🗞 Weekly Market Newsletter | Edition No. 07

News Update + A Full Analysis of Major Indices Including Stocks, Crypto, Commodities, Bonds & Forex

Aug 21, 2022

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🎙 This edition i’m testing a new feature with an audio narration by me - I’d love your feedback by leaving a comment at the end of the newsletter on if we should keep it 👍🏽 or axe it 🪓

Saturday August 20th 10:46am

Hello Everyone,

We can now say for certain that last week's bullish-breeze was in fact the calm before the storm that clouded over the markets this week.

A strengthening U.S Dollar and a break-out on the benchmark 10-year U.S Treasury yields was enough for;

a) The Bears to scare off the Bulls.

b) My charts to require a magic eraser on last week’s predictions.

I’m going to start off today with a few scribble’s & comments on noteworthy news headlines from last week before jumping into fresh charts across the major indices.

It’s time to dive in…

- Bramwell

ps. this week i’m adding two new features to the edition;

A voiceover for those who prefer to hear my wonderful vocals narrating this entire edition.
A paywall at the end of the weekly news recap allowing free subscribers to read the weekly review; however, ensuring they join our community to get the technical analysis.

so if you haven't subscribed yet…

BramwellFox MetaCapital’s Weekly News Recap

News Headlines Scribbles (& How I’m Thinking About Them….)

🗞 Federal Reserve eyes September Rate Hikes

This week the FED released their minutes which to many investors sounded ‘hawkish’ towards their policy decisions on interest rates coming in September.
Investors are hedging their probabilities between a 75 basis point hike vs. 50 basis point hike.

💭 Bramwell’s Thoughts…
I believe both of these rate hikes have been priced into the markets. Investors have been keeping pace with moves by the FED all year and as the phrase goes “If it’s in the news, it’s already priced into the charts.” Despite this, market volatility leading up to the events are expected; however, I maintain with a bullish sentiment on the market given the recent Inflation Reduction Act + Midterm U.S Elections and expect for policy actors to soften the landing of quantitative tightening.

🗞 China’s Central Bank Cuts Interest Rates by 10 basis points to 2.75% - but why?

The Chinese economy has a massive elephant in the room; ~~their stock market~~ housing market is on the verge of a collapse.
An estimated 96% of Chinese citizens prefer exposure to real estate vs. stocks which has created a liquidity bubble in the hundreds of billions by over-leveraged developers who are sitting on too much supply.
💡 Google Keyword; Evergrande

💭 Bramwell’s Thoughts…
I’m curious to know if the Chinese Government is keeping the borrowing cost of debt down despite global inflation soaring everywhere else in an attempt to stabilize local fears of a real estate problem that may turn into a fractional reserve banking problem if debt defaults begin to cascade.

🗞 Canada’s Inflation falls to 7.6% from 8.1% & Home Prices down 5.3% in July and 18.2% since February

Canada’s inflation is cooling off thanks to the recent decline in Crude Oil prices globally - but the cost of living still remains sky high for the majority of Canadians.

💭 Bramwell’s Thoughts…
We are taught to budget 30% of our household income after tax towards our rent / mortgage payment; however, this rule may require a curriculum amendment as the Canadian real estate market is now facing a bubble of itself.
For example, a 2-Bedroom home here in Kelowna, Canada could easily fetch $1M+ - meaning a family with a household income of $200,000 are out of luck.
Is Canada on the verge of a housing collapse as well?
With home prices down 18.2% since February and interest rates on the rise, a cold winter may be on the horizon and the pipes of the real estate market may begin to freeze.
I’m speculating that peak lows of the housing market may fall between Q2 2023 and EOY 2024.

🗞 $552 Million in Crypto Liquidated on Friday

Crypto Traders continue to over-leverage themselves trying to catch the perfect ‘market bottom’ which led to over $500M in liquidated positions across the board on Friday as Bitcoin’s rally up to 25K ended with an aggressive drop to the $20.7K support.

💭 Bramwell’s Thoughts…
Each financial crisis is birthed from excess liquidity in the form of both speculation + under collateralized lending (leverage) trading spiraling out of control.
In 2022 so far we have experienced the insolvency collapse of multiple high profile hedge funds and crypto exchanges (3AC, Celsius + more) due to over leveraged positions - but that has not deterred the eager ~~gamblers~~ traders who want to win-it-all-back in one trade with using 125x.
Market bottoms are generally formed by two main events; capitulation + bankruptcy (liquidations of high leverage) which tells me after this week that we may be close, but not there yet.

🗞 Canadian Crypto Regulations (…are coming.)

