WEEKLY MARKET OUTLOOK
FOR THE WEEK OF APRIL 3, 2023
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Important Prices
S&P Outlook
Bull Case: Bulls were able to break through supply and break above the 4100 psych level. Moving forward, bulls will want to continue defending the 4100 area on any pullbacks with the next strong supply above at 4177.50. If price breaks below, new daily demand at 4013.50 could serve as support.
Bear Case: There is possible supply above at 4177.50 that has been untested where bears will want to defend. Ultimately, bears will want to bring the price back under 4100 with the next possible target near 4013.50 demand.
What’s Moving The Markets?
Elon’s AI Warning
Elon Musk came beside the Future of Life Institute, calling for a six-month pause in developing systems more powerful than OpenAI’s newly launched GPT-4 in an open letter citing potential risks to society. Co-signatories of this letter included Stability AI CEO, researchers at Alphabet-owned DeepMind, and other pioneers of research in the field. This may prompt some companies to slow down the development and investment into AI capabilities until there is more clarity on the safety and ethical implications. Investors should expect greater focus on regulation of AI development, with companies and governments coming together to ensure that AI systems are developed in a way that is beneficial to society.
Electricity Overtakes Coal
The U.S. has long been dependent on coal for generating electricity, but the falling prices of solar and wind has accelerated the shift to green energy. More electricity was generated in the U.S. last year from renewable sources than from burning coal for the first time ever. This is a major milestone in the clean energy transition and emphasizes that the U.S. is shifting away from its reliance on coal. The increase in renewable energy generation is driving down electricity costs, making it a more attractive investment option for investors. With the growing emphasis on reducing carbon emissions, renewable energy sources are expected to become increasingly important over the coming years making it a lucrative investment opportunity.
New Rules For Banks
After the collapse of Signature bank and SVB earlier this month sent tremors through the banking system, The White House is planning to implement tougher rules for banks with $100 billion to $250 billion in assets. Some options include tougher capital and liquidity requirements, as well as steps to strengthen annual “stress tests” that assess banks’ ability to weather another financial downturn. The new regulation will enforce a more stringent set of checks and balances to ensure that banks are following the correct procedures. This will provide an extra layer of security when it comes to investing in banks, making steps towards a more resilient banking system and instilling more confidence in the banking sector.
Banks Open To Crypto
After the downfall of Signature Bank and Silvergate Capital, two big crypto-friendly lenders, several regional banks are now offering their support to crypto firms. Crypto executives and bankers stated that these banks who are willing to service crypto firms have been flooded with applications during the past two weeks. Attracting deposits from crypto firms could help shore up banks’ balance sheets at a time when a string of failures has shaken confidence in the banking system. The banks offering their support to crypto firms could provide more stability to the crypto market, providing more reliable services and banking solutions to crypto firms. This will help allow investors and traders alike to have more confidence in their transactions and investments.
Tether In The Hands Of Tron
Tether is continuing to extend its lead in the battle for the stablecoin market, increasing their market cap by more than $5 billion in the past two weeks to about $79 billion. This is due to some controversy around two of its main competitors USD Coin and Binance USD. Their recent growth does come with some risk. Tron, historically the busiest blockchain for tether trading, is under scrutiny from regulators for selling unregistered crypto tokens and artificially boosting the trading volume of TRX, Tron’s native token. Some investors and analysts believe that the fate of Tether is heavily tied to that of Tron because Tether has about 56% of the token on the Tron blockchain.
Binance Sees Billions In Outflows
As of early last week, Binance had experienced net outflows of $2.1 billion on the Ethereum blockchain of the $63.2 billion in the exchange’s publicly disclosed wallets. Analysts claim that these withdrawals are likely due to Binance’s decision to bring back trading fees at the same time the Commodity Futures Trading Commission is suing the exchange for allegedly violating rules designed to prevent illicit financial activity. Investors, traders, and analysts are monitoring closely for more regulatory actions against Binance in the coming months. Some individuals are even pulling their money out of Binance, fearing the type of bank runs that felled crypto exchange FTX and other lending platforms last year.
EARNINGS RELEASE CALENDAR
FOR WEEK OF APRIL 3rd
Expert Insights and Predictions
“The NYSE McClellan Oscillator is currently 86.02, which suggests that the stock market is starting to see overbought conditions. This doesn't mean that there is immediate downside, but it does mean that we are reaching a point of buyer exhaustion.
It is also noteworthy that the trend of highs vs lows on the NYSE suggests that we are still in a bearish environment. Lows have been much more pronounced than highs, with a few headfakes along the way of rallies. We are back in one of these periods, but as we can see to close the week there were only 45 new highs on the NYSE.
Overall, we're starting the second quarter with some degree of froth in the market after the recent bear market rally. I don't believe that this is the start of a new bull, as if it was it would be with the highest valuations to start a new bull market in history. Be nimble out there!”
“These past week's banking liquidity crisis, ironically, has improved financial conditions, as the Federal Reserve was “forced” to become less hawkish. This liquidity inflow has sent risk assets back up.
If we look at QQQ, we can see that the market is back in positive gamma. In these cases, the delta hedging activity of market makers becomes a stabilizing factor for the market lowering the overall volatility. As we can see in our chart, GEX and Cumulative GEX have become positive factors for the market.
At the same time, we can see that the positioning throughout the option chain is bullish. The market is well positioned above current price. These levels can act like magnets for daily price movement.
Finally, we analyze the Option Matrix, the easiest way to monitor gamma & delta exposure throughout the month. Its position is very bullish right now and we can expect more likely continuing upward moves.”
Economic Data Calendar
