A0 Financial

Date: 10/15/2023

(Not Financial Advice)

Table of contents:

1. Big Tech’s Bullish Weekly Chart Pattern

2. Bitcoin Report

3. Bearish Sentiment

4. Potential Oil Shock

5. Conclusion

Big Tech’s Bullish Weekly Chart Pattern

With tech earnings kicking off this week, the Nasdaq shows signs of potential bullishness. A bull flag forms on the $NDQ chart on the weekly time frame. Also, the $SPX is forming a falling wedge on the hourly time frame. Although we stated that the macro showed bearishness last week, the technicals are bullish, and the sentiment is bearish. At A0 Financial, we always put the macro first, but we will not take a position in the market if the market is showing uncertainty. A bear market rally is possible from here. We do not know where the markets will go, but if the $SPX breaks upwards from this falling wedge, we could see $4000.

Bitcoin Report

So far, Bitcoin has been resistant in the market, pulling its weight while the S&P 500 has been falling. Right now, we are seeing Bitcoin slowly starting to weaken as it has lost its bullish trend, and last week, it fell 3.39%. If it falls below the 50-day moving average on the daily time frame ($26673), 25.5k to 25k is potentially next. Then, 23k, then 21k. But, first, we have a pullback to 27.3k the week after we will range or fall.

Bearish Sentiment

Understandingly, the sentiment is very bearish. We have wars, rumors of World War 3, high inflation, and high interest rates. Usually, the market is contrarian. When the sediment is bullish, the market usually goes down. When the sediment is bearish, the market usually goes up. Last week, the fear and greed index was at 18 (Extreme Fear). The market shot up the last time the fear and greed index was at these levels (March 23, 2023). This is a good sign for bulls, but short-term. In our previous weekly analysis, we mentioned the possibility of a credit event. When a credit event occurs, it usually happens unexpectedly. The market is typically quiet, no bad news, a lot of good news, then… bam! You see, the bank runs on the news, and you lose most, if not all, of your money in the positions you were holding! It usually happens slowly, then all of a sudden. These aren’t the usual conditions before a credit crisis. But be aware that it can still occur.

Potential oil shock

As deglobalization continues to become increasingly realer by the day, the possibility of an oil shock is high. America has to get its energy problems straight. With the rise of wars and conflict, America could lose a lot of necessary resources that are needed and not created in the United States. The United States’ GDP comprises about 80% services and 20% goods. In other words, that means we don’t create most of the goods we sell. It is brought from different countries and sold here. We rely on other countries, and if these countries start getting into wars, we may see hyperinflation and, eventually, a Depression.

Conclusion

In conclusion, the current financial landscape is a complex interplay of factors that shape market sentiment and future prospects. While Big Tech's recent rally, evident from the positive signals on the Nasdaq and S&P 500 charts, suggests a contrarian market tendency, the backdrop is growing increasingly bearish due to geopolitical concerns like the Israel vs. Hamas conflict. The fear and greed index, registering low levels, hints at potential short-term bullishness. However, it is vital to exercise caution as unforeseen credit events can disrupt financial stability, and the broader sentiment remains bearish with looming global conflicts, inflationary pressures, and rising interest rates.

Thank you for reading this week’s market analysis, and we wish you a good trading week!