's also important to take the headline with a grain of salt and consider the larger context.
It's possible that these comments are part of a larger political agenda aimed at swaying public opinion towards international regulation, making this a pragmatic and analytical discussion.
By painting cryptocurrency as a failure, there may be an attempt to steer public sentiment towards a more centralized approach to finance that favors traditional banking.
This underscores the importance of education and accessibility when explaining the implications of blockchain technology and cryptocurrency.
While the cryptocurrency industry is still in its infancy and its long-term implications are uncertain, blockchain has shown tremendous potential for disrupting traditional finance and creating a more decentralized and transparent global financial system.
We should be clear and confident in our discussion, and view these comments in the larger context of the ongoing debate about the future of finance.
🗞 Things we need go up in value, things we want go down.
💭 Matthew’s Thoughts…
I have read a tremendous amount of literature over the past 10 years on the evolution of capital and money and one insight I’ve gathered is knowing how to scale out current trends into long term predictions.
Looking at the chart below, we can see that the resources we need as human beings are becoming exponentially more expensive over time, such as healthcare, education and shelter and food.
Meanwhile the items that are more transitory, such as entertainment, technology and fashion are decreasing in value.
This highlights the problem we are facing with our current financial system and why we must adopt a new international value system or else the future will become unaffordable to the masses.
Just imagine at this pace where these prices will be in 10, 20, 50 years from today.
In fact, I’d love for you to leave a comment and make you prediction on food, mortgages, clothing and healthcare in the year 2100.
📰 Fox MetaCapital’s The Weekly Look-Ahead 👀
📊 Monday Report Release ‘U.S Durable Goods, MoM’
What is it?
The Durable Goods report measures the change in the total value of new orders for long-lasting goods, such as appliances, cars, and machinery. This report is an important indicator of the health of the manufacturing sector and can impact the overall economic outlook.
Why does it matter?
A higher-than-expected reading could indicate strong demand and economic growth, while a lower-than-expected reading could suggest weakness in the manufacturing sector and slower economic growth.
📊 Tuesday Report Release ‘Consumer Confidence’
What is it?
The Consumer Confidence report measures the level of confidence consumers have in the overall economy and their personal financial situation.
Why does it matter?
Higher consumer confidence can lead to increased consumer spending and overall economic growth. A lower-than-expected reading could suggest that consumers are becoming more cautious about their spending and could signal slower economic growth.
📊 Wednesday Report Release ‘ISM PMI (Purchasing Managers' Index)’
What is it?
The ISM PMI is a monthly survey of purchasing managers in the manufacturing sector that measures their sentiment on business conditions.
Why does it matter?
A higher-than-expected reading could suggest strong business conditions and economic growth, while a lower-than-expected reading could suggest weakness in the manufacturing sector and slower economic growth.
*Tesla Investor Day is also on Wednesday which is an event where the company presents its future plans and strategy, which can impact investor sentiment and the stock market.
📊 Thursday Report Release ‘Jobless Claims’ + FED Speakers
What is it?
The Jobless Claims report measures the number of individuals who filed for unemployment benefits for the first time.
Why does it matter?
A higher-than-expected reading could suggest weakness in the job market and slower economic growth, while a lower-than-expected reading could suggest a stronger job market and economic growth.
FED Officials Waller, Jefferson, Bostic & Barkin will also give speeches this week and may provide insights into the Fed's outlook on the economy and monetary policy. Their comments can impact financial markets, especially if they suggest a change in the Fed's stance on interest rates or other policies.
Fox MetaCapital’s Weekly Asset 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
💬 Matthew’s Commentary, Analysis & Prediction for the Week Ahead:
The dollar had quite the rally this week, fueled by a hot PCE print and the Fed's release of minutes that led investors to start pricing in a 50 bps hike in March - it seems like they're ready to throw the kitchen sink at inflation once and for all. This sent Treasury yields soaring and risk assets took a hit, with the S&P500 and Bitcoin both suffering losses.
