We are most decidedly in a bear market at the moment, so I don’t think that we are suddenly going to see everybody jump into the stock market.

• S&P 500 Index had a positive session again on Wednesday.
• We continue to see quite a bit of noise in the market.
• The recovery is quite impressive, but we still have a long way to go before you can start talking about a trend change.

Because of this, you need to take the attitude that you are waiting for a setup that goes with the longer-term trend. The 3900 level above could be resistance, right along with the 50-day EMA that sits at the 4000 level.

4000 Level is the Ceiling

The 4000 level is the “ceiling” as far as I can tell, so therefore I think this is a market that will continue to favor the downside, as the Federal Reserve continues the tight monetary policy, and there are a lot of concerns about inflation and slowing down when it comes to the global economy. With that being the case, the market is more likely than not going to continue to see more of a “fade the rally” type of situation.

At this point, it’s also worth noting that toward the end of the last hour, sellers came in and pushed the market down. That being said, the market is likely to continue to see a lot of noisy behavior, and I do think that given enough time we will struggle. Ultimately, I believe this is a market that will continue to be very noisy, so you need to be cautious with your position size. It’s very difficult to imagine a scenario where the stock market suddenly takes off, but at this point, it’s going to be interesting to see whether or not the jobs number will make for a bigger move, or if it will squash any type of rally. We are most decidedly in a bear market at the moment, so I don’t think that we are suddenly going to see everybody jump into the stock market.

Right now, you can make an argument that we are in the descending channel, and you need to pay close attention to once we get toward the top of it, near the 3900 level. Underneath, if we break down below the lows of the last several days, then the market opens up down to the 3700 level, perhaps even to the 3650 level which opens up even further losses.

I don’t have any interest in trying to get too cute with this, and I think that given enough time this becomes a great investment.

• The BTC/USD pair continues to hang around the $20,000 level, essentially doing nothing.
• The market is trying to build some type of base, or just hover around the $20,000 level in order to make the next move.
• The market will ultimately find a significant move to the upside or a continuation of the downturn.
• It’s more likely that we will see more of a downtrend, as the Federal Reserve continues to tighten monetary policy.

With a tightening monetary policy, it’s very difficult for institutions to put a lot of money out on the risk spectrum like buying Bitcoin would be, and therefore the big move just is not going to happen to the upside. If we break it down below the $18,000 level, it’s likely that Bitcoin will go to the $16,000 level, perhaps even the $12,000 level. In fact, if the market were to reach down to the $12,000 level, it’s likely that we would see a bit of accumulation there, and I will start to dip my toe in the water at that point.

Long-Term Forecast

The $12,000 level could be interesting as it was previous resistance, and now it should continue to suggest that we would have quite a bit of support in that region. That being said, I think we will probably drop down to that area and then go sideways for ages. This is what we have had for multiple downtrends, and I think that we would see more of the same. Given enough time, it’s likely that we will see an opportunity to pick up and accumulate Bitcoin, and hopefully, be holding on to a large amount of Bitcoin for the next bullish run. I don’t have any interest in trying to get too cute with this, and I think that given enough time this becomes a great investment. After all, Bitcoin determines where the rest of crypto goes, and I think we have a situation where longer-term investors are looking at this as a potential opportunity, but they don’t necessarily want to jump into the market with both feet, but ultimately this is a situation where we have to scale in if you are a longer-term trader. If you are shorter-term trader, then you are looking for opportunities to short this market.

You need to be very cautious with your position size, as the gold market has been like a wrecking ball for a lot of trading accounts lately. 

Gold markets were all over the place Wednesday, as we continue to see a lot of volatility in most major markets. Gold is being thrown around by the bond market, which is all over the place as well. Keep in mind that gold has a lot of crosscurrents to deal with right now, such as the previously mentioned bond market, the US dollar, the concerns about inflation, and the concerns of the global economy slowing down in general.

Looking at the candlestick, this suggests that there is a lot of indecision, and it’s worth noting that the 200-day EMA above is sitting at the $1855 level and going sideways. Because of this, it suggests that the market is more likely than not going to continue to see more consolidation than anything else. If we were to break above the 200-day EMA, we have to deal with the 50-day EMA, so therefore you have a situation where the noise above is going to continue to cause major issues.

