This is NOT investment advice.
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Feels like there is this sense where everyone wants this to be the bottom for equities. People want the Mag7 to bounce off of this support. They want the Nasdaq to bounce back and rip higher. They want the 200DMA to be the perfect landing spot for stocks AND for Powell to "be a dove at the Fed meeting" at the same time "so we can get the market back on track". It all lines up so perfectly . . . . . . . .
And again, perhaps I missed the message completely, but going back to Powell and the Fed I personally did not receive any type of message that says "don't worry, we got your back with rate cuts just lever up long the QQQs". I might be completely wrong.
Bonds liked the Fed meeting, equities mehhhh maybe. Bonds got a clear message (seller leaving the market) while stocks are trying to take the message and make it seem super dovish. Looks like the Nasdaq wants to rally in terms of price, but where is the volume (Friday's OpEx extra notwithstanding) to back it up?
Since Bessent started yapping more and demonstrating he is a mature adult ready and willing to hit the challenges head on, look at where yields have gone . . . . . . . . .
They keep saying the Bond Market is the priority, and so far looks like their tactics and strategy are working (how they handle the refi wall continues to evade me). Nonetheless - bonds have rallied since early January as equities and Bitcoin slide.
Let's take a look at the bigger picture, starting with Japan.
Japan
BOJ already talking about leaning more hawkish as recent inflation data shows a resumption of the inflation trend which for now reverses the trend of inflation slowing somewhat. Bottom Line: more room for BOJ to act more hawkish.
Yields in Japan (blue circles) effectively doubled since the Fed 50 BPS cut in the fall and then the election. Recent action shows the move higher resuming and (for now) inflation appears persistent again. Generally falling JGP (prices) and strengthening Yen means Yen Carry unwind (in a vacuum).
Now let's take a look at some macro charts (both from Zerohedge.com) and their impact on money flows and the US market which brings us to the topic of liquidity. The point I have been trying to make is two fold A) there is liquidity sloshing around globally (perhaps even rising), which is good but also could make Powell more hawkish, and B) as shown below is that liquidity necessarily hitting America or going elsewhere?
This next chart is very telling. Valuations, historically, have aligned across the globe fairly well, until the GFC. Coming out of the GFC we see US valuations extend themselves and now sit well above their counterparts. Since the GFC markets have also enjoyed the benefits of the Yen Carry trade.
So - bigger picture (kind of like the Bitcoin Lid) it might make sense to at least be conscious of the fact that US equities are facing both the decline in the Yen Carry AND money flows in a different direction globally.
Looks to me like Bessent wants to unleash the power of fiscal and monetary policy from the EU first (German spend as example and pending ECB QE) and set that train barreling down the tracks in a direction that benefits the global economy and American economy.
All that said, in the here and now it's certainly possible to levitate higher on thin volume, VIX might even be sponsoring the trip. More specific to Bitcoin, let's take a look at the 4HR and these very low volume attempts to bump higher:
What would be very, very bullish at some point is for Bitcoin to break free from the QQQ. Though inclusive of both, Bitcoin is not a proxy for merely "innovation and growth". Why do I bring this up now? The market is starting to understand more the bigger picture and chess game underway.
America wants to push the rest of the world to essentially fend for themselves yet work together towards peace. Push them to ramp up fiscal spending and QE. The market is sensing this more and more in my view, and the bond markets of Germany and the UK versus the US bond market are indicative of this. Bitcoin is the beach ball and solution globally - but it still remains too closely aligned with the Nasdaq (and hence Risk On vs Risk Off and US/EU money flow battle). Debt/FX markets much, much, much bigger than just the Naz.
Very interesting times. The current administration in America and others linked to it are going out of their way to emphasize how important Bitcoin is, and we know about the unfortunate bond math facing Bessent and Powell. Is Bitcoin a direct part of some attempt to wiggle out of the looming tsunami of refis coming? DOGE, for all the headlines, may not be putting that much of a dent in the deficits now given the lawfare. February deficit was over $300B alone, and the Commerce Secretary says no tax cut until the budget is balanced (so, meaning never?). How does it all add up and come together? Unclear.
Nonetheless - very nimble/light/flexible hedges/trades here as it just looks to me like could easily get pushed either way given lack of conviction. Bitcoin keeps inching higher ever so slightly on light volume, and the liquidity underneath has shifted a bit higher gradually. But, higher time frames looks like a classic light volume rebound back up to rolling over averages . . . . . . . and the Money Flow is still negative on the weekly.
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