ESP Tuesday: Wall Street Sighs for Now as Santa Makes an Appearance. Watching Bitcoin and Stocks.

Keeping a close eye on everything, especially Bitcoin

The Santa Claus rally, such as it may be, seems to be materializing. We should enjoy it while it lasts.

And while it’s possible that the worst is over for the post FOMC mini-crash, stocks seem to be entering the most frustrating stage in their behavioral repertoire, the seemingly infinite post mini-crash grinding pattern which squeezes out the final excesses. Certainly, this isn’t guaranteed and stocks could go lower. But there are plenty of reliable indicators which suggest that this is indeed what’s happening.

Consider the market’s sentiment. The CNN Greed/Fear Index hit a low of 26 on, or about 12/23. This morning, it’s hovering near 30. That’s a bullish sign as it signals high levels of fear in the market. The CBOE Volatility Index (VIX) was in the upper 20’s last week, its highest reading in several months. Since then it has retreated and remains below 20. This is a sign that put option buyers have lost their momentum. This eases the selling pressure on the markets. The Put/Call ratio recently hit its recent high near 1.0, good enough to trigger a bounce.

Our recent Bitcoin trade, featuring the IBIT ETF, results directly below was stopped out. But that doesn’t mean I’m done with it. Let’s see what happens in the next few days.

• SOLD the iShares Bitcoin Trust Beneficial Interest ETF (IBIT). Bought 10/29/24: $39.20. SOLD 12/19/24: $55. Return for this trade: $1580/100 shares (40.3%).

Image courtesy of https://media.istockphoto.com/

Market Update

The major indexes are bouncing back this morning after hitting the oversold levels I’ve been discussing for the past few days. The New York Stock Exchange Advance Decline line (NYAD) is also bouncing back after its recent sojourn outside its lower Bollinger Band, usually a prelude to a reversal. So far, Wall Street is following the technical script. Keep your eyes open.

The U.S. Ten Year Note yield (TNX) is trading above the critical 4.5% yield area. If this doesn’t change, stocks will remain vulnerable. We may see TNX tag the 4.75% area. The good thing is that the RSI is nearing 70, which means that we are getting very overbought and that some sort of pause/reversal is likely.

Bitcoin (BTC/USD) has found some support at the 50-day moving average. Again, rising bond yields seem to be constructive for BTC, as money seems to pull out of bonds and move into crypto.

The ESP portfolio is holding up quite nicely in this market. This morning I have a new trade featuring a stock which is poised to prosper as its competitors struggle.

Thanks to everyone for your ongoing support. I really appreciate it. Wishing Everyone a Great Christmas and a Happy New Year!

Thanks also to all the current Buy Me a Coffee members and supporters. Special shout out to new members who now have access to the Sector Selector ETF Service, included, at no extra charge with your Buy Me a Coffee membership.

For active trading, short term trading strategies, check out the Smart Money Passport.

If you’re a weekend investor, I’ve got just the thing for you. Check out my steady pace long term focused Weekender Portfolio.

If you’re thinking about day trading, my new book – Day Trading 101 ()

– will get you started along the right path.

And if you like this post, hit the Like Button and Share/Restack it. It helps to spread the word.

You’re the music. I’m just the band.