This week, all eyes are on the DXY, which is approaching the Daily 200MA (red) and close to taking out the Daily FVG box marked in grey. As I mentioned earlier, we're stuck smack dab in between FOMC meetings, so it's hard to predict what's coming next. I'm expecting a rejection and reversal just shy of 106, followed by a correction into the 104 range as we approach March 22nd.
While I speculate that investors are pricing in a 50 bps hike, my intuition says that it's possible the Fed will surprise us and keep the course by raising 25 bps, as initially expected. If this happens, I'd expect a harsh rejection marked by the 'X' on the second vertical line, which would send the DXY into the 103 range before we reassess the macro situation in late March. This would be bullish for crypto and stocks, setting us up for a strong start to Q2.
Featured Chart DXY 1D (click to enlarge photo)
Canada appears to have done a better job at cooling inflation than their U.S counterpart, thanks in part to the Bank of Canada's hawkish stance on interest rates in 22’.
However, with the BOC hinting at pausing their tightening efforts, the Canadian dollar is struggling to gain against the USD.
It’s worth noting that the Canadian dollar is heavily influenced by the energy market, and the recent slump in oil prices has also contributed to its weakness.
The CAD hit a low of .7293 in December and I anticipate the CAD to bounce back from the green area of demand and move upwards towards the supply region in red, meeting its equal lows on this correction.
While the DXY is likely to lead the way across all forex markets, the scenario is set for the CAD to gain strength should the USD correct, as I'm anticipating in late Q1 or early Q2.
Featured Chart CAD 1W (click to enlarge photo)
Equities
⚖️ S&P500 + ⚖️ TSX + 📉 VIX + ⚖️ DJIA + ⚖️ DJUA
💬 Matthew’s Commentary, Analysis & Prediction for the Week Ahead:
While the market is currently anxious about the potential for an aggressive pullback on the S&P500 due to concerns about short term interest rates, there are some key economic data points to watch for signs of a potential bullish trend.
Looking at the daily chart, the S&P500 has broken out of its bear market resistance and is now re-testing key support levels, including the 200MA, the October rally trendline, and the weekly range median, all at once.
While this may be causing concern for some investors, it's worth noting that this could also be the perfect opportunity for a short squeeze and subsequent rally.
However, it's important to keep an eye on the markets and wait for additional economic data before jumping to any conclusions.
If the SPX does lose its current support level, the first target will be 3895, followed by 3765. On the other hand, if the deviation from the trendline proves to be a whipsaw, a short squeeze could send the SPX up to 4250 prior to the March FOMC.
Ultimately, now is the time to remain objective, watch the data closely, and be prepared for any outcome.
Featured Chart S&P500 1D (click to enlarge photo)
The TSX, Canada's main stock index, experienced a breakout of the weekly range high but eventually fell back into its range, ending the week at 20.2K.
Canadian investors are uneasy due to the uncertainty in the energy market and fluctuating global oil prices, which may be the reason for the intense sell-off from last week.
However, if we focus purely on the technicals, the chart doesn't look too bad.
The daily chart shows a small gap away from retesting the 100MA, and the TSX is still above the 200MA on the weekly chart, which are both bullish signs for the Canadian equity index.
That being said, the market requires more economic data before flipping bullish on the TSX. It's crucial to keep an eye on the energy market and how the Bank of Canada's policy may impact the CAD.
I anticipate a slight consolidation above 19750, followed by a reclaim of the weekly range high of 20,325 within 1-2 weeks, barring any major unforeseen events.
Featured Chart TSX 3D (click to enlarge photo)
Rumors were rampant last week about soaring VIX calls, leading many to anticipate a looming bout of volatility. However, it appears that the market might be indicating something different this week. Large wicks atop the recent 1D candles suggest to me that the VIX could experience downward pressure in the near future.
I anticipate a correction into 19.75 before reassessing the week's events on Sunday. This will help me decide where the VIX may shape up heading into the early weeks of March, just before the all-important FOMC meeting. Keep a sharp eye on the VIX in the coming days; it could be an essential barometer for market sentiment.
