Bitcoin, Seasonality, Oil, $SPX, Gold and Gas: The Seven Day Scope: Snipers Only
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Remember to keep this in mind from stock traders almanac. The nasdaq is usually very strong in election years.
Despite a strong initial trading day, we've observed a consistent pattern of strength fading in the days that follow, typically until approximately the seventh trading day. From that point until the expiration week, all five indexes have historically enjoyed upward gains. However, these gains have not proven resilient through the end of February.
In an election-year context, February's performance exhibits mixed outcomes. NASDAQ and Russell 2000 appear to follow a trajectory akin to the past 21 years, with gains holding steady until the month's end. In contrast, the other indexes seem to meander through the month, ultimately settling for modest average losses.
The record of the monthly options expiration week has been somewhat irregular in the longer term but showed signs of improvement until the onset of the Covid-19 pandemic in 2020. Since then, the performance of this week has seen three or four instances of decline, depending on the specific index being considered. Notably, both the S&P 500 and Russell 1000 have experienced four consecutive weeks of decline. The week following the expiration week also displayed improved trends prior to 2020 but has since reverted to its bearish longer-term tendencies.
Here is the calendar range for 2024. Breaking those lows could be very bearish but right now we are very bullish! In case you missed it…
“As January goes so goes the year.” Old saying on wall street.
The S&P 500 saw a 1.6% increase in January, resulting in a positive outcome for our January Barometer for the year 2024. Originally introduced by Yale Hirsch in 1972, this barometer has made only 12 significant errors since 1950, boasting an impressive 83.8% accuracy rate. The underlying idea is that the performance of the S&P 500 in January tends to set the tone for the rest of the year. Notably, nine of these 12 errors occurred after 2001, and when you include the eight flat years in the analysis, it maintains a robust .730 batting average.
Source: Stock Traders Almanac (Jeffrey Hirsh will be on the show next week)
1 month futures performance.
Gold-Notably, gold open interest plummeted rapidly from 500,000 contracts to the lower end of the range, standing at 433,000 contracts in just a few weeks. This suggests a scarcity of interest in holding gold contracts. I am not bearish on gold at all. I would be adding to this trade here if you don’t have a position and there are other ways to play this. I will post that for our subscribers this week. As rates fall. This could be a major move this year.
Bitcoin-I remain bullish on Bitcoin. For a swing trade it is sitting at a great level still. A quick run to the recent highs at 49k or higher should happen quickly. Placing a stop at the 38k level could be an easy swing trade.
Bitcoin Seasonality-Remember February is a very bullish month for Bitcoin.
Wheat-The emergence of a new Polar Vortex event in the United States or Europe carries the potential to instill fear among market participants, particularly in the winter wheat sector. This apprehension could prompt short-sellers to reconsider their positions and opt to cover, potentially serving as a catalyst for shorts across the broader grains complex to exit their positions.
Adding to the intrigue is the current weather situation, where unseasonably warm temperatures have caused at least half of the Hard Red Winter (HRW) and Soft Red Winter (SRW) wheat to break dormancy earlier than usual. This sudden shift in the wheat's growth stage, occurring within the next 10 days, creates a unique scenario. Should a Polar Vortex event occur before the arrival of protective snow cover, it has the potential to inflict unconventional damage to the crops, introducing an element of surprise and unpredictability to the market's crop damage profile. This unpredictability can further heighten market volatility and influence traders' decisions in the grains market.
We could easily see a rally in the wheat market.
Natural Gas prices are poised for a potential resurgence, with the United States facing the prospect of storage supplies dwindling to levels below the 5-year average. This development is primarily a consequence of the remarkable draw-downs in natural gas stocks that have been observed throughout the month of January.
Investors and energy market participants are closely monitoring this situation, as it has the potential to impact various sectors of the economy. A tighter natural gas market could affect energy costs for consumers, influence the decisions of industrial and commercial enterprises, and even have ramifications for the broader energy landscape.
According to the current market cycle analysis, it becomes evident that stocks and gold remain at the forefront, leading the charge in terms of performance. While the commodities index, which primarily comprises energy-related assets, has displayed notable upward movements, it also highlights the need for a discerning approach when considering long-term investment strategies.
Indeed, many commodities are on the rise, showcasing the broader strength in the commodities sector. However, this nuanced environment reminds us of the importance of maintaining selectivity in our long positions. A selective approach allows us to navigate the evolving landscape of commodities and equities, aligning our investments with assets that exhibit the most promising potential for growth and stability. We will talk about our picks and systems more in our subscribers only report on Monday.
Just to add. I still see this scenario playing out. The fed will get behind the curve. Inflation will take over…
What is the market trying to tell us?
Stay informed. Stay resilient. Against all odds.
Warm regards, Jason Perz
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