Weekly Market Outlook: Volatility Looms as Stocks Face Test, Crypto in Transition

Inflation is back in focus this week with CPI numbers set to come out on Wednesday. While, the stock market has put together an impressive rally over the last two weeks, it will likely be put to the test this week.

Overall, investor sentiment remains somewhat neutral even with the recent winning streak.

Bulls have a slight edge here but we have been tracking the 60 year cycle with near identical accuracy so let’s look at how we line up this week.

Here we have the S&P 500 daily chart. Last week I showed you that the 60 year cycle topped on the 12th of May and turned red for 3 straight weeks to set up the late May buying opportunity that is historically the best buying opportunity of election years.

Additionally, just last week the S&P 500 completed the 60 and 90 week cycles from the August 2022 top and the March 2023 low. Both were significant inflection points in the market.

So we have to be cautious here. Remember the 60 year cycle made a slight new high on a bearish RSI divergence, thats exactly what we will be watching for this week. The market is giving us a lot of mixed signals here with the short term price action but the the longer term cycles suggest caution on this recent rally.

As for crypto it has been death by a thousand cuts over the last two months.

This is the kind of price action that makes a traders want to pull their hair out. It too is sending us a lot of mixed signals in the short term.

Starting with the weekly. I still have to believe the low was in the other week. We had a confluence of powerful weekly cycles (60 & 90) and a weekly reversal candle so it’s hard for me to see a scenario where we take out 56k. Although it feels like we have with how much worse the bleed has made it.

Zooming in to the daily and the picture isn’t so pretty. Last week we had a series of reversal candles and time overbalance. Not something you want to see as a bull but it has to be respected. I also have today as the day to watch. It’s been one I have been talking about for over a month actually. Let’s see how consequential it is but it brings us to an important time by degrees date which is exactly 60 days from the March peak. We would like to see confirmation here of our first higher low.

I would also like to point out that ETH is at an interesting point here going into this time period of a supposed ETF decision later this month. I feel that it is not likely going to pass but this setup makes me question that it could have a chance.

Below, you can see the confluence of the (30,60, & 90) week cycles. You can also see that it is respecting the .5 level even though the selloff has been bad.

So keep an eye on ETH as the month progresses here. As much hate as it has gotten we have an ETF catalyst on the horizon. It was also the market leader because it was the first major crypto to bottom in June of 2022. And, while SOL has outperformed and will likely continue to outperform neither has hit a new ATH yet. So when I see sentiment this bad with no justification I have to wonder what’s in store as high time frame cycles converge with price here for a low.

Lastly, if we look at the BTC.D and ETH/BTC we can see that high time frame divergence is still setting up in a big way. These things take a lot of patience but I think the clear takeaway from this recent correction is that we are in a transitional phase of the market. Where BTC is getting its last breath and the next phase of the market starting in Q3 will be all about ALTS when they significantly start to outperform.

So this weeks takeaway is the same message. I believe the stock market could be at a minor inflection point after a strong rally. Crypto on the other hand has most likely already passed the lows. However, the continual bleed warrants patience as we grind through an important transition phase in the markets. This week should see an increase in volatility after very muted price action. Watch today the 13th for signals as we head into CPI on Wednesday.