However, if we were to break out above the $1880 level, then it’s possible that the market will have just completed a major “double bottom”, and then go looking to reach the $2000 level. The $2000 level is an area where we have seen massive resistance previously, so it could end up being a bit of a target for those who are trying to make out to the upside. Alternately, if we were to break down below the $1800 level, then it’s likely that the market could go to the $1750 level, maybe even the $1700 level after that.

Keep an eye on the US Dollar Index, because it does have a lot of influence on where we go in the gold market. You also have to keep an eye on that 10-year yield in America, because it is also a major negative correlation. Ultimately, gold is trying to figure out what it wants to be, but it looks like we are still trying to figure out what to do next. Because of this, you need to be very cautious with your position size, as the gold market has been like a wrecking ball for a lot of trading accounts lately. Ultimately, this is a market that continues to grind sideways more than anything else.

Risk assets are not loved at the moment, so keep that in mind as you deploy trading capital.

Helium fell a bit on Wednesday as we continue to see it bounce around the $9.00 level. We recently tested the 50-day EMA, which sits right at the $12.00 level. This is a market that continues to look very negative, and it’s likely that we will continue to see sellers flood into this market. It looks as if we are trying to form some type of “double bottom” near the $6.60 level, but it would not surprise me at all to see this market slice through there. After all, Helium is under the same type of pressure that most other crypto markets are.

Because of this, trading the Helium market is going to be the same as every other crypto market, at the whim of risk appetite. Helium is a relatively small market, so it’s going to be thought of as extraordinarily speculative. This will be especially true with the larger institutional money, so I just don’t see the catalyst for this market to take off to the upside. When you see this chart, it looks as if we are at least trying to build some type of basing pattern, but it would not take much to make this part of fall apart again. If we break it down below the $6.60 level, the next natural area to challenge would be the $5.00 level, where a certain amount of psychology comes into the picture.

On the upside, if we were to break above the $12.00 level, then it’s likely that the market could go running toward the $16.00 level. That’s an area where we had seen quite a bit of selling recently, so breaking above there would really make a statement. That almost seems impossible at this point, at least not until we see Bitcoin and other bigger coins take off. That seems to be unlikely, at least in the short term. I suspect that any rally at this point will probably be jumped upon by short-sellers, but that doesn’t mean anything other than it’s a risk asset. Risk assets are not loved at the moment, so keep that in mind as you deploy trading capital. If you are a longer-term investor, you may get an opportunity to build huge positions at lower levels, but you would need another “alt season” to make that profitable.

Pay attention to the US bond market, as the rate differential between the United States and the United Kingdom will continue to drive this pair.

The British pound fell rather significantly from the 1.26 level on Wednesday as we continue to see a lot of negativity. Ultimately, the strengthening US dollar is the main theme for the overall Forex markets as of late, and I think that will continue to be the case. After all, there are a lot of concerns out there that will continue to have people looking for safety, which means the US dollar.

The market breaking above the highs from the last couple of days would be able to sign, but we have to deal with the 50 Day EMA if we were to break above there. A move above that level could open up the possibility of a move much higher, but I think that the 1.30 level is an area where we would see a lot of selling pressure, as it was previous support. Ultimately, this is a market that is in a downtrend, and I think it’s only a matter of time before we would see the weight of the market come into the picture. The 1.30 level is an area that will attract a lot of attention, and I think that would be the top of any type of longer-term relief rally that would happen.

I’m looking for signs of exhaustion, such as the candlestick during the trading session on Wednesday, to get short yet again. Given enough time it’s likely that we will see the market reach the 1.22 level, where we had bounced from previously. If we can break it down below there, then it’s likely that we would see the market reach the 1.20 level underneath. The size of the candlestick for the Wednesday session of course is rather negative, and the fact that we are closing towards the bottom of the candlestick suggests that there could be a bit of follow-through during the trading session on Thursday. Either way, I have no interest whatsoever in trying to get longer this market, at least not until the fundamental situation changes. Right now, it’s obvious to me that the market will continue to struggle, and therefore I am looking for signs of exhaustion in every short-term rally to get involved. Pay attention to the US bond market, as the rate differential between the United States and the United Kingdom will continue to drive this pair.

