The Wolf Den #836 - It’s Just Us
Nobody else is here.
Welcome to The Wolf Den! This is where I share the news, my ideas about the market, technical analysis, education and my random musings. The newsletter is released every weekday and is completely FREE. Subscribe!
In This Issue:
It’s Just Us
Bitcoin Is Overbought
Altcoin Charts
Stocks Sliding On Earnings - Legacy Markets
Trading With Confidence
BlackRock Takes A Step Forward. Then Back. Then Forward.
Greed Is Here
Bitcoin Explodes! What Should You Do Next In The New Bull Market?
It’s Just Us
My retail radar is silent.
Since Bitcoin exited the $26,000 level, has anyone reached out to you asking about what is going on in crypto? I’m not referring to your anonymous farm-animal avatar friends who live and breathe between crypto Twitter and their portfolio, I am talking about your real-life coworkers, friends, and family.
I don't know about you, but my retail detector is dead silent. I haven't encountered Bitcoin being discussed in everyday conversations when I take my kids to after-school activities. My friends who aren't part of the crypto world haven't mentioned the BlackRock ETF, and the concept of 'halvening' remains unfamiliar to everyone outside of the crypto community. Do you believe anyone is aware that an Ethereum ETF might follow the Bitcoin ETF? Crypto Twitter still seems uncertain about that possibility. Personally, I find comfort in this uncertainty.
While retail remains quiet, Crypto Twitter, on the other hand, is operating at around 140 dB, a point where the noise begins to hurt. Engagement on the platform has significantly increased compared to just last month. What's noteworthy about this heightened engagement is that, except for occasional mentions of altcoins, projects, or alternate news events, Bitcoin completely dominates the conversation. Alt season hasn't arrived; at best, we see a few mentions, but predominantly it's sleeping projects finally stirring to life - a topic that's largely flying under the radar.
I anticipate that all of this will undergo a significant transformation once the ETF becomes operational. My gut feeling is that when the ETF secures approval, every major news outlet reporting on topics even tangentially linked to crypto, markets, or finance will find it impossible to ignore. Despite our anticipation and excitement surrounding it, the ETF's approval remains a historic milestone, even for those who expected it or knew it was imminent. Nevertheless, I still believe that many investors outside our crypto community aren't currently giving much thought to digital assets.
While it's true that some Wall Street players have finally joined the party, it's important to note that only a handful of companies have filed for Bitcoin ETFs so far: BlackRock, Wisdom Tree, Valkyrie, ARK, VanEck, Fidelity, Invesco, Bitwise, GlobalX, Grayscale, and Franklin Templeton (apologies if I missed anyone). On the flip side, there's a long list of prominent names that have yet to make an appearance or even consider the invitation. Vanguard, State Street, Morgan Stanley, JP Morgan Chase, Goldman Sachs, Capital Group, BNY Mellon, and many more remain on the sidelines or completely uninterested in the dance floor. Mainstream retail investors, those outside of the crypto sphere, are still completely unaware of the impending wave of money coming and its significance.
I know this may all sound like an extremely bullish intro, but keep in mind any curveball is possible leading up to the ETF until it is listed and live. I encourage you to view this newsletter as a sobering perspective, one that emphasizes the need for caution and prudence while the party is just starting.
Bitcoin Is Overbought
Bitcoin's RSI is extremely overbought on most lower time frames, including the daily which is at 88. Some healthy retracement would make sense... but.... Weekly RSI is just entering overbought, which is the power zone in a true bull market. In 2020, RSI went overbought on the weekly at around $12,000 (small blue circle on bottom left). Price went on to hit $65,000. If we get some true bullish catalysts, there's endless room to run.
Bitcoin is overbought on most timeframes, including the daily which is at around 88. The weekly (not shown) is just barely touching overbought now, so there’s a long way to go on that time frame. The daily can push a bit higher, but that would start to hit historic levels. Further, another push up will very likely give bearish divergence, making a higher high on price and a lower high on RSI. Not guaranteed, but something to look for to let us know that the top of this current move is likely in before some healthy correction.
