Market is Confused

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Today we will be covering...

• Market Summary

• Chart of the Day

• Liquidity

• Sentiment

• China Buzz

• Crypto

• Cycle Analysis of Major Indexes

• EW Analysis of Major Indexes

• VIX/VXX Update

• Commodities

• Crypto – Bitcoin Deep Dive

Market Summary

The stock market indexes continued the pullback/consolidation from the Thursday high but did not open their cards completely.

There are conflicting signals from indexes. SPX and NDX EW counts are suggestive of one more high, while DJI and RUT look more likely that they already topped.

Short-term cycle projections also send non-unison messages, but for NDX and DJI they suggest additional down is in the store.

Repeat from last week:

The short-term analysis is becoming more in line with the intermediate—and long-term analyses, which suggests a reversal is due. The lightning could strike unexpectedly around the tops.

My longer-term expectations do not change. I will repeat from the weekend report: “Despite the market's resiliency and FOMO, I expect a correction in the next 2-4 months, initially.

Market data as of close on 25 Mar. 2024.

Chart of the Day

MSCI World Index (ex-USA) monthly chart is hitting the resistance from 17 years ago, the second time! Will it break out or be rejected. Maybe the breakout in the third attempt?

Liquidity

An unprecedentedly steep rise in personal interest expenses is not good for the economy or the stock market liquidity of ordinary Joes. This is unsustainable in my opinion. But I suspect interest rates will come down somewhat in the next couple of years.

Sentiment

Fund managers got into the leveraged long territory. This is not positive for stock in the intermediate term!

Extremely low short interest, a multiyear extreme! When a downturn starts there will be no short to buy to cover and provide the fuel for bounces, until big/smart money feels it is good to buy.

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China Buzz

China’s decision re Intel & AMD chips will have at least some impact on US semiconductors.

But not much impact today. SMH (semiconductors ETF) recovered quickly after an initial down open.

China intensified buying gold! De-dollarization?

Crypto

Although the excitement about Bitcoin halving is still present, Bitcoin sentiment cooled off since early March, which allowed for the recent snap back.

Posted this chart earlier on X (former Twitter). Institutions are very long while hedge funds are very short Bitcoin futures. Are institutions trying to squeeze hedge funds? I suspect hedge fund may prevail in the intermediate-term.

For my newsworthy updates between newsletters, follow me on X (formerly Twitter):

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