Let's see what the financial market is up to?

Yesterday, US Fed exhibited a willingness to change its Monetary Policy stance. The Fed stated that its members now expect rates to rise at the end of 2023. Their earlier stance was near 0 rates for the foreseeable future. The rationale for the shift was sustained economic recovery post-COVID-19 pandemic and inflation that may remain high for longer than expected. S&P and NASDAQ both reported declines. 10-year treasury yields also shot up.

During the last 1 year, 50 DMA has been strong support for the S&P, as well as NASDAQ. I think 50 DMA will still act as support. US 10Y yields also saw resistance at 50 DMA. I foresee a shift in the market narrative going forward about inflation easing. Any strong downside in the equity markets or sharp uptick in yields will cause the FED to come forward with liquidity support and markets will continue with their upward trend. While the FED has indicated that rates can rise after 2 years, the bond purchase program continues and monetary conditions will remain favorable.

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Brent Crude is due for a correction as RSI indicates that it is overbought. Fundamentally, the US deal with Iran is what the market is watching. Until then, OPEC will keep a tight leash on supply. I expect oil to also continue its upward trend to $80 per barrel.

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I have never really been a fan of bitcoin versus gold. I think investors should be exposed to both.

On the daily chart, there is a golden cross forming. The weekly chart is more interesting, as it shows that gold recently broke out of a downward trending channel. I think gold is retesting the upper line of the channel and I expect gold to bounce from here. Fundamentally, negative real rates are good for gold. It has a negative correlation with Treasury yields and the recent increase in UST yields has led to a slide in gold. Both should reverse trajectory soon.

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This is from my post yesterday -

BTC did rise above 41k yesterday. However, it was rejected at 200 DMA. I did not expect it to break 200 DMA right away but I think it will likely happen this week. 200 DMA is the key resistance to watch. There can be a retest of the downward trending yellow line too before 200 DMA is taken out.

The good thing is Bitcoin is not selling off with other assets after Fed comments from yesterday. It is demonstrating the very reason why Bitcoin should be part of every portfolio - lack of correlation with other asset classes.