Bitcoin Surges Towards $70,000 Amid Market Volatility And Election Uncertainty

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

This morning, crude oil prices plummeted by over 5% following an Israeli airstrike on Iran that notably avoided sensitive oil and nuclear facilities.

This unexpected development contributed to a jump in the major indexes, buoyed by the easing geopolitical tensions and the anticipation of upcoming mega-cap technology earnings. These earnings, coupled with the steadily improving Citi Economic Surprise Index, are expected to sustain the market’s upward momentum.

Traders are gearing up for the busiest week of the third-quarter earnings season, which coincides with the Presidential election on November 5. Five of the MAG7 companies—Alphabet, Microsoft, Meta, Apple, and Amazon—are set to release their earnings reports. Given their high valuations, these companies must meet expectations to prevent a potential sell-off.

On the economic front, this week is packed with significant events, including the PCE index release on Thursday, a preliminary reading of the third-quarter GDP, and the potentially market-moving jobs report on Friday.

Last week’s short squeeze continued to drive Small Caps higher, although the MAG7 basket saw minimal gains. Bond yields experienced volatility, with the 10-year yield surpassing the 4.27% mark.

Meanwhile, the dollar and gold ended the session unchanged, but Bitcoin found support and raced towards the $70,000 mark.

Despite the prevailing uncertainty surrounding the election, bond yields appear to have settled on an outcome, as indicated by the latest charts.

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ETFs On The Cutline – Updated Through 10/25/2024

Ulli ETFs on the Cutline Contact

Do you want to know which ETFs are hot and which ones are not? Then you need my High-Volume ETF Cutline report. It tells you how close or far each of the 311 ETFs I follow is from its long-term trend line (39-week SMA). These are the ETFs that trade more than $5 million a day, so they are not some obscure funds that nobody cares about.

The report is split into two parts: The winners that are above their trend line (%M/A), and the losers that are below it. The yellow line is the line of shame that separates them. You can see how many ETFs are in each group and how they have changed since the last report (256 vs. 237 current).

Take a peek:

The HV ETF Master Cutline Report

If you are confused by some of the terms we use, don’t panic. I have a helpful Glossary of Terms for you.

If you want to learn more about the Cutline method and how it can make you rich (or at least less poor), read my original post here.

ETF Tracker Newsletter For October 25, 2024

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.

ELECTION UNCERTAINTY LOOMS OVER MARKETS AS BOND YIELDS CLIMB

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Building on yesterday’s gains, which ended a three-day losing streak for the S&P 500, the index tried to secure a slight weekly advance.

However, this effort was thwarted as the markets sold off towards the close. The Nasdaq, on the other hand, finished Thursday on a positive note, buoyed by Tesla’s remarkable comeback rally. The EV manufacturer had its best day in over a decade, driven by stronger-than-expected profits and optimistic expectations for future vehicle growth.

Early in the session, a decline in bond yields provided upward momentum for the indexes, a trend that persisted throughout the day.

However, yields reversed course late in the session, with the 10-year yield rallying and closing at 4.24%. This shift clearly shows the dependency of the S&P 500 and Nasdaq on the direction of interest rates, as higher yields can undermine bullish sentiment.

This week, economic macro data exceeded expectations, contributing to the rise in bond yields and raising doubts about whether the Federal Reserve will continue its easing cycle as anticipated.

The MAG7 basket underwent a rollercoaster week but ended higher, thanks to gains from Nvidia and Tesla. While rising bond yields kept pressure on equities, they also helped the dollar achieve its highest weekly close since June.

Gold maintained its upward momentum, hitting a new intraday record on Wednesday. Meanwhile, Bitcoin’s advance was halted at the $69.5k level, causing the cryptocurrency to retreat and relinquish its early gains.

As we approach the upcoming election, it remains the primary focus for traders. Prediction markets currently favor Trump, but as the saying goes, “it’s never over ’till the fat lady sings.”

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 10/24/2024

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, October 24, 2024

How to use this StatSheet:

  1. Out of the 1,800+ ETFs out there, I only pick the ones that trade over $5 million per day (HV ETFs), so you don’t get stuck with a lemon that nobody wants to buy or sell.
  1. Trend Tracking Indexes (TTIs)

These are the main indicators that tell you when to buy or sell Domestic and International ETFs (section 1 and 2). They do that by comparing their position to their long-term M/A (Moving Average). If they cross above, and stay there, it’s a green light to buy. If they fall below, and keep going, it’s a red light to sell. And to make sure you don’t lose your shirt if things go south, I also use a 12% trailing stop loss on all positions in these categories.

