Stocks Drops As Bitcoin Tanks With The Potential For More Losses

June 21, 2021

STOCKS – JPM, MU, UPS, BTC

MACRO – SPY, DJT

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Stocks rose sharply today in a large snapback rally from oversold conditions. The S&P 500 managed to fill the gap from Friday’s sell-off; the only surprise was how fast it filled. I tend to think the selling price action is not over yet. The news from last week was a big change from the Fed, and those changes don’t typically just get brushed off.

Additionally, it isn’t often that the advance/decline falls 6 days in a row, let alone 7, so the S&P 500 was overdue for a snapback. In fact, the last time the advance/decline fell 6 days in a row was on February 28, 2020; before that, it was around October 24, 2018, January 13, 2016, August 25, 2015, and July 24, 2015. Now, I don’t remember exactly, but those weren’t the smoothest periods.

So is the bottom in? Maybe. But history would suggest there is a good chance it is not. The chart below shows the times when the Advance/Decline fell 6 days in a row.

Transports

The Dow Transports were completely oversold on the RSI and the Bollinger Bands. It even hit the long-term uptrend. So again, no surprise there was a bounce; there might be some follow-through even tomorrow.

JPMorgan (JPM)

JPMorgan had a good day, reversing some of last week’s losses. Again, like the rest of the market, today appears to be a bounce off of oversold conditions. Could it rebound tomorrow some more? Yeah, does it matter much, not if spreads continue to collapse.

UPS (UPS)

UPS seems no different, with the potential to push back to the 20-day moving average at $207.35.

Micron (MU)

Micron has traded horribly, and despite the market being up sharply today, this stock did nothing. I don’t know what to say here, but the price action is overwhelmingly negative.

Bitcoin (BTC)

Anyway, bitcoin is trading down another 9% today. I’m just waiting for this thing to break 30,000. Once it breaks 30,000, it lights out. The next stop is probably around 16,000. Yesterday, I noted that it was very close to breaking an uptrend on the log chart. Today it is very close to breaking support on the linear chart.

If there was actually some fundamental way to value bitcoin, there might be a level where buyers would have some confidence to step in. But since bitcoin-only trades on emotions and imagination, there is no way to guess where a reasonable place the crypto may stop. So the charts are all you have. Good luck..

-Mike

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