Volume was higher yesterday than the day before, which is still very encouraging, and good news can still send this flying, RSI be damned. At this point, you are looking for dips to buy, in my opinion.
Like the daily, the 4-hour is overbought and looks likely to form bearish divergence if price makes another push. We have a bull pennant, so it is actually quite possible that a serious push up could avoid that divergence. Also, as price has dropped a bit, so has volume, which is a classic sign of consolidation. If price was dropping with volume increasing, we would be worried that the trend was changing.
Altcoin Charts
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
Injective has shown relative strength through the bear market, trading barely 50% off of the all time high.
As you can see, it was ranging for most of 2023, before a strong breakout above on strong volume. To be transparent, I actually SOLD some of my long holdings on Coinbase, because it was trading at a 15-20% premium, so I was out around $13-$14 with 20% of my holdings. I am looking to either re add that on a dip, or just move on to other setups.
The trade I want to see here now is a retest of the top of the range as support, just under $10. Then we should see this rip back up to new highs.
This all depends on Bitcoin and the market in general. But this is a beautiful setup, with the 50 and 200 MAs crossing bullish and both pointing up.
* I still own quite a bit of Injective
God tier retest of former resistance as support - a resistance that was in place for a year and a half. Literally a perfect trade opportunity.
I wrote about it on Monday.
“What a move from LINK. As you can see, it has broken out of 18 months of accumulation. This move perfectly started at the EQ of the blue range, the dashed center line.
That said, this looks over extended. Today’s candle looks toppy, but is not closed yet. RSI is massively overbought.
If I was looking to enter this, I would never do it now after the huge green candles. I would wait for a nice dip, willing to miss it if it does not happen. The top of the range is an obvious place to look for a dip as a retest. A dip back down to $8.79 would be nice as well.
*I own LINK.”
These are my favorite setups - retests of a key resistance as support. I have no idea if it will hold, but nice entry for those who caught it.
Stocks Sliding On Earnings - Legacy Markets
US equity futures have experienced a decline, primarily driven by mixed tech earnings reports. Microsoft Corp. showed positive results, especially in its cloud business, while Alphabet Inc. (Google's parent company) saw a drop of over 7% in premarket trading due to its cloud unit's underwhelming profit. Investors are keenly watching the earnings season, anticipating insights into companies' performance amidst rising interest rates and potential changes in consumer spending due to inflation. Key reports from Meta Platforms Inc. (parent of Instagram and Facebook) and Amazon.com Inc. are awaited.
In Europe, stocks weakened due to concerns that the global economic slowdown is impacting corporate profits. Major companies like Kering SA and Reckitt Benckiser Group Plc reported suboptimal sales results. Moreover, Worldline SA, a French payment company, saw a significant drop in its stock value after revising its yearly outlook.
On the global front, the 10-year Treasury yield increased, affecting the appetite for equities. Central banks intend to maintain high policy rates to counteract inflation. Asian stocks experienced a boost after the Chinese government reinforced support for its economy. However, Chinese real estate firm Country Garden Holdings Co. faced a default crisis, reflecting the ongoing property-debt issues in China.
The Brent crude oil benchmark remained stable after a decrease to below $88 a barrel. Diplomatic efforts between the US and Saudi Arabia aim to mitigate potential disruptions in the oil market following recent geopolitical events. Lastly, the Bank of Japan is closely monitoring bond yield movements, with an upcoming policy meeting slated to discuss potential adjustments.
