TA Tuesday: The macro-momentum drives markets into a Santa rally

No news is good news: macro-momentum drove traditional markets into a Santa rally. Crypto in line with two-year US Yield.

On the macro side:

On Dec 14 the FOMC meeting will take place. The market is now expecting to see a 50 bps hike (target rate: 425-450), which is “softer” given that we saw 75 the last three times.

In a recent speech, Powell said: “[…] the time for moderating the pace of rate increases may come as soon as the December meeting”, but he also added that“[…] it is likely that restoring price stability will require holding policy at a restrictive level for some time […] We will stay the course until the job is done”. Consensus sees the final target rate at 450-475 by 2023.

On Friday we had strong NFP numbers, unemployment at 3.7%, +282k jobs added, and a strong wage growth of 5.1% YoY. Interest rate hikes take some time to manifest in the real economy, and, once again, as long as the labour market keeps being this strong, rates will stay high.

Traditional markets are/were in “Santa rally” mode (NDQ: +8.68% MoM, SPX: +6.11% MoM, DJI: +4.61% MoM, RUT: +2.54% MoM). This has also been the case for a weaker dollar (DXY: -4.87% MoM). Looking at the macro picture, it seems too early for a turning point in the markets, and I would not be surprised by a general stepback. Looking at the US Treasury Yields, we still have the 2Y at 4.391%!

As expected, this macro-momentum faded away in crypto with BTC -17.88% MoM.

In terms of crypto:

At the moment, I am biased towards “no news is good news”. Everyone’s eyes are on Twitter announcements and leaks, and not really on prices, volatility, correlations, etc. As we don’t have any updates (think of DCG), the market will move higher.

I won’t say crypto is lagging equities, but still, we may see digital assets inching higher as we approach the end of the year.

Looking at the charts:

BTCUSD

  • Support: $15.4k
  • Resistance: $18.5k

Either we will break through the resistance and go back to $20k, or we will see new lows ($10k-$12k).

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