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:
Dear Santa…
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Some Food For Thought
Grayscale Bends The Knee To The SEC
Two Weeks
CZ Is Raking In The $$$
Here’s Why Bitcoin Will Pump In 2024 l Macro Monday
Dear Santa…
The S&P 500 is up 24.75% YTD.
The Nasdaq Composite is up 44.92% YTD.
The Dow Jones Industrial Average is up 13.19% YTD.
And we all want more.
Fortunately for traditional investors, their hopes might materialize as markets find themselves in the midst of a 'Santa Claus rally,' an upward trend in stock prices during December, often peaking in the last week of the year, extending between Christmas and New Year's Day.
The reason for the Santa Claus rally remains a mystery, with several plausible theories attempting to explain this phenomenon. The following are the five primary reasons why this rally occurs, and it is likely a blend of these factors.
Holiday Optimism - Investors may experience increased positivity and optimism during the holiday season, contributing to a more buoyant market.
Tax Planning - Year-end tax considerations may lead to selling of losing positions before December, followed by a potential rebound in stock prices.
Portfolio Adjustments - Fund managers and institutional investors may engage in portfolio adjustments, including window dressing, influencing market movements.
Low Trading Volumes - Reduced trading volumes during the holidays can amplify the impact of smaller trades on stock prices.
Investor Behavior - Investors may participate in buying activity during the holiday season due to a positive sentiment or the desire to start the new year on an optimistic note.
How poetic would it be if the S&P 500 could achieve a new all-time high before the year concludes? Santa, can you make that wish a reality? Aiming for an all-time high of 4,796.56 from its current trading value of 4,770.91, the S&P 500 would only require a modest 0.53% gain.
Fortunately, historical trends work in our favor, with over two-thirds of Decembers dating back to the 1960s resulting in positive gains for shareholders. Moreover, the S&P 500 has historically gained an average of 1.3% during the seven-trading day session that closes the year since 1969.
And there’s also the emerging discourse about a Fed pivot. An examination of the CME Group's CME FedWatch Tool reveals that the market has attributed some significance to the possibility of a rate cut, as indicated below.
The 'Santa Claus rally' serves as a valuable indicator of the strength anticipated in the coming year. As noted by the Motley Fool, “Since 1994, the S&P 500 has gained 23 times during the Santa Claus rally period, and 18 of those times, the S&P 500 has gained the following year. Of the six times that stocks have fallen during that period, they've declined in the following year.”
Keep an eye on the markets over the coming days and see if Santa Claus sticks around. Perhaps if we behave well, he will hang around until early January and bless crypto with an epic surprise. There’s a lot to look forward to in 2024.
Bitcoin Thoughts And Analysis
Nothing has really changed here - Bitcoin remains in a clear pennant, consolidating on decreasing volume. We want to see the top resistance broken before we do anything. A break out from this should send price absolutely soaring. Could the ETF be the catalyst for the breakout? We will see.
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.
I know that I continue to harp on this idea, but it feels like the next rotation will be into Ethereum and anything Ethereum adjacent, namely Layer 2. METIS is up a few 100% in a matter of days, and MATIC is starting to finally move. This is where I will likely be focusing into the new year, as you already know. I will share some charts as I see them, but clearly now is a great time to focus on altcoins.
Legacy Markets
U.S. futures remained steady as the S&P 500 approached a record high from January 2022, fueled by optimism around potential Federal Reserve interest rate cuts. Futures on the S&P 500 and Nasdaq 100 showed little change in a holiday-affected trading session. The S&P is on a seven-week winning streak and is just shy of last year's peak.
Coherus Biosciences Inc. saw a significant premarket increase after FDA approval for its medication, and cryptocurrency stocks also gained as Bitcoin recovered some losses.
Market sentiment is buoyed by the possibility of Fed rate cuts as early as March, although some analysts warn that the current optimism may be overstretched, and the market may not see cuts at the pace currently expected.
The 10-year Treasury yield decreased, and the dollar held steady against major currencies. In Europe, shares modestly advanced to their highest level since January 2022, with light trading volumes anticipated to continue through the end of the year.
Vestas Wind Systems A/S and Anglo American Plc saw notable gains in Europe, while AP Moller-Maersk AS and Hapag-Lloyd AG dropped after a potential Red Sea shipping disruption.
Australian equities reached their highest since April 2022, driven by the mining sector. Mainland China stocks rebounded, with industrial profit growth signaling economic recovery. The Nikkei 225 in Japan gained after the Bank of Japan's meeting summary indicated no rush to end negative interest rates.
Hong Kong's major tech stocks made a partial recovery from recent losses, with Tencent and NetEase posting strong gains.
