DeTrended #8: Decoding The Headlines Through Technical Truth

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𝙎𝙋𝙓 𝙎𝙏𝘼𝙇𝙇𝙎 𝘼𝙎 𝙋𝘽𝘼 𝙏𝙃𝙍𝙀𝙎𝙃𝙊𝙇𝘿 𝙊𝙑𝙀𝙍𝙎𝙏𝙍𝙀𝙏𝘾𝙃𝙀𝘿, 𝘽𝙏𝘾 𝙍𝘼𝙂𝙀𝙎 𝙄𝙉𝙏𝙊 𝘼𝙇𝙇 𝙏𝙄𝙈𝙀 𝙃𝙄𝙂𝙃, 𝙂𝘽 𝙔𝙄𝙀𝙇𝘿𝙎 𝙍𝙀𝘼𝘿𝙔 𝙏𝙊 𝘽𝙍𝙀𝘼𝙆𝙊𝙐𝙏

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” — John Templeton

Summary

In our last issue, I discussed the daily percentage bands on the S&P 500 being the most overstretched in over a decade, indicating an expected price retracement. Prices began descending on Wednesday due to overbought daily technicals. Meanwhile, Bitcoin shows it’s no longer correlated with the S&P 500, surging to an all-time high while alt-coins plod along, many testing significant resistance levels but remaining well below their peaks. A notable retracement is still anticipated for Bitcoin, which could further pressure alt-coins. US 10-year Treasury yields are rising following Moody’s downgrade due to U.S. fiscal concerns, and UK 10-year and 30-year gilts are breaking out to levels not seen since 2008—a worrying sign for confidence in current fiscal policy. Gold continues its struggle below its all-time high, with some major financial analysts predicting a $10,000 price in the next two years. However, technical data suggests gold has topped out, showing weekly bearish divergence in the short term.

Market Psychology 101: Crazy price predictions and trending headlines get retail excited, institutions sell to them at the top.

My Relative Cyclical Oscillator (Stock market top / bottom cycle leading indicator) is up to 52.87 from the buy zone (<40) in April suggesting we have much higher to go.

My BCRO (Bitcoin cycle top / bottom leading indicator) is sits at 62.46 suggesting we have much higher to go this cycle.

Current Strategies PA / DEMA / Investment

Strong retracements will provide new signals for swing traders and offer investors another entry point. Patience is key to avoid FOMO, as prices appear poised to correct from overstretched technical indicators.

Fiscal conditions suggest stocks remain volatile, with investors seeking safe havens like gold and Bitcoin until bond yields reach acceptable levels. Note that tariffs are only paused, offering temporary relief; until they’re resolved, market participants should stay cautious.

Risk management and patience are your secret weapons for navigating these market conditions, as always.

Over on eToro, my copiers and I had 10 longs hit partial take-profit 1 in the past two weeks, with 2 subsequent stop-losses hit at breakeven, resulting in 8 “risk-free” longs. Five longs remain open, with $GOOG added Thursday, aiming to fill the gap near its all-time high at partial take-profit 1.

Data points to an exponential growth curve for Bitcoin, driven by “scarcity engineering” from $MSTR, sparking a new wave of buyers, including 21, MetaPlanet, nations, and U.S. states, all adding Bitcoin to their treasuries. With the abolishment of SAB-121, banks will follow. Bitcoin miners look undervalued, as collectors and keepers of the coin.

Macro trends have turned bullish on the MAG 7. Alt-coins & miners have hit their “Golden Pocket” (78.6% Fibonacci retracement), a high-probability bottom. Holding periods may exceed a year, with profit-taking along the way.

Economic & Sentiment Data

👉 Global M2 continues to rise sharply (Bullish leading indicator)

👉 ISM Manufacturing Index (PMI) was revised down to 48.7 as imports surge (<50 bearish)

👉 Rates held steady again to Trumps annoyance, while probability of lower rates next month drops to 5.3% (Neutral)

👉 US10Y yield inched higher to 4.58%, range bound between 4.8% and 3.7% (Neutral indicator as down from highs but above expectations, not low enough to drive a risk-on environment)

👉 GB10Y 4.75%, continuous to hover below resistance with a high probability breakout barrier triangle pattern target of 6.5% ( Very bearish for GB Economy)

👉 EU10Y inched up to 2.64%, range bound between 1.92% and 3% (Neutral)

👉 US GDP Q1 shrank by 0.3%. Tariffs causing a surge in imports are hitting the economy as US businesses struggle with growing costs. Forecast for Q2 is down to 1.1% (Recessionary)

👉 QE - No money printing announced yet, QT is loosening. QE is a tax on citizens' savings, devaluing their purchasing power (Neutral)

👉 Job number surprised to the upside again but be prepared for revisions to come down. Unemployment remained 4.2% (Bullish)

👉 Core PCE, FEDs preferred measure of inflation remains 2.6%. (Above 2% target, slowing the probability of rate cuts while inflation persists but not significantly high either)

👉 Market Sentiment - Drops to 68, approaching extreme greed. AAII jumped to 37.7% Bullish, 36.7% bearish. Sentiment is finally shifting to bullish but remains neutral overall

Market Data

👉 $SPX500 - PBA threshold are more stretched than over a decade suggesting we range for a while or have a deep retracement which appears to have started Wednesday. There is a gap to fill $5719 just above major support and the daily 200EMA. Weekly RSI hit oversold levels not seen since the covid and 2008 bottoms, after which price went on momentous rallies.

👉 $BTC shoots to 111k. Indicators are overbought from the 3D down suggesting a decent retracement to come but Bitcoin also has a tendency to ignore this. Glassdoor analytics showed accumulation across the board predicting this rally.

- Hash power is down from 1 Z/H to 0.95

- Bitcoin is the 5th largest asset in the world by market cap

- ETFs had a great week of net inflows +$1.6B

-StrategyB and other corporations continue to soak up any new supply as miners hold onto their newly mined coins. A supply shock is still a high probability event. MSTR price is near ATH

- Dominance dropped back to major support at 63.2% as alts make a significant comeback. My terminal target remains 71% as we have seen these pull backs before.

- Sentiment / fear and greed jumps to 73 (Extreme Greed))

👉 $GOLD topped on weekly bearish divergence, and continued lower after I shared the short set up but is putting up some resistance due to higher yield demand

👉 $USDOLLAR drops back to 99.8. The next major support at 94. This move should be very bullish for risk-on assets but economic factors stand in the way. Weekly RSI has hit oversold, a short term to 105 is my current outlook.

👉 $VXX jumped back up on yield news as a hedge against the market but the rally has yet to have any sustained move

Weekly Trade Set Ups

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ONDOUSDT looks poised to breakout towards the high volume node EQ and major resistance at $1.32. A close above the daily 200EMA would be a signal to go long for me after price successfully tested the previous range resistance as support. Invalidation / stop loss level would be below the swing low, major support and ascending trend line at $0.84

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