Newsletter #26 Relief Rally or a Major Reversal?
There's a reason why it's called a relief rally. Coz any up-move that comes after so much pain does provide a great amount of relief to all bagholders.
Well, I am just relieved that after weeks of bearish views on risk assets and sitting on 100% cash, finally I am able to give you all some bullish updates this week.
Model's call to exit ALL positions and get into CASH more than a month ago did really well and it was able to keep us out of this entire carnage, and now it's finally flipped from cash to Long.
Model is LONG $BTC $ETH $QNT $LDO $ENS $TWT (Charts below)
So is it just a small bear relief rally before it all comes crashing down? or a full-blown bullish reversal to the upside? I don't really know. But what I do know is even major reversals start with relief rallies. If it turns out to be a fake-out, then the model will swiftly exit and as always I will update you all.
What's really interesting is, the model had signaled June lows as the bottom for the crypto, and it came close a zillion times to invalidating that call but it hasn't happened yet.
I know I know, your favorite crypto influencer is calling for 10K BTC and how every coin is a Sh*tcoin and is surely going to Zero. All I am saying is, let's keep an open mind and play it on a week-on-week basis.
I have written the below for many weeks now. We dint get the nuke yet but we got the latter.
Bitcoin and Ethereum are entering the value zone, if we do get a market-wide sell off then it would be a great time and price to accumulate these assets for those who believe in this space. The above logic applies to ALL cryptos/stocks that you believe will survive the next 5 years.
So I will buy either on a complete NUKE aka BTC in the range of 14k-17k if we get one or on a Long signal by the model
So it all started with the WallStreetJournel article stating "Fed Set to Raise Rates by 0.75 Point and Debate Size of Future Hikes" To give you a visual this is what happened in the US dollar Index.
As I wrote previously in my "Why fight the FED?" update, I don't know or speculate what the FED is GOING to do, I just focus on the market's reaction to the news. It seems like it wants to go up hence it will take any slither of hope, even a "debate" of the future hike.
Coming to Macro, the model has done well in capturing major moves (check previous updates) in all 3 macro variables aka DXY, VIX & US10Y. I wrote this in last week's update
But there are signs of fatigue. Seems like the bulk of the move is over barring any volatile spikes. But like always it's best to wait for confirmation.
The model has turned from bullish to neutral on the US dollar (DXY) Volatility (VIX) and interest rates (US10Y).
After correcting calling a sizable down move in Stocks, the model also has turned from bearish to neutral on S&500 & Nadaq100. If there's follow-through & confirmation then it would flip Bullish.
Below are the Models signals on BTC, ETH, and Solana from 2020 to date and all the coins the model is long on. I have been publishing this every week since I went live in May and will continue to do so.
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