Is it over?

Daily Plan 1.3.24

Most of the action today was around the 3 levels I shared last night, and we saw a decent jump from the lows to the key level I shared, however, these gains were pared to close the session near 4750.

Key events impacting action were of course the FOMC commentary, the dollar strength, and the bond markets.

Bitcoin was another strong seller from my weekly levels and at one point was down almost 10% or 5000 dollars.

Talking of the FED, I will personally not take it at any face value. They are just playing it by the ear, from month to month, and there is not much substance in the FED minutes for me personally.

What I am instead interested in is the related markets like Gold and Oil. I am a bull on both.

Let us talk about Oil for a second.

The current admin policy is all in on the green energy. Trillions of dollars will be spent this decade to push the oil consuming systems, like public transportation into electric vehicles. The merits of this approach are beyond this blog.

However, a direct result of this is to incentivize oil producers like the KSA, Iran and Russia for example to explore other forms of payments and payments networks.

The world as a whole holds a lot of US dollars for no other purpose but to purchase Oil in US dollars. To the extent the current American green energy push is successful, it undermines the status of the US dollar holdings.

Let us say the BRICS countries are able to find a way to trade amongst themselves, and they do not need or rely on US dollars as much to continue their operations, this means the US dollars would be sold as well as demand for US dollars as a holding currency will diminish. This floods the market with US dollars, lowers the value of US dollars and at the same time keep inflation high enough in the US for the rates also to remain high, if the coming inflation has to be kept under wraps.

These things will take many many years to play out - this is why I am a structural long term bull on Oil and Gold. I believe Central bankers around the world will continue to purchase non US dollar currencies such as Gold.

The FED can control the local level policy with rates and balance sheet maneuvers. They can do very little about the demand of US dollars overseas.

A direct beneficiary of this in the short term could be Bitcoin as in theory it is a neutral payment network which can be used for large sovereign transactions. This is why I think this 37000 or so area on Bitcoin is important. As long as this holds, I do believe we can test 50000-52000 area, whether the spot ETF is approved or not. Now what I am describing, a simple way to measure if this holds or not, is to monitor the US dollar. I think what I stated stands as long as the US dollar holds this 105 area. It is 102 at the moment.

I think the reason for this relative strength in the US dollar is the impending Econ data out of Europe overnight. I think this will show a very weak state of European economy and that makes Dollar attractive. Though it is arguable how much longer the US economic data remains steady before it turns south too.

With US Dollar above 105, other factors may be at play which could be related to short term geopolitics. Think more wars and strife.

Now on the emini side, I did not like the close today around 4750.

For emini, markets like AAPL are paramount and AAPL made no attempt today to repair some of the gaps I talked about last night.

This is not good.

Due to this one factor, I am keeping an eye out on the 4760 level from today.

Scenario 1: I expect more sell off into 4710-4730 area tomorrow, unless we are able to take out 4760 early on in the morning.

Scenario 2: Bids above 4760 will be an encouraging sign that recent bout of sell off is behind us but I will like to monitor this as it develops, and send a chat update to folks tomorrow. Join the chat room below. Some users reported they have not received my email last night. Check your settings. You may have accidentally clicked on APP updates only which means you will not get an email and can only view the email on the APP.

The main angst of bulls should be why were we not able to hold 4770 today. These type of questions are important questions and should be resolved soon by the bulls, if they do not soon want to see 4600s trade.

TEVA

I am liking this action in this Israeli Pharma company TEVA around 10 bucks now.

I think if 9 holds on this , we may see 14-15 area tested. At any rate I do not want to see it give up that 9 level.

SNAP

With SNAP, I had an excellent bearish call at 18. I shared February 16th $15 put which is looking handsome now in hindsight.

The put is up about 35%.

I am watching 16 level on SNAP. It is about 15.7 now. If 16 holds, I think we can sell down into 14 area before the stock finds some relief.

CVNA

The CVNA January MOPEX put I shared is now up 50%. However the real damage was to the $45 February calls which I shared around 20 bucks. These calls have been decimated and are now trading barely at 6 dollars!

To continue to support my work, please share, like and subscribe as it helps me continue to share levels with traders like your self.

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90% of moves happen within 1-2 months in a year. Markets are sleeping for most of the year. You want to be ready and waiting to pounce when they wake up. Remember same way most of the move happens in first 2 hours or last one hour, the same way, most of the price action happens in a few weeks out of the 52 weeks. Do not be left unprepared.

~ tic

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