Rate Of ReturnUS stocks faced a major setback on Monday!? Iran retaliated against Israel, Bitcoin plummeted! Logic Investment Market Review 240414
Key points of this article:
𝒪 The USD/JPY breakthrough I mentioned earlier, along with the oil ETF positions we've held, have brought substantial returns to our members.
𝒪 Bitcoin's weekend crash provides significant implications for US stocks.
𝒪 Why I'm still hesitant to make big moves in US stocks.
◉ Asian Markets - Hang Seng Index hits resistance and plunges, Nikkei falls to support.
After touching the 17250 resistance level this week, the Hang Seng Index triggered heavy selling pressure, dropping to the 16770 support level established in early April within just two days.
Although this is a buying zone, the bears are in full force, so it's not advisable to go long immediately.
Wait for the next round of price fluctuations and look for clear signs of bullish accumulation before considering long positions for better odds.
For individual stocks, I'm closely watching 941 (China Mobile).
The entry strategy has been shared with readers before.
In Japan, despite yen depreciation, the stock market isn't responding positively.
While the Nikkei has fallen to a key support level, the trend remains weak with potential for further breakdown.
Unless it quickly recovers after breaking down, I'd have stronger conviction to go long.
◉ US Markets - US stocks hovering at highs, Treasury yields break key level.
The Nasdaq and S&P 500 have been consolidating at highs this week, while the Russell 2000 small-cap index broke through its support level.
From my observation, the Russell 2000 has underperformed these indices for the past five years.
Short-term, inflation and geopolitical tensions continue to create selling pressure on US stocks.
Notably, oil prices remain a key inflation driver.
Further oil price increases would prevent the Fed from cutting rates, potentially worsening inflation.
This creates persistent headwinds for US stocks, especially as investors have been positioning for anticipated 2024 rate cuts.
This is one reason for our caution about increasing US stock exposure.
Bitcoin's weekend plunge (which correlates with indices) suggests high probability of US market gap down tomorrow.
For Treasuries, breaking February's key support suggests potential new downtrend.
109.22 presents a shorting opportunity.
◉ EUR/USD - Still in consolidation range.
Breaking below 1.07 support on Thursday/Friday shows clear bearish momentum.
Avoid long positions unless price reclaims this level this week.
◉ USD/JPY - Successful breakout.
The USD/JPY breakout I've frequently mentioned in this column has materialized.
Why is this the best trade setup recently?
Because this represents not just a daily chart triangle breakout, but weekly and monthly timeframe breakouts simultaneously - creating powerful confluence.
This means consensus across short, medium and long-term traders.
In such scenarios, stops can be placed at the tightest timeframe while profit targets reference the widest timeframe.
The resulting risk-reward ratio becomes exceptionally favorable.
With modest leverage, account balances could potentially gain two extra zeros.
Risks involve Fed or BOJ policy shifts.
Premature Fed cuts or BOJ hikes could quickly reverse the trend.
But based on recent economic data, I'm willing to take this bet.
Currently holding JPY short positions.
◉ Crypto - Plunge on news.
Bitcoin's supposed 'safe haven' status gets disproven again.
Many now recognize Bitcoin's correlation with US equity indices.
Thus, Bitcoin weakness foreshadows poor US market performance tomorrow.
While Bitcoin broke its ascending triangle, it's now in consolidation rather than full downtrend.
Ethereum looks worse, having broken key support.
For longs, quick recovery above [level] becomes critical.
◉ Gold - Exhaustion at highs.
Gold's multi-timeframe breakout continued rallying this week before Friday's sharp reversal from new highs to close negative.
Friday's drop reflected both profit-taking and unwinding of Iran-Israel conflict hedges when no immediate retaliation occurred.
Retaliation eventually came Sunday, suggesting gold may gap up tomorrow.
However, Iran's strikes appear largely symbolic with minimal damage.
One interpretation: Iran wants to save face without escalating to war.
Market uncertainty now depends on Israel's response.
Further Israeli retaliation would create unpredictable geopolitical risk with greater market impact.
◉ Oil - Failed breakout.
If you believe gold rises on Middle East tensions, you'd likely expect oil to follow.
Iran produces 4% of global oil supply.
Currently holding oil ETF positions.
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