7 Monster Stock Market Predictions – Sunday, May 23

Chart, Trading, Courses, Forex, Analysis

This week should see a lot of volatility now that we are past options expiration and gamma has rolled off. It means we should expect to see big swings in the market as gamma levels get rebuilt over the next couple of weeks.

Bitcoin

However, the outlook this week looks more negative than positive given the volatility in Bitcoin this weekend. The cryptocurrency continues to melt, and I don’t see that situation improving any time soon. If bitcoin is a bubble, which I believe it is, then you are likely to see it settle back around 16,000 at some point.

I think we are likely to retest the lows around 29,000, and maybe lower. The crypto is in a consolidation pattern currently and is getting ready for another drop.  The decline looks too impulsive to be part of a retracement pattern. Therefore, we could be in a 5 wave count lower; it suggests it falls back to around 16,000.

There are many problems with it; the most obvious is that I can’t imagine that Bitcoin ever becomes a global currency or any of these cryptos do. It seems highly unlikely that any country would endorse the use of any crypto. It would mean that that country would lose the ability to control its own currency, which means it would not have the ability to issue its own debt.

It is likely why China is now beginning to crack down on the concept of mining for bitcoin and why other countries will likely follow. It is why China is developing its own digital yuan. Do I think a digital currency is the way of the future? Yes, but in a country’s own currency.

In a way, we already have digital dollars; we have had it for decades. Every time you swipe your credit card or debit card, it is a digital transaction. Every time you transfer money via Venmo or Cash App, you are making a digital transaction. It is transmitted in dollars electronically via a network.

Anyway, for those that think bitcoin is not correlated to stocks or a sentiment indicator, think again. Just look at the decline in the Refinitiv most shorted stocks over the last few months and look at the decline in bitcoin price. There is something there. Global market sentiment is shifting.

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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William K. 2 weeks ago Member's comment

Some are rising and some are falling and the mood is uncertain. That is what I would expect given that there are a number of influences on emotions right now.

Anastasija Janevska 2 weeks ago Member's comment

Isn't that always the case though?