Featured Chart VIX 1D (click to enlarge photo)
The Dow Jones Industrial Average, or simply the Dow, is a stock market index that tracks the performance of 30 large, publicly traded companies in the United States.
These companies are considered to be leaders in their respective industries, and they are carefully selected by the Dow's index committee.
When people talk about "the market" on the news, they are often referring to the Dow because it is one of the oldest and most widely recognized stock market indices in the world.
When the Dow goes up, it means that the stock prices of the 30 companies in the index are generally rising, and when it goes down, it means that their stock prices are generally falling.
The Dow is used as a barometer of the overall health of the US economy, but it's important to remember that it's just one index and doesn't represent the entire stock market. Many other indices, such as the S&P 500 and the Nasdaq, also provide important information about how the stock market is performing.
The DJIA has been ranging between 32.5K and 34.6K since November 2022 and was the first major index to break out of it’s bear market.
Last week the DJIA printed an equal low to the December bottom and I’m anticipating a bounce to the highs of the inside bar candle targeting ~33.7.
From there, it’s possible the Dow finishes an A,B,C correction by clearing out the weekly FVG below 31.7 which may be foreshadowing weakness in the U.S Economy by mid-year.
Time will tell.
Featured Chart DJIA 1W (click to enlarge photo)
The Dow Jones Utility Average, or DJUA, is a stock market index that tracks the performance of utility companies.
Utility companies are businesses that provide essential services such as electricity, gas, and water to households and businesses.
They're known for being stable and consistent earners since people always need these services.
The DJUA is made up of 15 large utility companies that are publicly traded on the stock market. These companies are selected based on their size, trading volume, and other factors. By tracking the performance of these companies, the DJUA gives investors an idea of how well the utility sector is doing overall.
It’s important to note that in a macroeconomic landscape with higher interest rates the DJUA may suffer as these companies rely heavily on debt to finance their operations.
With a potential further hike on the horizon it’s likely we may see the DJUA touchdown atop of the Weekly 200 MA before a reversal takes place possibly leading to a mid year breakout of it’s bear market trend.
Featured Chart DJUA 1W (click to enlarge photo)
Treasuries
📈 US2YR & 📈 US10YR
💬 Matthew’s Commentary, Analysis & Prediction for the Week Ahead:
As I’ve been discussing, investors are certainly fearing short term interest rates right now.
The 1-Year Treasury Yield is above 5% and the 2 & 10-Year are equally soaring.
The 2-year Treasury yield could potentially reach 5% this week, which is a possibility that shouldn't be ignored.
I have set an upper region at 5.25% for the 2-Year and 5% for the 10-Year. However, these yields are unlikely to remain in this area for long as it represents a steep discount on U.S debt.
The U.S. debt is an essential part of the world economy, and its yields are inversely related to prices. This means that when yields increase, prices decrease, and vice versa.
Thus, this potential spike upwards is likely driven by fear of the March FOMC, and once the dust settles, I'm expecting a sharp correction back downwards to the range lows.
Featured Chart US2YR 1W (click to enlarge photo)
*It’s worth exploring the importance of the 10 year yield articulated beautifully by Dan below.
Featured Chart US10YR 3D (click to enlarge photo)
Cryptocurrencies
📈 Bitcoin & + 📈 XRP + 📈 Total Crypto Market Cap + 📈 Total Altcoin Market Cap
💬 Matthew’s Commentary, Analysis & Prediction for the Week Ahead:
Bitcoin has rallied over 60% from its lows in November 2022 and at the time of writing is consolidating above its range low of $22,750.
We can see that volume has been steadily declining since the yearly open sparked the impulsive rally that sent Bitcoin from $16K to ~$21K, and this ought to be a concern for the bulls if they wish to maintain a bias of further continuation higher.
With the daily 400MA moving average crossing down through the weekly fair value gap (FVG), it would be harmonious for one last rally upwards into $27K to occur before the March FOMC rate decision.
