The markets believe that we are trending towards a soft landing, which is causing defensive positions to get punished and risk-on positions (like stocks and crypto to get rewarded). I personally don’t believe we are trending for a soft landing and I think there is a lot of market risk buying at these price levels. However, the market is driving the price action and investors are trading as if we have successfully beat inflation and avoided a recession. At the same time trading against the trend will hurt and my shorts are taking a hit being on the opposite side of this move. I will make adjustments to my positions, but for now these are my updated thoughts on each asset:
- Bitcoin and crypto are experiencing a post-FOMC rally, BTC has resistance at $64.9k and $68k if the rally continues. I think there could be an opportunity to buy under $60k (possibly around $58k). If there is some type of steep decline in October I have around $47-48k as a buy level. Altcoins usually close neutral in Sept and are likely trading near their monthly highs with an opportunity to buy lower in October.
- The stock market also experienced a post-FOMC rally, and is likely to have a pullback at some point as well. QQQ is trading under $486.74 resistance and SPY is trading at all time highs. I will wait for the next pullback to decide if I want to adjust my short position or not. I still think there is a risk of a steep correction, but for now the markets are trending up higher. The narrative is no crash until after the election, which I don’t really believe.
- GOLD is a safe trade and continues to trend up higher.
- Silver is trading near all time highs and is not likely to perform well over the next few months.
- US bonds hit resistance, $100.64 for TLT and $63.50 for TMF, and had a brief pullback. I don’t think there should be any concerns here for bonds, they are likely to perform well in the long run.
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