Key events this week:
Canada rate decision, Wednesday
US new home sales, Wednesday
IBM, Meta earnings, Wednesday
European Central Bank interest rate decision; President Christine Lagarde holds news conference, Thursday
US wholesale inventories, GDP, US durable goods, initial jobless claims, pending home sales, Thursday
Intel, Amazon earnings, Thursday
China industrial profits, Friday
Japan Tokyo CPI, Friday
US PCE deflator, personal spending and income, University of Michigan consumer sentiment, Friday
Exxon Mobil earnings, Friday
And here are some of the main market moves:
Stocks
The Stoxx Europe 600 fell 0.3% as of 9:55 a.m. London time
S&P 500 futures fell 0.4%
Nasdaq 100 futures fell 0.6%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.3%
The MSCI Emerging Markets Index was little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro was little changed at $1.0586
The Japanese yen was unchanged at 149.91 per dollar
The offshore yuan fell 0.1% to 7.3223 per dollar
The British pound fell 0.2% to $1.2136
Cryptocurrencies
Bitcoin rose 0.6% to $33,858
Ether fell 0.1% to $1,769.98
Bonds
The yield on 10-year Treasuries advanced four basis points to 4.86%
Germany’s 10-year yield advanced two basis points to 2.85%
Britain’s 10-year yield advanced two basis points to 4.56%
Commodities
Brent crude rose 0.3% to $88.32 a barrel
Spot gold was little changed
Trading With Confidence
Way back in newsletter #7, I shared this segment and haven’t shared it since. Now that the market is starting to open up, I think it’s time to revisit this hidden gem.
I toured Japan in 2006 with a famous Japanese singer named Toshi Kubota. It was his 20th-anniversary tour - he had been on the road playing stadium shows for decades. Even with all of that experience, he still had terrible nerves before each and every show, often throwing up or nearly going into a panic before going on stage. He had a ritual to recenter himself - a set of affirmations and exercises to build his confidence for each show. He never made a single mistake in the 40+ shows that we played together. He was able to overcome his insecurities and build his confidence to succeed.
Confidence is the key to success in all facets of life. It is attractive to the opposite sex, noticeable to employers, motivating to your subordinates, and intimidating to opponents. A part of being confident is believing that the best outcome is the most likely - it inherently eliminates negative thinking and allows you to tackle any obstacle in your path. You can “fake it till you make it” with daily reminders that you are talented, worthwhile, and able. Eventually, you start to believe it and the confidence becomes real.
Confidence is particularly important when trading. The grounds on which you make your moves are always shaky and the only constant agent in investing is yourself. It is impossible to trade well if you are worried about losing - it is an expected and inevitable part of the game. Further, if you are not confident in a trade, you should not be taking it. The moment that your confidence in a setup falters, it is likely time to exit. Most importantly, you should never take a failure personally and let it bring you down.
Failure is a valuable asset because it gives you a lesson - if you track your failures, it will ensure that you do not make the same mistake twice. The difference between a bad and good failure is the resolution to learn something from it and apply it to your future investments. When you learn from your losses, it gives you more confidence in upcoming trades.
Build your confidence and I guarantee you will see an improvement in your trading (and life).
BlackRock Takes A Step Forward. Then Back. Then Forward.
I ended yesterday’s intro with the following statement that has already proven true within 24 hours: Throughout this journey, the market will attempt to shake out investors at various points; the market seldom offers easy victories to the 'buy the rumor, sell the news' crowd.
In a remarkably swift turn of events, BlackRock's IBTC ETF found its way onto the Depository Trust & Clearing Corporation (DTCC) list, which oversees NASDAQ trades, only to disappear just as quickly without any official statements from the involved parties. Then the DTCC website went down yesterday probably from everyone checking… then the listing came back.
This is what ChatGPT had to say about it… interesting…
Greed Is Here
Last month we were 14 ticks into ‘fear’ and now we are 16 ticks into ‘greed.’ Crypto can turn around fast and stay in a particular sentiment for extended periods of time, shaking out investors with weak convictions or poorly positioned trades. Sooner or later, crypto will be due for an extended trip into ‘greed.’ Don’t forget that 2022 was all about ‘fear’ and 2023 was ‘neutral’ for the most part. My guess is that 2024 is the year of ‘greed.’
Bitcoin Explodes! What Should You Do Next In The New Bull Market?
Bitcoin reached $35K before the correction yesterday on the optimism of the upcoming ETF approval. Matthew Sigel, Head of Digital Assets Research at VanEck, and John Wick, analyst and trader provide their opinions on what happened with the Bitcoin price and what else we can expect.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
Good writing MELKER and you’re right. Nobody knows anything.
Good writing MELKER and you’re right. Nobody knows anything.