Else, should the price breakdown my support levels below are 21.5K followed by $20,375 to remain bullish into Q2. It's worth noting that a breakdown through these levels could indicate a shift in market sentiment and potentially lead to a bearish trend for Bitcoin.
Featured Chart BTC 1D (click to enlarge photo)
The fate of XRP hangs in the balance this month as the Ripple vs. SEC litigation draws near.
This case holds great importance for the entire crypto market and until there is more clarity from congress or a precedent set in court, the regulatory concerns will continue to cap the market.
As of now, Bitcoin's price movement will set the beta for the rest of the crypto assets.
Heading into the week, I'm predicting XRP to bounce back from its lows and retest liquidity in the 40 cent range, pending the movement of Bitcoin.
Featured Chart XRP 1D (click to enlarge photo)
TOTAL and TOTAL2 are two cryptocurrency market capitalization indices. Both indices have recently reclaimed, or are close to reclaiming, their weekly range median as a support level.
This is a bullish sign for the cryptocurrency market, indicating that prices may be poised to move higher.
The next logical move would be for prices to test the supply at the range highs before the Federal Open Market Committee (FOMC) meeting occurs on March 22nd.
Featured Chart TOTAL 1D (click to enlarge photo)
Featured Chart TOTAL2 1D (click to enlarge photo)
Commodities
📈 Oil + ⚖️ Gold & 📉 Silver
💬 Matthew’s Commentary, Analysis & Prediction for the Week Ahead:
Remember that Oil prices are heavily influenced by factors such as global supply and demand, geopolitical tensions, natural disasters, and economic policies.
A significant increase or decrease in oil prices can have a major impact on the global economy, as it is a crucial commodity that is used in transportation, manufacturing, and many other industries.
The strength of the US Dollar (DXY) also plays a crucial role in determining oil prices.
As oil is priced in US Dollars (re: Petro Dollar), a stronger DXY can make oil more expensive for buyers using other currencies, potentially reducing demand and causing prices to drop. Conversely, a weaker DXY can make oil more affordable and increase demand, causing prices to rise.
With that in mind, despite the recent consolidation and ranging of oil prices, it's important to keep an eye on these various factors and how they might impact oil prices in the coming weeks and months.
Featured Chart Oil 1W (click to enlarge photo)
Remember that Gold is often considered a safe-haven asset, and its price can be impacted by economic reports, inflation, and the strength of the U.S. dollar.
Similarly, silver is also sensitive to economic indicators, but it tends to be more volatile than gold.
During FOMC meetings, the market pays close attention to any statements or decisions regarding interest rates, which can have a significant impact on gold and silver prices.
In general, if the FOMC signals that it will keep interest rates low or decrease them, it can be bullish for gold and silver as investors may seek refuge in these metals.
On the other hand, if the FOMC signals that it will raise interest rates, it can be bearish for gold and silver as higher interest rates may make alternative investments more attractive.
Additionally, the strength of the U.S. dollar can also impact gold and silver prices. If the dollar strengthens, it can make gold and silver more expensive for buyers in other currencies, potentially reducing demand and prices.
Conversely, if the dollar weakens, it can make gold and silver more affordable for buyers in other currencies, potentially increasing demand and prices.
I’m bullish on both Gold and Silver in the long term and both price regions right now should be heavy spot buying for bullish metal investors.
Featured Chart Gold 1D (click to enlarge photo)
Featured Chart Silver 1W (click to enlarge photo)
👋🏼 Hey!
Thanks for reading this week's Weekly Market Update Edition No. 032
If you have any comments, feedback or questions on any material written in this edition please share as I'd love to continue a dialogue below.
If you enjoyed the read, I’d really appreciate if you’d share our community with your network of friends, family & fellow investors!
In the year 2100: A banana would be easily 20.00, average home 1M-2M, there will be less people owning homes for sure though and energy will be electric or solar powered or we will live on a different planet likely 🤪😜