  1. All other investment areas don’t have a TTI and should be traded based on the position of each ETF relative to its own trend line (%M/A). That’s why I call them “Selective Buy.” In other words, if an ETF goes above its own trend line, you can buy it. But don’t forget to use a trailing sell stop of 12%, or less if you’re feeling nervous.

If some of these words sound like Greek to you, please check out the Glossary of Terms and new subscriber information in section 9.

  1. DOMESTIC EQUITY ETFs: BUY— since 11/21/2023

Click on chart to enlarge

This is our main compass, the Domestic Trend Tracking Index (TTI-green line in the above chart). It has broken above its long-term trend line (red) by +7.57% and is in “Buy” mode as posted.

The link below shows all High Volume (HV) Domestic Equity ETFs. They are ranked by M-Index, which is my secret sauce for measuring momentum. Prices in all linked tables below are updated through 10/24/2024, unless otherwise noted. Price data not yet available at publication is indicated with 00.00% or -100.00%. Please note that distributions are not included in the current momentum numbers.

If the TTI is above the trend line, you can use the tables in the link below to pick your winners:

http://www.successful-investment.com/SSTables/HVDomETFs102424.pdf

  1. INTERNATIONAL ETFs: BUY — since 11/21/2023

Click on chart to enlarge

This is our global guide, the International Trend Tracking Index (green). It has now moved +5.51% above its long-term trend line (red) and is in “Buy” mode as indicated.

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Markets Rebound After Three Days Of Losses Amid Rate Cut Hopes

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

After three consecutive days of losses, the markets finally found some upward momentum, with major indexes showing early gains as expectations for rate cuts rose modestly.

This positive shift was supported by strong earnings reports, notably from Tesla, which surged 21% after surpassing expectations. Whirlpool and Lam Research also posted gains, while IBM weighed on the Dow, dropping 5% after missing estimates.

So far, over 32% of S&P 500 companies have reported their third-quarter results, with 76% beating analyst expectations. Contributing to today’s rebound were slipping bond yields, which encouraged positive sentiment, although the 10-year yield remains above the 4.2% mark.

In economic news, New Home Sales jumped by 4.1% month-over-month in September, with a year-over-year increase of 6.3%. Despite the Federal Reserve’s rate-cutting efforts, historical precedent suggests this rebound might be short-lived.

Bond yields dipped slightly, and the dollar paused its relentless climb. Gold reversed its losses from the previous day, reaching a new inflation-adjusted high since January 1980, as noted by ZH.

Bitcoin mirrored gold’s movement, bouncing back from Wednesday’s lows to cross the $68,000 mark, thereby recouping its losses. Crude oil, however, experienced a volatile session, initially advancing but ultimately surrendering all gains by the end of the day.

Meanwhile, concerns over debt and deficits resurfaced, with the USA’s foreign default risk climbing to a one-year high.

Will this trend prove to be short-lived like in 2023?

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Tech Giants And Home Sales Plunge Amid Rising Bond Yields

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The major indexes began the session on a downward trend for the third consecutive day, as bond yields surged, with the 10-year yield surpassing the 4.25% mark. By the end of the day, the S&P 500 had suffered its steepest decline in seven weeks.

While some traders attribute rising yields to a robust economy, I believe that concerns over the deficit play a more significant role, especially given the current economic instability.

My perspective was reinforced today when it was revealed that US Existing Home Sales fell to their lowest level since 2010, dropping 1% month-over-month (MoM) against expectations of a 0.5% MoM increase—a substantial miss. Although August’s 2.5% MoM decline was revised to a 2% MoM drop, sales for the year were still down 3.5%.

Despite short-term weakness and volatility being common in any bull market, the recent pullbacks have remained within expected ranges, indicating that the long-term trend is still positive.

However, the current political and geopolitical climate sets up the possibility of a significant directional shift, even as we approach a typically strong seasonal period. Today’s 1% drop is still considered a moderate correction.

The MAG7 basket suffered, with tech giants Apple and Nvidia losing 2.16% and 2.81%, respectively. The most shorted stocks continued to lose upward momentum. The dollar ended the session stronger, approaching its July highs.

Gold could not withstand the strength of the dollar and rising yields, relinquishing the gains of the past three days. Similarly, Bitcoin fell below $66,000, and crude oil slipped but managed to hold its $71 price level.

If today is any indication, volatility will continue to be with us throughout the election period.

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