Oil prices fluctuated amidst Red Sea shipping concerns, and iron ore remained around 18-month highs. Copper futures also rose, nearing multi-month highs. Overall, U.S. stocks have risen 4.5% for the month and 24% for the year, with global indexes showing mixed performance. Asia remains behind, with the MSCI Asia-Pacific Index 25% below its 2021 peak.
Key events this week:
Japan industrial production, retail sales, Thursday
US wholesale inventories, initial jobless claims, Thursday
UK Nationwide house prices, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 7:08 a.m. New York time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 0.3%
The MSCI World index rose 0.3%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.2% to $1.1060
The British pound was little changed at $1.2736
The Japanese yen fell 0.1% to 142.57 per dollar
Cryptocurrencies
Bitcoin rose 1.7% to $43,048.11
Ether rose 3% to $2,291.03
Bonds
The yield on 10-year Treasuries declined three basis points to 3.87%
Germany’s 10-year yield declined six basis points to 1.92%
Britain’s 10-year yield declined five basis points to 3.46%
Commodities
West Texas Intermediate crude fell 0.6% to $75.12 a barrel
Spot gold was little changed
Some Food For Thought
It's crucial to note that Anatoly Yakovenko, co-founder of Solana, doesn't harbor animosity towards Ethereum. Such sentiments are often projected by emotional investors onto their blockchain leaders.
Just as Vitalik shaped Ethereum in the image of Bitcoin's vision, Anatoly has similarly crafted Solana with a nod to Ethereum's ideas.
While it may sound unconventional, envision a future where Ethereum and Solana seamlessly intersect, addressing each other's limitations and creating a symbiotic relationship.
Grayscale Bends The Knee To The SEC
In an SEC filing yesterday morning, it was disclosed that Barry Silbert, the founder and PM CEO of Grayscale, will be stepping down from his role as chairman. Mark Shifke, currently serving as DCG’s CFO, is slated to take on the position of chairman in his stead. Additionally, DCG's president, Mark Murphy, has resigned from the board, with another company executive set to assume his role. A third executive is expected to join the board.
Put differently, it seems that the SEC has orchestrated a game of musical chairs for Grayscale, directing when the music begins and ends in this leadership shuffle. The silver lining in this situation is that if there were concerns about Grayscale becoming the black sheep in the impending approval window, this penance, in theory, bolsters Grayscale's grace. Of course, this all assumes a connection to their ETF filing with the SEC.
Two Weeks
We stand precisely 14 days away from the SEC's pivotal decision — arguably the most consequential our industry has encountered. The outcome, whether approval or denial, holds immense significance. Even if not in this instance, the SEC will eventually yield. It's noteworthy that until June 15, the public largely deemed this possibility implausible, a sentiment that shifted with the entry of BlackRock into the fray.
Despite the gravity of the impending decision, it seems the broader public has yet to fully grasp its significance. Post-approval, my advice is to brace for substantial shifts in narratives. While the initial focus will be on capital inflows into the ETF, the allure of this spectacle will inevitably fade. The true test will be how the asset performs long term
CZ Is Raking In The $$$
Despite the challenges faced by Binance this year, I hadn't anticipated discovering that CZ's wealth surged by nearly $25 billion to reach $37 billion in just one year. While it's unfortunate that CZ is grappling with legal repercussions, the potential for an epic comeback upon his return to the space is going to be exciting. February 23rd marks the day of CZ's sentencing, and it will undoubtedly be a sad day.
Here’s Why Bitcoin Will Pump In 2024 l Macro Monday
Join Dave Weisberger, Mike McGlone, and James Lavish as we break down what's happening in macro and crypto!
My Recommended Platforms And Tools
Trading Alpha - My new go-to indicator site and trading community. Use my link and get 2 months for FREE. Make sure to use code “2MONTHSOFF.”
OKX - Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $60,000! Use my code HERE.
NGRAVE - ZERO is the most secure and user-friendly hardware wallet. If you aren't happy with your current crypto wallet, look no further than the ZERO.
The Daily Close - Brand New Newsletter! Institutional grade indicators and data are delivered directly to your inbox every day, at the daily close. Trade like the big boys
Nord VPN - Get an exclusive NordVPN deal - 40% discount! It’s risk-free with Nord’s 30-day money-back guarantee. Protect your privacy.
Twitter - I spend most of my time on Twitter, contributing to CryptoTownHall every weekday morning, sharing random charts, and responding to as many of you as I can.
YouTube - Home of the Wolf Of All Streets Podcast and daily livestreams. Market updates, charts, and analysis! Sit down, strap in, and get ready—we’re going deep
TheWolfOfAllStreets.io - The most comprehensive collection of everything I have going on. Plus over 100 blogs and other exclusive content.
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.