Stock Market Outlook

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· Lesson: Be careful when trading FED news and news in general, as it is hard, or impossible, to outtrade the machines.

· In my opinion, FED’s announcement do not change market trends; they introduce short-term whipsaws.

· Near-term options remain the same, as I discussed in the Sunday Premium report.

· This week, the stock market closed every day at a maximum uncertainty position keeping options for further bounce up and going to a lower low open. Ideally, I would like to see first another low, theh a bigger bounce toward June, but the market is calling the shots.

· It is still a good strategy to sell the rips (RIPs), i.e., raise cash.

· My intermediate- and long-term views have not changed.

Market data as of close on 2 May 2024.

April Became the Worst Month for Bitcoin Since November 2022

· Do you remember my writing about “buy the rumor, sell the news” regarding all the hoopla surrounding Bitcoin ETFs and Bitcoin’s halving? It was on the mark!

· Bitcoin declined almost 14.8% in April.

· This was the largest monthly drop since November 2022, when Bitcoin declined by 16.2%.

A Bitcoin Technical Analysis Lesson

· In early March, I posted a negative cycle outlook for 2024 and into early 2025 in the Premium Newsletter.

· Just before mid-March, one day after Bitcoin’s peak, I posted the chart below, flagging the potential top and pointing to the technical characteristics below.

· A strong negative divergence in the RSI indicator during a rising wedge in March.

· The daily MACD started to curl down.

· The Momentum indicator was already dropping sharply before the peak.

· The three possible Elliott Wave (EW) counts all indicated a top of significance.

Bitcoin Technical Analysis Today

· Fast Forward 1.5+ months, and we get the chart below.

· The mid-March technical analysis was on the mark! What has happened since then?

· Bitcoin declined in a wedge-looking pattern that counts best as 5 overlapping waves, i.e., a leading diagonal (EW) in EW terminology (the blue wedge). This can constitute wave (i).

· Bitcoin spiked below the downtrend line of the wedge, which is typical for diagonal patterns, and the pattern is likely complete or nearly, thus, a bounce can be expected.

· Notice how bitcoin was trying without success to break above the previous high resistance (the red line). It poked above it a couple of times but quickly reversed.

· Bitcoin broke below the longer-term converging yellow and black trendline that provided support in mid-April. These trendlines, the upper trendline of the blue wedge, and the red resistance line will represent resistances for Bitcoing in an expected bounce in wave (ii) retrace. It is possible that Bitcoin could bounce to about level of the wave iv or (i).

· Notice how weak the bounce was into the time area of the 40D cycle peak. This suggests that longer cycles are pressing down. Indeed, a 20W cycle peak is “scheduled” for about mid-May +/-.

· Bottom line: A bounce non-withstanding, Bitcoin is predisposed for a correction of significance, under all three considered EW counts (the red count is my preferred alternative).

· I will look at Bitcoin time cycles in more detail in the Premium content.

Bitcoin Seasonality – Sell in May and Go away

· We discussed the stock market seasonal pattern “Sell in May and Go Away” a couple of weeks ago.

· A similar pattern exists in Bitcoin price performance.

· The chart below shows monthly Bitcoin price gains/losses based on a 15-year sample.

· Summer, June through September, underperforms other parts of the year. Notable, August and September had negative returns.

· The chart below shows the Bitcoin’ yearly pattern dor day of the year.

· In 2024, Bitcoin has been tracking the pattern fairly well, so far.

· This pattern suggests a seasonal strength into June, which may coincide with expected wave (ii) bounce mentioned earlier.

· Then a weakness into October.

·         The last 3 times I looked at the SPX cycles. Today, I will check NDX cycles.

·         Sideways price action with whipsaws is typical of situations when cycles of different lengths have opposing directions. That’s the toughest scenario to take advantage of cycle analysis.

The chart below shows. . .

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