A crucial week for the S&P 500/SPX (SP500) and stocks in general
Earnings season is kicking off with big financial names, and SPX is at a critical technical inflection point. Naturally, there are a slew of other fundamental factors to consider like a surge in coronavirus cases as well, but let us look at this technical image first.
Source: Think or Swim, Ameritrade
We can see that SPX futures are trying to break above 3,200. If this occurs, the 3,220 level will get tested next. Now, if the SPX can clear 3,220 I believe new ATHs could materialize relatively quickly (3-4 months). However, several key fundamental factors likely need to occur for this scenario to realize.
To the downside, the 3,180 support level is quite important. I expect it can get tested, and even if a breach occurs I don’t expect the SPX will go far below it. Perhaps to roughly 3,150 in a base- to worst-case scenario. However, in a worst-case scenario, I will be concerned if the 3,100 level starts to break down.
The Bitcoin Market
Bitcoin continues to move roughly in tandem with the S&P 500. However, what should be considered is that while Bitcoin (BTC-USD) may move in a very narrow range, some key alt coins are up by 40-50% or even over 100% just in this quarter alone.
(VET-USD): Surge by roughly 120% in a few weeks before correcting.
Many of the top “altcoins” resemble well positioned companies in a market where demand for blockchain-related services is likely to rise substantially in future years. I view many of the digital asset enterprises as viable businesses with enormous growth potential.
The primary difference between digital asset enterprises and traditional businesses difference is that you buy stock to own a part of company and you buy “coins” to own part of a digital network/project (business).
Bitcoin is battling with the $9,300 level and will likely go up toward the higher end of its current trading range of around $9,000-$9,500. Whether we can break out to the $10k level remains to be seen, but I suspect that if SPX proceeds higher so will Bitcoin, and the “vibrant” digital asset market.
To the downside, we do not want to see a break below $9,200, or worse, $9K. If $9K breaks down decisively, BTC will likely test a lower level of $8K-$7,500. For now, I find this scenario remote given the fundamental backdrop for the cryptocurrency complex.
Gold Headed Higher
Gold futures show a very nice continuation of gold’s bull market run after the mid-march flash crash.
Gold companies/ETFs we like: (KGC), (KL), (NEM), (AGI), (GDX), (GDXJ), (PAAS), (FSM), (AG), (SLVP), (SIL), and others.
We see that silver is likely to break out to $20 plus new multi-year highs soon. So, the best way we see to play the silver market is through the quality silver mining companies.
Bank earnings are going to start coming in this week, and I expect that many, especially the investment banking businesses had stronger…
Read more:Why The Everything Rally Could Continue