S&P 500, Bitcoin, Treasury Update

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on October 27, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

S&P 500

Are you going to talk about the expanding diagonal again?

If a simple pattern works so beautifully in an incredibly challenging environment, you ride it and milk it as long as it works (if you haven’t read about the expanding diagonal yet, you can do so here:

S&P 500 Path is Deceptively Simple

The October 12 Profit Radar Report that: “This week’s new S&P 500 low meets the minimum requirement for a wave 5 low, and RSI-2 is nearing over-sold again.”

Starting on October 13, the S&P soared almost 300 points.

Obviously there are still a ton of economical and political cross currents, but the KISS approach is to look higher as long as double support (shown on the monthly chart) holds.

Treasuries

“Distrust in government is a global mega trend. The US Treasury market may just have carved out a key reversal and perhaps major market top.” March 15, 2020 Profit Radar Report

30-year Treasury bonds just suffered the worst one-year decline on record and are down 35% from their all-time high. The last 2 1/2 years have erased about 43% of the gains racked up during a 40-year bull market.

But, as mentioned in the October 23 Profit Radar Report, there is long-term support near current price, short-term RSI-2 is over-sold, RSI-35 is around support, and a furious rally is becoming likely.

The daily chart shows TLT up some 6% since October 24, now nearing over-bought and resistance, but price is compressed from almost 9 month of steady losses, so further up side (perhaps after a pullback) is very possible.

Bitcoin

October 23, Profit Radar Report: “Bitcoin futures are trading above trend line resistance. RSI-35 has been rising over the past 4 months where price was range bound. This is not a screaming buy signal, but the development is overall positive.

Aggressive investors may consider either 1) buying bitcoin with a stop-loss below either of the support trend lines or 2) buy after a break above resistance around 20,400. One ETF alternative for bitcoin is the Grayscale Bitcoin Trust (GBTC).”

Bitcoin has since broken out, and previous resistance is now support (and potential stop-loss) for longs.

Continuous updates for the S&P 500, Treasuries, Bitcoin are available via the Profit Radar Report.

If you want to be the best-informed investor you know, and have access to always relevant and purely fact-based research, sign up for the Profit Radar Report. 

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

2022 S&P 500 Path Remains on Track

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on October 13, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

For months, the S&P 500 has been following the expanding diagonal pattern. This has been a surprisingly easy way to navigate an uber complicated political and economical environment.

If you haven’t read about the pattern that’s almost worked like painting by numbers, you can check it out here:

S&P 500 Path Deceptively Simple

As shocking as the 2022 stock market performance has been to most, it is actually very much in line with another historic pattern; the 4-year presidential election cycle:

“2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.

The following year (the pre election year, 2023) is the strongest year of the election year cycle as incumbent presidents prime the pump to increase the odds of reelection. Historically, the S&P 500 gains on average about 50% from the mid election year low to the pre election year high.

Cycles project a fair amount of political and economic turmoil starting in Q1 of 2022. Based on seasonality and cycles, 2022 will be a tough year to navigate where high stocks prices early in the year should be used to raise cash for a better buying opportunity later in the year.”

Some may say; ‘hindsight is 20/20, it’s easy to point this out after the fact,’ but I wrote the above in my 2022 S&P 500 Forecast, published for Profit Radar Report subscribers back in January.

The S&P 500 mid election year seasonality chart that accompanied the above commentary highlights the tendency of a Q4 low.

Is it a fools errand to write about a buying opportunity in a bear market? That’s an interesting question, and my answer along with an interesting statistic is available here.

Does the expanding diagonal pattern and election year cycle guarantee that stocks will rally? Of course not. There are no guarantees in life or investing.

But, and that’s a big but, the odds of an upcoming rally are much higher than many believe them to be.

Of course I’m not recommending to buy blindly, but I am keeping my eyes peeled for breadth and sentiment extremes or divergences that tend to be seen near meaningful lows. I discussed one divergence, that happened this week for the first time in 2022, in yesterday’s Profit Radar Report update.

Since then, S&P 500 Futures dropped as low as 3,502 and soared 150 points over the last 3 hours.

The above long-term support chart may be helpful in identifying a buying opportunity (or failure of one).

If you want to be the best-informed investor you know, and have access to always relevant and purely fact-based research, sign up for the Profit Radar Report. 

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”