The one thing that you should do is keep an eye on your position size as it will almost certainly cause problems.

Gold markets fell rather hard Wednesday as we continue to see a lot of trouble near the 200-day EMA. Ultimately, this is a market that has been selling off quite drastically, and at this point, it looks as if we are trying to find buyers underneath. This is a market that is going to be influenced by a lot of external problems.

For example, the interest rate markets in America will have a huge influence on what happens, and if interest rates continue to rise significantly, that is going to put downward pressure on gold. Alternately, if the interest rates in America start to sell off, then it is likely that gold will rally. Nonetheless, there are a lot of different things to pay attention to when it comes down to the gold market right now.

The technical analysis is most certainly worth paying attention to as well, as it looks like we have tried to rally quite significantly over the last week or so. However, this pullback does make sense as you would not anticipate that the market was suddenly going to take off to the upside. This has been a nice move higher, but at this point, it’s likely that we would see some type of pullback to look for more buyers.

It’s worth noting that the bond markets are starting to pick up a little bit, driving yields down. If we can continue to see that happen, then the gold market gets a bid. On the other hand, if we see the bond markets continue to attract buyers, that will drive down the price of gold as the yield for holding paper will be much more worthwhile.

There is a lot of risk out there right now, so there is a certain amount of demand for gold based upon that alone. Nonetheless, I think you should expect a significant amount of volatility, especially if we are going to see a potential trend change. Because of this, the one thing that you should do is keep an eye on your position size as it will almost certainly cause problems. It’s worth noting that the $1870 level has offered resistance of the last 48 hours, so if we break above there, then we could go higher.

Crypto is in a bit of a freefall, and you have to look at rallies as a potential selling opportunity going forward.

Litecoin initially tried to rally on Wednesday but gave back the gains to show less than bullish behavior. Ultimately, Litecoin is in a downtrend and much like the rest of the crypto markets, looking for some type of bottom. That being said, the bottom is nowhere to be found and I do think that we will go much lower from here. The candlestick from last week that ended up forming a hammer showed that the $60 level could be a bit supportive, but I think it is probably somewhat limited in its support.

Litecoin is going to follow the rest of the crypto markets, and by extension, Bitcoin. It is Bitcoin that calls the shots for the rest of the crypto markets, and until we can get some time of bullish momentum in the market, smaller coins such as Litecoin will continue to fall. While ironic, the reality is that crypto is a risk asset, and not nearly as “decentralized” as a lot of fanboys had hoped. This is what happens when institutional money comes into the marketplace, it starts to act like every other asset. You need to understand that institutional traders do not care about the use case scenario of Litecoin, Bitcoin, or even Ethereum. What they are concerned about is volatility and return on capital.

As volatility has gotten out of hand when it comes to risk assets, money flows out of places like Bitcoin and into safer spots. At this point, just about anything is safe in comparison to the crypto markets, so please keep that in mind. Ultimately, this is a market that has a major ceiling at the $100 level and is not until we break above there that you can take any rally seriously. Furthermore, you would need to see at least three days in a row of bullish pressure in Bitcoin, perhaps even strong ones to show conviction. Pay close attention to volume, as it can give you a bit of a “heads up” as to where we go next.

A breakdown below the bottom of the hammer from last week opens up a move down to the $50 level, and then eventually the $40 level after that. Crypto is in a bit of a freefall, and you have to look at rallies as a potential selling opportunity going forward.

3850 is a real potential target at this point, opening up the possibility of even further downward pressure going forward.

The S&P 500 pulled back rather drastically on Wednesday as the negative pressure continues to be drastic. The markets are finally coming to grips with the idea that the Federal Reserve is not there to save them. It has been quite a ride, but at this point, we look ready to meltdown. Ultimately, if we break down below the hammer from last week, that opens up the floor for significant downward pressure. The S&P 500 has a lot of risks built into it, and I think it is likely that we will continue to see people bail on the markets.

