WEEKLY​ MARKET OUTLOOK

FOR THE WEEK OF JUNE 5, 2023

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Important Prices

S&P Outlook

Bull Case: Bulls continue to push price through Daily supply. Currently within a 4 hour supply but not as strong. Bulls will want to continue holding above 4243.25 pivot to maintain lower high pattern.

Bear Case: Price currently testing psychological 4300 level where bears will want to defend. If price breaks above 4302, no strong supply until roughly 4362.

What’s Moving The Markets?

UK & US AI Regulation

Rapid advances in artificial intelligence, such as OpenAI’s ChatGPT, are complicating governments’ efforts to agree on laws governing the use of the technology. Policymakers and many in the industry have expressed concern about AI with some equating it to the risks posed by pandemics or even nuclear war. The US Federal Trade Commission’s chief said earlier in May that the agency was committed to using existing laws to keep in check some of the dangers of AI, such as enhancing the power of dominant firms and “turbocharging” fraud. The EU is now pushing the AI industry to adopt a voluntary code of conduct within the upcoming months to provide safeguards while new laws are developed. A draft could be drawn up “within the next weeks”, with a final proposal for industry to sign up “very, very soon”. The rapid development of AI technology combined with the potential for misuse make the timely regulation of AI critical for safeguarding the public and preventing harm.

US Debt Deal

President Joe Biden on Saturday signed a bill that suspends the US government’s trillion debt ceiling, avoiding what would have been a first-ever default with just two days to spare. The House of Representatives and the Senate passed the legislation last week after Biden and House of Representatives Speaker Kevin McCarthy reached an agreement following tense negotiations. The deal suspends the $31.4 trillion debt ceiling until Jan. 1, 2025, allowing the US government to pay its bills. Non-defense discretionary spending would be “roughly flat” at current year levels in 2024 when factoring in agreed upon appropriations adjustments and total non-defense discretionary spending excluding benefits for veterans would total $637 billion for the 2024 fiscal year, down marginally from $638 billion the year before. The passing of this debt deal is good news for the financial markets in the meantime as a default on US debt would have undoubtedly caused an economic crisis.

Saudi Arabia In Talks To Join BRICS Bank

The BRICS bank, commonly named ‘The New Development Bank’ may soon receive funding from Saudi Arabia as the country seeks to join the bloc. This move is aimed to reduce the US dollar dependency and support the yet to be released BRICS currency. The development could challenge the US dollar’s status as the global reserve currency if Saudi funds billions to the BRICS bank. If the funding goes through when discussed this week, Saudi Arabia would be a deep-pocketed shareholder. BRICS gaining control of the oil markets that Saudi Arabia could force Europe and African countries to pay in the new BRICS currency, putting the US dollar on the back foot with no strong demand in the international markets for trade. The global power could tilt from the West to the East and developing nations could soon drive the world’s economy.

Revamping Crypto Regulation

The US Commodity Futures Trading Commission (CFTC) has proposed an in depth revamp of its risk management regulations, as they emphasize the need for firms to prepare themselves for the volatility of cryptocurrencies and the associated risks of holding customers’ digital assets. The CFTC stated that emerging technologies such as digital assets, artificial intelligence, and cloud services have introduced significant risks, compelling them to reevaluate their regulatory oversight and risk management requirements. The proposed rulemaking process involves an “advance notice of proposed rulemaking” followed by a formal proposed rule being drafted, which will then undergo a vote to determine the final version of the regulation. The move by the CFTC reflects the recognition of the digital asset market’s rapid growth and by addressing the risks associated with crypto volatility and custody practices, the CFTC aims to enhance investor protection and ensure the stability and integrity of the financial system.

Russia Adopting Crypto

According to a report from a Russian media publication, the country is planning to ditch previous plans of the creation of a crypto exchange and instead establish a framework for the operation and establishment of crypto exchanges in the country. The head of the State Duma committee on the financial market stated that instead of one national crypto exchange, well-established rules for crypto exchanges would be better and would be overseen by the central bank. It was stated that the crypto exchanges would be utilized for cross-border settlements, allowing Russia to bypass sanctions while at the same time complying with the rules. Despite the newfound opportunity for crypto exchanges to be established in the country, the department has a strong belief that cryptocurrencies should be regulated and monitored comprehensively, adhering to the rules and regulations that are established.

Eye Scans For Free Crypto

OpenAI Chief Executive Sam Altman has raised $115 million for a cryptocurrency project he co-founded called Worldcoin. The project aims to distribute a crypto token to people “just for being a unique individual”. The project uses a device to scan irises to confirm their identity, after which they are given the tokens for free. Their mission is to create a global ID, a global currency, and an app that enables payment, purchases and transfers using its token, alongside other cryptocurrencies and traditional assets. While the public may be hesitant, investors are still eager to be a part of this project as it’s one of the few crypto companies still receiving hefty funding amid an ongoing bear market. The token will not be available to people in the US and some other countries due to criticism and perceived privacy risks.

EARNINGS RELEASE CALENDAR

FOR WEEK OF JUNE 5th

Expert Insights & Predictions

A current big watch of mine is Costco. Let’s go over some of the technical analysis. 

$COST weekly view has been creating this HUGE symmetrical triangle & is finally at  a point where it’s looking to possibly breakout! Also notice how from a weekly view we’ve had consistent higher lows forming along with lower highs on the topside & where we are now is the first time where we’re actually getting a higher low above the LAST lower high. 

THIS IS KEY to spot, basically price action’s way of saying that consolidation is looking to breakout. Knowing this is forming on a higher time frame compared to our intraday day-trading time frames where our trades may be on the 5, 15, 30+ min timeframes, this is forming on a weekly timeframe, which basically means that the move from this break is gonna be BIG! 

Personally I’m looking for an upside move when this officially breaks! Of course as always we will prepare for BOTH instances in case this does not break upside. Let’s cover each thesis. 

Thesis #1 is of the stock’s upside potential. Volume profile is in a bullish formation. Our first zone on the 12hr time frame upside is from 512.50 – 517.50. A break & hold above this zone can set up great confluence for us to reach our targets above with the first being 531.50. This level should hit if that first zone holds strong. It would also be a perfect scenario if we broke that zone (also being the upside trendline) and then came back down to retest that zone (also would be a retest of that higher timeframe wedge trendline) & then get the push up-side to our first target up @ 539.00. Key levels from break of first zone up-to that first target will be 522.10, 526.40 and then 531.30. This will bring us to our second zone that’s from 531.30 – 538.60. Now if this zone holds strong I see a lot more heavy potential for upside, a solid hold above 539.15 we have room and V/P will confirm all the way to 557.75, 565.70. A strong hold above 570 will then lead to targets of 586.55 & 597.

From where $COST is sitting now in correlation to those price levels its nearly a $90-$100 move upside potential. Remember this is also on a way larger time frame so it may take a lot longer time to evidently play out. My overall key level for upside here is…. $539*.

Now lets cover thesis #2 – If downside plays out, what to look for. The LAST higher low to be put in was just around $472. Since this we passed above the LAST lower HIGH which is signaling to me it’s getting ready for a potential breakout of consolidation. Until 472 is broken down, there’s still room for bounces within the bottom trend line zone that could still be picked up. If that level breaks it may be seen as a break to the downside off this symmetrical triangle forming. Key levels to watch for downside movement off the break of this level will be 269.25. 460.90, and then will watch for a bounce off this bigger demand zone from 455.90 – 452, if this zone breaks I have 439 as an ultimate target! Below 439 $COST has the ability to really see lower levels.

Economic Data Calendar

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