10/22 Triple divergence is playing out. How deep?

18 時間前

Overview:
The SPY closed down by only 0.16%, despite opening lower than Friday’s close. During the second trading hour, the index dropped 0.5% but managed to recover the losses throughout the day. Only a few SPY stocks ended in the green, with Nvidia gaining 4.14%. Despite this minor pullback, the index has seen six consecutive weeks of growth, and one red weekly candle wouldn't derail a bull run that has gained 23% since the start of the year.

The tech-heavy QQQ also closed in the green, up 0.19%, thanks to Nvidia’s boost.

The U.S. Leading Indicator Index (LEI) fell by 0.5% month-over-month to 99 in September, a steeper decline than the expected -0.3% and more significant than the -0.2% drop in August, according to The Conference Board’s report on Monday. From March through September 2024, the LEI dropped 2.6%, exceeding the 2.2% decline in the previous six-month period.

"Weakness in factory new orders continued to be a major drag on the US LEI in September as the global manufacturing slump persists," said Justyna Zabinska-La Monica, senior manager of Business Cycle Indicators at The Conference Board. "Additionally, the yield curve remained inverted, building permits declined, and consumers' outlook for future business conditions was tepid."

This index has been decreasing since March 2022, and Monday’s reading officially places it below its lowest point during the COVID-19 period in April 2020. However, the rate of decline appears to be slowing.

Meanwhile, companies are still reporting better-than-expected earnings. Some well-known names reporting today include GE Aerospace (Boeing's engine supplier), Philip Morris, Verizon, General Motors, 3M, Enphase, and Invesco (owners of the QQQ ETF).

The CME Watch Tool now shows an 11.1% chance of no rate cut on November 7th, up from last week’s 9.3%.

While BTC dropped 2.40% on Monday, BlackRock still bought $329 million worth of BTC ETFs. It’s almost amusing to think that BlackRock could be acting as someone’s exit liquidity. The firm now owns 362,192 bitcoins, valued at $23.169 billion.

BTC TA:
W: Unfortunately for the bulls, BTC closed last week at 69k, which is below the highs of the last two bullish waves in late March and early June.

D: Monday ended with a 2.40% correction—much needed after last week's strong rally. A timely release of pressure increases the likelihood of the bull run continuing. An important level to maintain is 66.9k, as it’s the point of control for this recent rally starting from October 10th. The next support levels are 65.8k and the key yearly support at 62.7k. Breaking below 62.7k would invalidate the current bullish wave. On the bearish side, Monday’s candle engulfed the previous five trading days (including the weekend). Before the pullback, the RSI hit 70.

4h: As we spotted and wrote about in our previous letter - the 4-hour chart showed MACD, CVD, and RSI divergences, with three consecutive declining peaks as the price continued climbing. The correction began on Sunday evening, and it may take more than a day to fully play out. The key level to hold now is 66.8k—if it breaks, the price may fall to the daily level of 65.8k. So far, it’s holding.

1h: The 1-hour chart looks bullish, as the 66.9k level is holding, with some bullish MACD and RSI divergence showing.

Alts Relative to BTC: ETH, SOL, and NEAR have not declined as much as BTC. However, SUI has dropped more significantly by 5%, and TAO by 9%. APT is unexpectedly pumping, while DOGE is up by 27.30%. Seems like alts are diverging from BTC correction. At least the aren't collapsing 7 - 10%, which was the case in the past with BTC falling by 2.4%.

Bull Case: BTC could be correcting slightly before resuming the bull run. If a recession is avoided, Trump wins the election, and rates are cut, the outlook remains positive.

Bear Case: BTC may have reached an old resistance level without breaking it, confirming it as a solid resistance, and initiating a deeper correction.

Fear and Greed Index: The index is back to Neutral at 57, down from the Greed territory of 60 over the weekend.