Crypto Market Cycles and Seasonality Project Upside Into Mid November 2022

 

https://www.loom.com/share/c28a6130ea0f43efbb91ad2cb3e4e172

Cycles and seasonality are projecting higher crytpo prices into mid November.

Watch the video above for brief discussion of the active cycles and seasonality in crypto.  The green box on the chart shows a cycle projection for possible future price action.

Here is a link to a webinar replay of the plan I am using to make money in crypto right now, as well as to position for the next bull market.  I am recommending this as an affiliate because I think it is an outstanding program and is appropriate even for the total beginner.

Automated Crypto Grid Bot Trading Webinar Replay

Pete

Stocks Appears Set For A Rebound Attempt (but probably more choppy volatility in the next few weeks) 10-12-22

Click on Chart to Enlarge

Currently stocks are in an interesting position.  SPY and QQQ hit new 52 week lows, but small caps and NYSE did not.  

There is a stark bullish divergence in breadth (Mclellan oscillator, etc).  

So between the non-confirmation and bullish divergence in the internals, it appears possible for a substantial rebound to occur soon.

However, on a pure price backtesting basis I have looked at different criteria combinations as price makes a 52 week low, and the results are NOT universally lopsided to the bullish side right now.

However the above shows the case where a 52 we lows is made with 4 or more closes down in a row.  I was a little surprised to see how bullish the skew was over the intermediate term.  So in the past that type of action has been somewhat exhaustive selling pressure.  So this is a bullish argument.

Click on Chart to Enlarge

This table shows times when both the 14 period RSI was in a bullish divergence at a 52 week low AND then 2 period RSI was less than 10.  So it incorporates a longer term extreme sell off and loss of momentum with a shorter term extreme sell off.

Again the results here are bullish, but the skew is more notable in the first 3-10 days.

I am not going to post other data here, but in the longer term a new 52 week low is a bearish skew as it confirms the downtrend.

And without a low or close below the bollinger band, a 52 week low is not as notable for a bullish rebound.

I have elected to highlight the bullish studies above, because on the balance of everything I am looking at, it appears the next 5-6 days would more likely be bullish than bearish.   But I do not view it as an extreme high probability occurrence right now.

Bitcoin Reward/Risk Ratio - October 2022

 Here is a look at Bitcoin reward to risk assessment for the coming year.

https://www.loom.com/share/749cc58cec2a42bcb4e291b081452fcc

Based on assessment of past similar market cycles, it appears that most of the price risk of Bitcoin would be in the next 2 weeks.

There is a very high 1 year reward to risk based on past cycles.  

Of course Bitcoin has been an outstanding performing asset in its price history, so it would be expected to show strong results.

But by many metrics it could be argued that this bear market is mature, with only a minority of past instances experiencing greater than 20% declines in the next year.  Most of those instances were in earlier years when Bitcoin had a smaller market cap, and so it would be even less likely to expect similar magnitude moves currently.

Pete

Crypto Market Overview and What I Am Doing to Make Money In Crypto Right Now

 

Watch this video for an overview of crypto markets and what I am doing to prepare for the next bull market.  

https://www.loom.com/share/2a299909feed4df8a40e7af8f759697d

I am recommending/promoting a training course that I have previously taken and am using to structure my crypto trading.  If you can't get on the webinar, you could still sign up to get a reply.

https://pbirchler4.krtra.com/t/riPW7lDMGcrK

Who I think would get a lot of value from this:

• You already are putting money into, dabbling, trading, in the crypto market
• You have money that you are investing outside of 401K or IRA, etc
• You enjoy markets and want to learn more and 
• You want to stay abreast of this emerging technology
• You are mature enough to follow a plan 

Some of the most valuable things I learned in this are:

1.  How to use automated grid trading so that all order execution is automated and able to remove the barriers to execution

2.  How to make money is sideways markets (which is most of the time)

3.  How to use automated trailing grids to generate "yield" (basically by a dollar cost average rebalancing type effect) on long term crypto holdings

4.  How to use automated trading to generate cash flow from a mix of cash (or stablecoin) and crypto

5.  How to borrow against cryptoassets that you want to hold for the longer term, in effect having a multiplier effect on your assets

Pete

Stocks Are Set Up for a Sharp Short Term Rebound 9-27-22

 

Click on Image to Enlarge

This table shows the history of SPY when the previous day RSI2 was less than 2 and today makes a 52 week low.  So basically price was already oversold to an extreme level, and then makes a 52 week low the next day.  The implication is high probability (90%+) of a high close within the next 5 days.

Click on Chart to Enlarge

This is an hourly chart of SPY showing a stark bullish divergence on the MACD at today's lows.  While I don't have a way to back test the significance of this, but in conjunction with the daily time frame price action, this shows a set-up where a 15-60 min chart could be "stalked" for a technical entry signal, with  a stop below the low.  

I any case it shows that momentum may be slowing, which is typical before a rebound.

Just a longer term note.......there is extreme fear and correlated selling in markets right now by many measures.  I have seen many indications that buying and holding for a year from the current levels would have a high probability of success based upon historical precedents.

Price pattern in stocks suggests continued sell off probable today - then sharp rebound 5-12-22

 This is a quick update to say that after looking at past price patterns in the context of markets making 52 week lows,  that with today's gap down I would estimate a higher chance of a continued sell off into the close.

But buying at the close today has a very profitable (volatile) short term set-up for a price rebound in stocks.

The idea would be to buy at today close and then sell at the first profitable close (or the following open).

Probable Continued Sell Off in Stocks 5-5-22

Click on Table to Enlarge

It is very rare to have any combination of underlying price factors which produce an extreme negative skew in forward returns in my experience.

But based upon today's market action I looked .....

Criteria:

• Yesterday SPY was up >2.5%
• Today is down more than 3%
• Price is below 200 day moving average

This basically shows a big flip flop in price in the context of a down trend.  

There are not many instances, but the past instances show a high probability of a continued decline with a 4:1 maximum loss compared to gain over the next 5 days.

There was also a high probability of 2 or more closes down in a row over the next 5 days.

9 out of the 11 instances showed maximum losses of over 4.9% or greater over the next 5 days.  

This scan was not adjusted for volatility.  So understand that there could a large increase in volatility over the next few days.

 

Panic Selling In SPY Suggests A Bullish Short Term Trade Opportunity 2-24-22

 Click on Table to Enlarge

The current sell off in SPY has reached a panic level that puts it in an elite class of sell-offs.

While fear is very high like it is now, it often FEELS very risky to buy stocks.

And certainly prices could go lower.

HOWEVER, the points of very high fear are often the greatest points of short term opportunity to go against the crowd.

The above table shows evidence of this.  That shows past instances in SPY when:

• Gap down is more than 2%
• The last 3 days were down previous to the gap down

Note the huge return from columns AK and AL,

This strategy would be buying at the open today and then selling at the close tomorrow or the following day.

In addition, in these past instances there was 100% chance of a higher close within the next 5 trading days relative to the close TODAY.

Now since volatility is very high, and there are no guarantees, the question here is not so much whether the odds favor a short term buy.  They clearly do.

The question is risk management and How Much? to buy.

If not using stops, then bullish option spreads or a naked call option could be used.

If going long the equity, then I like to use the leveraged ETF like SPXL but only use a portion of the account.  This should really be part of a defined plan.  

For fun here......if you are reading this, do you think prices will rebound and make a higher close within the next 5 days?

Or do you think this time is different?

Comment either way if you have an opinion!

Pete