Will Powell Wow?
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Our View
I was going to write about the move in Bitcoin yesterday but after the ES puked late on Friday, I decided to go with the PitBull story. Today, I am sharing my thoughts on Bitcoin. The first part is it doesn’t matter if you don’t like cryptocurrencies, they are here to say. I can’t count the number of times I thought about buying 1 CME bitcoin futures until I saw that the margin was $25,000 per contract.
That said, BITCOIN has come roaring back. I think there are a few reasons for this: too many shorts, the non-stop dollar debt the US is racking up, the ongoing push by central banks to create the new currencies, and because demand is rising on so-called spot bitcoin exchange-traded funds which allow investors to dabble in crypto in a less riskier way than ever before. The combination of these factors has attracted a huge influx of cash this year. While Bitcoin crossed over the 69,000 level, it did reverse and was down 11% before closing down 7.36%. I don’t think the rally is over. While I am still very skeptical, I also think there needs to be room in your portfolio for Bitcoin or cryptocurrencies at some point in the future.
I warned about increased volatility and that is exactly what we are seeing.
@JPM Clients’ View: This week we poll investors on China, Bitcoin, the BoE and BoJ, in addition to our running sentiment questions. Our last survey results indicated: (1) equity exposure/sentiment among respondents is ~52nd percentile on average; (2) 32% planned to increase equity exposure, and 76% to increase bond duration near-term; (3) 60% believe the Feb CPI release is more likely to surprise to the upside than downside; (4) 79% see NVDA as overvalued, though only 28% believe it’s in a bubble; (5) respondents were close to evenly split both on whether Chinese equities are at a positive inflection point and whether the BoJ will exit negative rates in March. Market pushes ahead with volatility low and froth building: Stocks continuing to push to new record highs and Bitcoin surging over $60k may indicate accumulating froth in the market. This may keep monetary policy higher for longer, as premature rate-cutting risks further inflating asset prices or causing another leg up in inflation. We see a dichotomy in volatility markets: stock vol is near multi-year lows despite expensive valuations/elevated positioning/high concentration, rates vol remains
stubbornly high given uncertainty around the timing/pace of rate cuts, and yet FX volatility has moved sharply lower despite elevated rates levels and vols.
Our Lean
It’s a loaded week.
Powell could send the markets lower again today and tomorrow while we look for the PitBull Thursday / FRYday low the week before the March triple witching and jobs FRyday. Yesterday’s price action was absent from any buy programs until the last rip. I know NVDA was rallying but I also pay attention to the NQ when it’s down 400 points. Our lean, I can’t rule out another drop but if the ES opens lower on the 9:30 open I’m a buyer. If it rallies early, I want to sell the rallies and buy the pullbacks and start looking for the PitBull’s low while paying close attention to the Fed headlines
MrTopStep Levels:
MiM and Daily Recap
After selling off late in the day on Monday, the ES continued downward to 5113.00 at 9.23 am and opened Tuesday’s regular session at 5116.50. I posted this in the MrTopStep chat just before the open: IMPRO : Dboy : (9:26:47 AM) : 5089 key After the open, the ES traded up to 5117.50, sold off down to 5107.25 at 9:54, rallied up to 5121.50, up ticked, and then sold off down to 5100.00 at 5089.00 at 10:50. After the low, the ES rallied up to 5098.25 and then dropped down to a new low at 5083.50 at 11:44. After this low, the ES rallied back up to 5099.25 at 12:31 and then sold off down to a 5063.00 triple bottom at 3:32 at 3:00. IMPRO : Dboy : (3:36:41 PM) : flat nq 17,859.5 IMPRO : Dboy : (3:37:20 PM) : I had a good day and Im going to stay flat into the close The ES rallied up to 5076.50 at 3:48 and traded 5077.00 as the 3:50 cash imbalance showed $1.3 billion to buy, traded up to 5083.50 at 3:55, and traded 5086.00 on the 4:00 cash close. After 4:00 the ES traded up to 5092.00 and settled at 5091.25 on the 5:00 futures close, down 43 points or 0.84% on the day.
In the end, it was an ugly decline and an ugly late-day rip that took no prisoners, Bitcoin fell 11% before closing down 7.32% on the day. In terms of the ES’s overall tone, it was all sell programs. In terms of the ES’s overall trade, volume was on the higher side, 228k on Glovex and 1.533 million traded on the day session for a total of 1.815 million contracts traded.
From @AlmanacTrader
Over the last 21 years, March has been a decent performing month for the market. Average gains over the period range from a low of 0.78% by DJIA to a respectable 1.40% by NASDAQ. March typically opens positively but selling pressure and weakness tend to follow quickly thereafter with choppy trading until around mid-month. From here on the market generally rallied to finish out the month. End-of-Q1 portfolio adjustments have contributed to additional choppy trading during the last three or four trading days of March. Election year average performance is influenced by across-the-board double-digit losses in 2020, but March’s pattern is similar with weakness in the first half and modestly improved trading in the second half.
Guest Post
Topic: PTG 3 Day Taylor Cycle
Author: David D Dube’ (a.k.a. PTGDavid)
Website: https://polaristradinggroup.com/
Prior Session was Cycle Day 1: Failure on Cycle Day 3 (see DTS Briefing 3.5.24) set up today’s long liquidation decline, pushing price down to retest 5064 range projection and previous Cycle Buy Day Low. Final hour short-cover rally back to 5090 Point of Control (POC). Range was 72 handles on 1.767M contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2: Anticipation for today’s trade is for MATD – “Morning/Market After Trend Day” rhythms. New Cycle Day 1 (Buy Day) Low is established at 5063. Back test of this level for surety is expected at some point before a sustainable cycle rally can unfold.
As always, our tactical trade plan remains unchanged…Stay in alignment with dominant intra-day forces.
Scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 5090, initially targets 5100 – 5105 zone.
Bear Scenario: Price sustains an offer below 5090, initially targets 5080 – 5075 zone.
PVA High Edge = 5145 PVA Low Edge = 5136 Prior POC = 5140
*****The 3 Day Cycle has a 90% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
Thanks for reading,
PTGDavid
Economic Calendar
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
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