Most of last week was extremely volatile. On the first day of last week, the Japanese Central Bank suddenly made statements about reducing bond purchases. The market perceived this quite hawkishly and when the Japanese Stock Exchange suddenly sold by 12% and the Asian markets opened with sellers like this, which had been selling for a while, of course this spread everywhere in the markets. The volatility index went above 50, and VIX above 50 is a figure previously seen in environments where major financial crises such as the global 2008 financial crisis, Wallmagedon, and the Covid collapse occurred. I had stated that VIX above 21.5 could increase the selling pressure in the world. When that figure there is triggered, of course, upwards in the market, although the volatility index technically measures the volatility of the 30-day S&P, in fact, the volatility index de facto increases in practice, and the market is selling. Therefore, here, Nasdaq broke its rising trend, S&P was subject to sharp sales. I was hopeful about Dow Jones, it also sold off. Then of course Trump said "Kamala Crash" on Thursday. When he claimed that there was a collapse caused by Kamala Harris, politics got involved and suddenly there was buying in the market. When the employment data came out a bit better on Friday, that buying continued, it did not close badly.
Now this week, the producer price index data will come on Tuesday and the consumer price index data will come on Wednesday in the US. Especially on the consumer price index side, 0.2% monthly, both core and headline inflation is 0.2% and again annual headline inflation is 3%, this is what is currently expected in the market participant survey, it is a figure below these, that is, a figure below 0.2. This is also priced in a bit right now in terms of futures. In other words, if it comes to 0.15 there, it will be 0.2, if it comes to 0.14 it will be 0.1, there are nuances like this. Therefore, if it comes to 2.9% annually below 3%, this inflation, especially the 50 basis interest rate cut, will increase the team in the next meeting, that is, that percentage. It is currently split 50% - 50%. 50% of the market expects a 25 basis point interest rate cut from the Fed at the next meeting, and 50% expects 50 basis points. Interest rate cuts should be slowed down. A 25 basis point interest rate cut is market friendly. But if there is a 50 basis point interest rate cut, this can obviously trigger selling pressure and panic in the market. In other words, this is what they call a soft landing. It should be like a 25 basis point or wait and see interest rate cut.
Of course, the oil side has come down significantly. It has fallen to $74. Below $74, sellers can obviously be triggered. Likewise, on the commodity side, the highest short position in terms of hedge funds in the last 12-13 years has been formed. There are sellers on that side, sellers on the food side, sellers on the copper side, silver also got its share of the sale due to fear of recession. Gold is resisting a bit, but I think the short positions of these hedge funds, entering into such a sharp short, shows the expectation of a recession. When we look at the data, I looked at the Atalanta FED gdp now and it shows 2.9% gdp. New York FED is between 2.2% - 2.3%. Of course, this is a high gdp, so there is no recessionary picture here. But hedge funds, like in gold, are continuing the main scenario by hedging themselves against the risk of recession. But there is a high position and on the other hand, it is really coming down.
Therefore, if the decline in oil continues here, the slowdown in global growth may increase the selling pressure on the stock markets in the coming period. I think there will be a reaction on the US side this week. Nasdaq got a good reaction from 17300 from its 50-week average. If it goes below this, the sellers will get very strong anyway, we need to be careful if it goes below that. But the weekly candle is good, it seems like we will continue to go up until Wednesday's data. According to the data coming on Wednesday, if it comes above the figures I just mentioned, maybe even better, I think this inflation expectation and interest rate will be 25 points better instead of 50 basis points. Of course, the volatile picture makes us think a little more. I actually predicted last week that many instruments would sell, but at this stage, this sale will have a reaction at least this week, an oversold reaction. I will evaluate it according to the results of that reaction. So, I hope we have come to the end of this correction. We will close well this week, get a nice green candle. We reached the 75 level in Brent oil and produced a serious reaction. 82 is an important resistance at the top, as long as this is not passed, the target is 60 dollars, and the medium-term target is 40 - 30 dollars.
