Irrational Exuberance

In my last update, I showed the potential green path on the simple Total Cap chart. It’s followed to a T with an exciting breakout to new all time highs. This week, we finally got the pullback I’ve been looking for, following the green path almost perfectly. Support here is critical, and if it holds (my base case) we can rally again from here and push deeper into the $4+ Trillion dollar range.

In the last newsletter on July 22^nd , I emphasized a short term correction was needed on ETH, and potentially dipping as low as $3200. We’ve so far hit $3350 and could do “one more low” before buys become attractive. However the bottom may very be in.

I also emphasized a potential 112k correction and buy zone on BTC, which we just hit on the nose.

This was an extremely precise call, and we now have the *potential to setup a move to 128k~ and higher in the coming weeks. I do think we may need some digestion/chop first however. In the next few charts I’ll outline the broader markets posture in a few charts.

July 11th:

August 3^rd : We followed the green path almost exactly, and for now while there is the support in the 6230~ region, the highest and best RR is on a test back to 6150~. This is what I called for on July 11^th … To start a correction and not re-test the prior ATH would be strange here – and a little further shakeout would clear some of the significant excess build up over the past few months. So consider this an if/then scenario, just like my call for 112k BTC… IF the S&P dips to 6150~, this will be a nice spot to trade on the long side. I’ll post some shorter term plays when we get there.

I’ve been harping on the DXY turn for the past few issues. I believe the bottom is firmly in and we will see 100-105~ area in DXY relatively short order. This will continue to put pressure on risk assets and liquidity so is necessary to watch.

I am going to steer clear of new trades (mostly) for the moment until we see how the market opens – I am still of the mind we can drift a bit further down before considering any bullish positions. I am tempted to take a swing at UNH however, it’s a dangerous trade but fulfilling a lot of the criteria I like for a strong bounce… Looking below we see a high time frame RSI divergence forming, a demand zone in price, and perhaps most importantly… a FAT volume spike. I circled the past 3 spikes… these often indicate seller exhaustion and can precede some major reversal candles (look at the green circled instances). Even if it ends up just being a deadcat bounce, these wicks can be very profitable.

TLDR;

1. Crypto and stock market warnings the past two issues were prescient – and the downside levels were almost EXACTLY correct.

2. Getting ready to short Gold at $3500-$3550 area (still no entry)

3. I have high cash and am waiting on a 6150~ SPX test to deploy it.

Trades:

Nothing new this week, eyeing UNH for a potential shorter term play.

I am also interesting in HODL strategies… a SOL royalty company on the Canadian Stock Exchange (CSE). Still watching for now but will likely place orders this week.