Stock Market Outlook

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The News Buzz

• Trump has turned to Bitcoin to solve America’s national debt once he is re-elected. The CEO of Bitcoin Magazine and crypto adviser for Trump’s campaign revealed that he had asked if Bitcoin could help tackle the $35 trillion debt.

• Bitcoin fell below 68k (see my X posts below) after wallets belonging to Mt. Gox transferred $9 billion worth of BTC to an unknown address. The transaction is possibly part of a plan to repay creditors by Oct. 31.

• Google has unveiled the future of AI in ChromeOS, showing off a suite of AI features built into its next-generation Chromebook Plus laptops. These new Chromebook Plus laptops have Google's Gemini AI chatbot preinstalled.

• Core PCE measure could see its smallest advance since 2024. Euro-zone inflation may pick up, but the ECB remains poised to cut.

• Starting on May 28, US trades will “settle” (complete the exchange of dollars for stock) in one day rather than two, after one century. US banks, brokers, and investors have been forced to review their post-trade technologies and procedures to ensure they are ready for the new pace of stock trading (the change poses a special challenge to investors outside the US who need to buy dollars as part of their stock trades.)

Basics of Trading

Some excerpts (slightly paraphrased) from Basics of Trading by Martin Armstrong (Armstrong Economics):

• The most fundamental truth about trading is that your opponent is YOURSELF. The majority must be wrong because they are the fuel that propels the market. The market enters a flash-type crash when the vast majority is LONG, and they try to sell, but there is no bid. Far too many people demonize trading such as “paper gold,” arguing that it is not real. Yet, eliminate futures, and you get liquidity, and then gold’s value would decline, not rise.

• Without a common exchange, gold has no value. What gives gold any value is the fact that it is accepted as having some value. If you cannot determine a value, no commodity, stock, bond, or object could ever have a value. This is a barter economy where you will NOT trade unless you need the item in exchange or know with certainty you can exchange it with a third party.

• To avoid getting caught at the high or the low, you must understand the nature of markets and how they function. Once you realize that, you will see your real opponent is YOURSELF, not the grand cabal. The majority must be trapped at the high, creating panic when the majority tries to sell, but there is no bid. Likewise, the majority is bearish at the low, and the dominant trade is short. They try to buy back, causing a panic to the upside for the lack of offers. It is a pendulum swinging to the extreme on both sides, which propels the market movement.

•  I [Armstrong] have stated that gold would bottom only after it became a dirty word. All that yelling and screaming about manipulation or whatever commodities are now in an inflationary trend. Claims that money should be tangible would benefit the bondholders at the expense of the people. People are now moving into commodities as they have lost trust in government and instilled fear of the future. Gold will rise co-currently with stocks amid this wave as people seek to move money out of public spaces.

• Confidence in government goes down, and gold goes up. Gold is not fiat. It is neutral. Stock rallies mean gold rallies – the two are going up because it is the trade against government bonds vs the private sector. You get something back even if, say, GM goes bankrupt. You get nothing if the government goes bust.

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EWH – Hong Kong iShares MSCI ETF

• The two charts below depict daily and weekly cycles composites of EWH.

• The daily chart cycle composite suggests that EWH will correct the recent rally until early-to-mid August.

• However, the weekly chart cycle composite suggests the pullback will be a buying opportunity for a continued rally into mid-2025 +/-.

Market Summary

As of close on 28 May 2024.

What Has Been

• US stock indexes were mixed in the first post-holiday session: The S&P 500® index (SPX) rose 1.32 points (0.02%) to 5,306.04; the Dow Jones Industrial Average® ($DJI) lost 216.73 points (0.6%) to 38,852.86; the Nasdaq Composite gained 99.09 points (0.6%) to 17,019.88.

• The breadth was not particularly good, with about 3:1 dec/adv in the S&P 500 with 7 of 11 sectors lower.

  § After drifting lower most of the day, the stock recovered in the last hour.

•  Treasury yields have been weighing on sentiment as they have increased following an increase in the Conference Board’s Consumer Confidence, more hawkish Fed commentary, and weak 2yr/5yr auctions.

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