Newton.co, one of the most popular Canadian Crypto Exchanges announced their finalized registration with the Ontario Securities & Exchange Commission this week.
In the comments thread of their post, a twitter user screenshotted the newly updated terms & conditions which outlined that users from designated provinces other than British Columbia, Quebec, Manitoba & Alberta would have an annual buy limit of up to $30K on all alt coins other than BTC, ETH, BTC Cash + Litecoin.

💭 Bramwell’s Thoughts…
I have to sometimes sit back and laugh at where we are in the grand scheme of crypto adoption.
I consider myself to be one of the most educated and ‘in-the-trenches’ crypto investors when it comes to understanding the space and where it's headed; thus, I cannot expect aged regulators to even try to grasp the pace and evolution of this technology - let alone attempt to pose such silly restrictions on decentralized technologies.
While the aforementioned rules are subject to only risk-averse participants and on a per-platform basis, the viral news backlash was enough for me to know that Canadian crypto adoption is approaching fast, and it’s a good thing.

🗞 ETH Merge itching closer + CME ETH ETF Launch in September

With the Ethereum 2.0 merge to proof of stake just weeks away, it’s worth mentioning that the CME ETH ETF will launch just days before the forecasted merge date in September.
Historically, ETF launches are devastating for crypto assets as it allows for hedge funds and large actors to actively short the asset with derivatives exposure creating selling pressure which was experienced in 2018 with the launch of the CME BTC ETF circa 2017’ that crashed Bitcoin’s price.

💭 Bramwell’s Thoughts…
I’m nervously excited for September and the ETH merge.
I’m not an Ethereum user and I dislike the network, development team and entire ETH movement; however, I'm not naive enough to allow my ~~personal vendetta~~ bias to deflect how important this merge will be for the entire ecosystem - it’s a monumental event.
I also cannot stress how much one hiccup in the tech, one unforeseen security exploit, or one launch of an ETH ETF could also create a cascade of volatility in the entire crypto market.
Tread cautiously into the darkness of H2 2022.

BramwellFox MetaCapital’s Weekly Market Review & Technical Analysis

📈 The Week Ahead in Charts

DXY (U.S Dollar Index)

❌ Last Weeks DXY Prediction: I was anticipating further downside for the Dollar last week due to my bearish high timeframe analysis that the DXY has formed it’s top - I was incorrect.

💬 Bramwell’s Commentary: A few bearish factors occurred last week that notably gave strength to the dollar.

Hawkish (/bad) minutes release by the Federal Reserve that have investors treading cautiously due to September's monetary policy decisions on interest rates.
Chinese economic news stirring the capital pot due to fear of collateral damage spreading globally in the event of a housing market collapse.
Profit taking from the equity markets as the S&P500 reached a short term target on what’s being speculated as merely a bear market rally.

📉 Bramwell’s Analysis: I have two charts below;

A 1-Month DXY with 40 Years History to showcase a high timeframe understanding of important levels.
A 6-HR DXY to show what I'm expecting could be the path to expect moving forward which is a bearish bias on DXY with a bullish bias on risk / growth assets.

Let’s first visit the 1-month chart and you’ll see the rising 14 year channel. The channel has an origin of 2008 and reaches a potential ‘top’ marked by the yellow circle in 2022 present day.

The DXY is currently reaching a few major resistances at once;

The Purple 3/1 resistance line from the downward trending Gann Fan.
The 0.5 Fibonacci Retracement Level (~108)
The January 1974 High of 109.5

With high timeframe support & resistance lines they generally carry significant technical weight for decision making, it is for this reason my bias is bearish.

To support the bias, we consider the fundamental macroeconomic indicators at play.

1 or 2 more FED Interest Rate Hikes projected; however, likely priced into the markets already and the momentum of quantitative tightening policy pivoting.
‘We’re not in a recession’ narrative by the U.S Government and a ~$500B Inflation Reduction Act signed - one would assume the actors would want the public to see a sentiment shift in cost of living.
Commodity prices falling + a strong S&P 500 rally recently occurred.
Geopolitical uncertainty from foreign nations such as Europe’s economic outlook, China’s housing market crisis and the Russian War with Ukraine.

For the Dollar to break higher it would require a poor earnings outlook for U.S stocks, geopolitical collateral damage from foreign nations creating a stronger reliance on the U.S Dollar for trade or continued / unexpected hawkish tone from the Federal Reserve into September due to worsening economic indicators.

For the Dollar to pivot and reverse lower, we would expect a further rally on U.S stocks, worsening commodity prices thus increasing the standard of living for Americans and driving growth and a major sentiment shift in the geopolitical tensions which lowers the potential market volatility and fears of a worse case scenario / black swan.

🐻 Bramwell’s Prediction for the Week Ahead: In the second chart below, the 6-HR DXY, you’ll see i’ve marked a potential A,B,C correction forming which categorizes last weeks strong dollar as the B leg of the corrective structure.