Any rally at this point will be looked at with suspicion, as the earnings season is starting to look rather ugly for retailers, which suggests that the consumer is not going to be there to bail things out. Without the ability to drum up a narrative, this suggests that Wall Street has a lot of pain ahead of it. The size of the candlestick is rather impressive, and I think we will probably have some follow-through. Any rally at this point in time is an invitation to start shorting again.

Whether or not we can find buyers is a completely different question, because you would have to be very brave to get involved at this point. In fact, we need to break above the top of the candlestick to even think about the idea of buying. That being said, these types of candlesticks almost never happen in a vacuum, so I would anticipate quite a bit of follow-through. It is also worth noting that the later we got through the day, the more selling came into the picture. As the US is heading into a recession this year, it is difficult to imagine a scenario where people want to start buying stocks. Yes, there will be the occasional rally, and it could even be a very bullish move. However, those are short-lived, as we have just seen over the last week or so. Speaking of the last week or so, the Wednesday candlestick just wiped out most of the gains from that same timeframe. 3850 is a real potential target at this point, opening up the possibility of even further downward pressure going forward.

The market continues to be a situation where traders are willing to fade the rally, especially as the US dollar continues to be very strong.

Gold markets rallied a bit on Wednesday as we continue to see this market grind back and forth. That being said, the market is more likely than not going to continue to be a scenario where buyers are going to be short-lived, as the US dollar is without a doubt the big winner as of late. The markets will continue to be very noisy, but ultimately, I do think that all of the noise above will continue to be a major issue for traders to overcome.

Gold markets have been pummeled by the US dollar’s strength, and it is worth noting that we stopped right at the 200-day EMA and the futures market. This is an area where you would expect a lot of technical selling, so be interesting to see whether or not we can continue to go higher. If we do, there are plenty of areas above that could come into the picture to cause problems. The most obvious place for me is going to be the $1883 level, where we had fallen from previously. That was an area that had seen a lot of downward pressure and sent the market down to its current levels. One would have to assume that there is a certain amount of market memory in that area, so I do think we probably have quite a few traders waiting to get involved at that level.

The market continues to be a situation where traders are willing to fade the rally, especially as the US dollar continues to be very strong. As long as that correlation still remains, it is difficult to imagine a scenario where I would get long in this market, especially as the 50-day EMA sits at the $1906 level and is sloping lower. I will be looking for signs of exhaustion that I can take advantage of. The market will continue to be very noisy, but that is not a huge surprise considering the CPI came out so hot during the day, and the Federal Reserve is most certainly in play. That being said, let the market rally a bit and then start looking for signs to get short. If we do break down below the lows of the session for Wednesday, it is very likely that we could go looking to reach the $1800 level.

This has been a nice bounce, but I think we probably see more selling.

The DAX had an explosive positive move during the trading session on Wednesday to reach towards the €14,500 level. This is an area that will attract a certain amount of attention, but at the end of the day, I do not think it is necessarily a sign that the market is going to shoot straight up in the air. It has been a very impressive bounce, but it must be noted that we are still recovering from a massive selloff. In other words, this could be a “bear market bounce”, which can be quite vicious.

I believe at this point if we break back down below the €14,000 level, the DAX will continue to reach down towards the lows. We may have sold off too quickly, and therefore we needed this bounce to bring back some type of equilibrium. Because of this, I believe it is worth noting that towards the end of the day we did start to sell off again, so this could be people jumping back into the short side of trading.

As far as buying is concerned, I would need to see this market clear the €15,000 level on a daily close, and perhaps even reach above the 200 Day EMA which is above there. If that were to happen, then obviously the DAX would continue to go higher, but with the situation in Ukraine dragging on, it is difficult to imagine a situation where the DAX simply takes off as it is the first place money goes looking to win in the European Union.

The ZEW announcement came out of Germany yesterday at a reading of -39, although it was expected to be +5. This shows you just how bad business confidence is right now in Germany, and that certainly could continue to weigh upon market confidence and therefore price. Given enough time, I think those questions need to be answered as well. The business confidence being so poor in Germany will have a negative effect on the stock market as well, and of course the global market slowing down means that we will have less exports coming out of Germany also. Remember, the DAX is highly levered to exports as most of the major companies are international conglomerates that sell their products all over the world. This has been a nice bounce, but I think we probably see more selling.