Market Warning: Stocks Entering Danger Zone Amidst Crypto's Major Opportunity

The first half of the year has been a rollercoaster for investors, with markets experiencing significant upside and relatively low volatility. The majority of investors have been stumped by the market because of the disconnect between this market and what they have experienced in the real economy.

As we approach mid-year, stocks have rallied impressively through the first half, sparking optimism among traders. However, this optimism comes with cautionary notes this month as technical indicators and time cycles suggest potential turbulence ahead.

Meanwhile, the crypto market has faced its own set of challenges, yet it now presents what appears to be a substantial buying opportunity, especially for and Ethereum and other alts. As the first half comes to a close, it's crucial to understand the signals and patterns that may shape the coming months.

Now, lets take a look at where we are starting with the S&P500.

I believe stocks may be entering a danger zone on this rally. Zooming out here to the weekly we can see the balance of time coming into effect. From the covid crash to the top was 93 weeks. We are now entering week 91 of this move. Additionally we have a bearish divergence forming on the RSI as you can see in the two black lines below. Price is making a new high while RSI is not. There is still room to move up over the next week or two but be warned we could see a correction into that August window that I have been highlighting since the beginning of the year.

If we zoom in to the daily we are also seeing warning signs.

First, we have the two nearly symmetrical moves off of the bear market low. Again another 200 points to the upside would not surprise me here as it would bring this move to 150% of the previous move and create an even bigger divergence. Additionally, getting even closer we can see a cluster of signal candles forming a double top. And finally, you can see that I have the 17th of this month marked as an anniversary date that is a very strong top date in election years.

So given the macro time factors aligning with the price action and current positioning I believe we could see a more significant correction play out in the second half of this month.

One final note I will leave you with is June 7th a natural date that will fall at the end of this week.

Per Gann rules “advances or declines often culminate around this date.” I would say that we have been in a great advance up to this point. Also notice the June 22nd date and how SPY put in that first signal candle on the 20th.

Turning our attention over to crypto we have quite the opposite setup.

Again, the Gann natural dates apply but unlike the stock market the crypto market has been in a decline heading into this natural date.

BTC is nearly in the exact same setup as SPY but in reverse. 42 weeks from macro low to macro low which culminated the first phase of the cycle. We are now 42 weeks from that major low and put in what looks to be another major low and a higher low from the May low. We are also seeing a bullish divergence setting up on the RSI. A lower low on RSI and a higher low on price.

This has been a clear accumulation range for BTC above previous ATH levels and it looks to be the best setup of the year. It took a few more weeks that anticipated but BTC hit oversold levels it has not seen since the low 42 weeks ago and before that we hadn’t seen these levels since the FTX crash. I don’t know about you but that sounds to me like a MAJOR opportunity and one we may not see again this cycle.

ETH is in an even stronger position here with the impending ETF announcement. Starting with the weekly you can see the green close giving us the signal bottom and holding the 50% level in the purple box. On the daily, again, watch the 7th to the 9th. The 7th is a natural date and the 9th will be 120 degrees from the March top.

In the final image, you can see the ETH/BTC chart attempting to breakout of a major weekly downtrend and start reclaiming ground vs BTC.

All in all this is nothing new. Stocks rip while crypto gets hammered and then the tables turn. It’s happened in previous cycles and it looks to be the setup going into July. However, I still maintain a word of caution here not only for stocks but crypto as well. Until the market is able to confidently break above 72k (BTC) and 4k (ETH) we remain in a big consolidation range. The second half of this month going into mid August will be on watch. The July 7 window will be a key turning point by the looks of it. On a macro level this is an incredible buying opportunity for crypto especially beaten down alts.