Featured Chart A. DXY 1M

If this is true, a Head & Shoulders pattern would form and a potential market structure break which could see the dollar falling to critical support regions of 101-103.

I’m bearish on the dollar this week.

I’ll be watching for fear to start the week on Monday / Tuesday with a rejection confirmation by mid-week when equities would resume their rally.

Featured Chart B. DXY 6HR

S&P500

✅ Last Week's S&P 500 Prediction: The S&P 500 pushed up last week only to reject off it’s 200D MA (~4325) as well as the downward sloping Gann Fan - we expected this.

📉 Bramwell’s Analysis: I’m continuing my bullish stance on the markets by playing the bearish DXY analysis to help form the path forward for the S&P 500.

I’ve marked off the region ~4160 (Low, March 2022) as the area I would like to see solidified as support.

Featured Chart S&P500 4HR

🐻 Bramwell’s Prediction for the Week Ahead: I’m expecting a week of corrective price action and consolidation as the markets prepare for the DXY’s decisive path and upcoming remarks by Jerome Powell on future interest rate movements.

VIX

❌ Last Weeks VIX Prediction: I was expecting a less volatile week last week and for the VIX to take out it’s January 22 low’s between the 16-17 region; rather, volatility seen an uptick and the VIX finished just over the 20.5 mark.

📉 Bramwell’s Analysis: I have channeled the VIX on a high timeframe which you’ll see below in the 12-hour VIX chart. We crossed the midline in July however have not seen the VIX reach the bottom of the channel nor re-test significantly the dotted red-line midway point.

With indicators forming bullish, I would expect for the VIX to strengthen into the September FED meetings buying time for Crypto & Stocks to consolidate before breaking upwards in September when the VIX falls to 16-17 bottom of the channel.

🐂 Bramwell’s Prediction for the Week Ahead: While i’m not expecting a punch to face from market volatility, I am expecting a grind upwards to the 25.8 mark by end of month and quarter.

Featured Chart VIX 12HR

Bitcoin

✅ Last Weeks BTC Prediction: While I firmly believed a Bear Trap was in store, I didn’t expect the cascade of market liquidations to send Bitcoin to the bottom of it’s channel and nearly invalidating the bullish structure.

📉 Bramwell’s Analysis: I have marked three (3) standard deviations of Bitcoin’s potential bullish path on this 6-HR chart below. If we assume Bitcoin has kept the bullish structure intact, we would want to see an immediate reaction soon or to begin the week from Bitcoin pushing up (green dotted path) into the 23.6 region before correcting to a higher low (marked by red cups) on a high time frame (marked by the red dotted path falling into the green cup) to play out the Wave 1 of Wave 3 scenario below.

If Bitcoin fails to gain strength soon, a revisit to the lows of 19.8 may be tested before a potential continuation downwards into the 14-15K region.

🐂 Bramwell’s Prediction for the Week Ahead: I’m ~~praying for~~ bullish on Bitcoin to recover from these channel lows to begin it’s next wave upwards, however at this point everything is in the hands of other major macroeconomic events.

Featured Chart BTC 6H

Oil

❌ Last Weeks Oil Prediction: I have been waiting for Oil to fall into the $80 per barrel region however those targets have not been met yet as Oil pushed up a little from $85 to ~$90/barrel to end the week.

📉 Bramwell’s Analysis: Below you can Oil has corrected below the higher timeframe support line (black line) as well as having fallen below it’s multi-month trading channel support.

I’m expecting Oil to push-up one last time to bearish-ly re-test the channel and trend line support before continuing down to the 400 MA ~80 barrel.

🐂 Bramwell’s Prediction for the Week Ahead: While the DXY finds a path early to start the week and equities continue their correction, I’m expecting Oil to idle between the $80-$92.5 region before continuing downwards.

Featured Chart Oil 1D

Gold

✅ Last Weeks Gold Prediction: I’ve been crushing the path of Gold. Last week I projected the A,B,C corrective path perfectly and reached its target.

📉 Bramwell’s Analysis: I’m very bullish on Gold and other precious metals due to my bias of a ~~failing~~ falling U.S Dollar as the world’s reserve currency.

Gold has been forming a series of very tight higher lows and you’ll see from the chart below Gold has bounced from the bottom of the channel, past the midline and now making its way upwards to my Q3 target price of $1800-$1850/oz.

🐂 Bramwell’s Prediction for the Week Ahead: I’m bullish on Gold and believe it will soon make it’s next leg upwards along it’s Wave 3 path.

Featured Chart Gold 12HR

👋🏼 Hey!

Thanks for reading this week's edition of the Weekly Recap + Looking Ahead.

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.