Research Summary
The report provides an analysis of various financial markets, including the Nasdaq, SPX, Nikkei 225, and cryptocurrencies like Bitcoin and Ethereum. It also discusses the USDBRL breakout, Brazilian relative equity performance, and retail investor sentiment. The report uses various indicators and charts to provide insights into market trends and potential future movements.
Key Takeaways
Bullish Trend in Nasdaq
- Continued Bullish Trend: The report indicates that the Nasdaq 100 closed strong, with the bulls firmly in control. The index is in a primary bull trend and is two months into the third bull leg. The path of least resistance remains upward.
Market Internals and Trend Fragility
- Market Internals: The Market Internals Aggregator did not trigger the sell signal discussed in the previous week. The report suggests keeping an eye on this indicator for future movements.
- Trend Fragility: The Trend Fragility indicator, a composite of sentiment and positioning data points, is slowly climbing higher and now sits at 83%. A move above 90% would trigger a sell signal.
Retail Investor Sentiment
- STAX Index: Schwab’s STAX index, a monthly sentiment/positioning indicator based on the activity of millions of retail investor accounts, is currently at 48, showing a lack of the type of exuberance that tends to mark large tops.
Breakout in USDBRL
- USDBRL Breakout: The USDBRL is breaking out of a 4-year compression regime, indicating a lot of coiled energy for a move higher.
Cryptocurrency Trends
- Bitcoin and Ethereum: Both Bitcoin and Ethereum appear to be gearing up for another leg higher after correcting sideways for the past four months. The bottom of this range offers a nice technical inflection point to buy/add with tight stops.
Actionable Insights
- Monitor Nasdaq Trends: Given the continued bullish trend in the Nasdaq, it may be beneficial to keep a close eye on this market for potential investment opportunities.
- Watch Market Internals and Trend Fragility: As these indicators climb, it’s crucial to monitor them for potential sell signals that could impact investment decisions.
- Assess Retail Investor Sentiment: The current STAX index level suggests a lack of exuberance, which could indicate a potential shift in market sentiment and should be considered in investment strategies.
- Consider USDBRL Movements: The breakout in USDBRL suggests potential for a significant upward move, which could present opportunities for currency traders.
- Track Cryptocurrency Movements: With Bitcoin and Ethereum potentially gearing up for another upward move, it may be worth considering these cryptocurrencies in investment strategies, while also considering the associated risks.