Because if it is going to turn into a head and shoulders formation on both nasdaq and s&p weekly charts, which is the reverse pennant on the s&p side, it is on many instruments, it is on nasdaq as well. But the reverse pennant in the previous correction was a scam. In other words, they made a reverse pennant there. Technically, they then drew it up. That's why we need to talk technically, numerically. As I mentioned earlier, the incoming data should be evaluated based on inflation.
We had a crash up to 17300 on nasdaq last Sunday night when the Japanese unloaded everything they had as a result of the explosion of their carry trade positions. VIX jumped to 37 on forex platforms and 65 on other platforms. However, nasdaq regained all of its decline during the week. Although technical analysis is not useful in such environments, I am still positive since there was no day close below 17900. This week will be a bit of a decision week. If it gives back all the gains it made last week, it may be necessary to stay away from the market for a while. The other scenario is for the rises to continue up to the 19500 - 19700 region.
Dax tested the 17000 level in the crash last week and returned very quickly. In order for the movement to continue, 18200 - 18500 should be passed. From there, it will target the 20000 level. If it falls to the 17000 level and below again, it would be useful to be a watcher for a while.
On the ounce gold side, I think the main direction is up. I think the ounce gold will accelerate above $2500. There is a technical inconsistency in the downtrends. There are peaks, but frankly, macro data currently looks positive in favor of the ounce gold, especially for the end of the year. There will be interest rate cuts, the Ukraine-Russia conflicts are still ongoing. Ukraine entered Russian territory. Geopolitical risks, as well as risks in the Middle East centered on Israel, continue. Therefore, declines in gold may be technical declines. But I think we will continue the main direction up and approach it, I had a target of $3000 there in the first stage.
The ounce of gold is the most solid product of the past week, even though it eased to the level of 2365, we are at the level of 2445 again. If the 2470 - 2480 region is passed and can stay above it in possible attacks, the movement will accelerate. They can tire up to the level of 2290 under 2365.
Although silver was forced to close below 27 last week, it closed the week above 27 again. This is partially positive. If it continues to stay below 27, the level of 25.50 will come to the agenda. If it wants to evolve upwards, it should settle above 28.50, then we can talk about new peaks.
USDJPY fell to the level of 140 last week. Everything has an end. When the free loans given for years exploded by 50%, the money returned to its country. Carry trade will become even less attractive as the gap between US interest rates and Japanese interest rates decreases. Technically, the 152 - 155 area is serious resistance. As long as these levels are not permanently exceeded and the US starts to cut interest rates, JPY will continue to gain value.
On the Bitcoin side, I said last week that I was expecting 50,000 below 61,500. It went down to 49,000. 49,000 is actually the number when the ETF was approved and sold. It is also in line with the targets of the inverse head and shoulders formation. We need to turn up from there. In other words, I think Bitcoin should not fall below 46,000 - 47,000. Because it is very serious, the uptrend will be broken below that and the problem will grow. Now, of course, here, the degree to which the recession will be priced in the upcoming period and the degree to which we will predict it is very important, especially for risky markets. Right now, the data published by both Goldman Sachs and the Atlanta FED and New York FED by the GDP do not have very recessionary data. Employment data was also not bad last week. Bitcoin touched the 49,000 level with the Japan crash at the beginning of last week and caused a strong reaction. Now, after being flat for a while, it needs to break the 67,000 level and start its rise. If it comes back to the 49 level, it means there is a serious problem globally.
But of course, there are important data such as retail sales again this coming week. Of course, these need to be interpreted professionally. In other words, they say data dependent as the FED puts it. There is a market that is dependent on data. Again, although the Bank of Japan has also made a commitment that they will not increase interest rates while the markets are unbalanced in the upcoming period, the markets have actually been disrupted due to the interest rate increases and the reduction of bond purchases. In other words, it is necessary to examine the cause and effect relationship well here. Therefore, it seems to me that there is a word game here in the statement text. It is also necessary to follow the steps of the Bank of Japan in particular. In other words, if I were to summarize this week in general, I expect a reaction in the stock markets. But it is important that this reaction continues.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
