Guest Post by Dr. Stool at CapitalStool

Image Source: Unsplash

Check out this overlay of the hourly chart of BTC with the 24 hour ES S&P futures.

Obviously, this doesn’t show cause and effect. Some correlations do, but not this one. But it sure as hell shows correlation and concurrency. Most asset classes are moving in near lockstep as macro liquidity ebbs, with brief periods of remission, or in this case, remittance. Here in the early going on Friday, we’re in one of those quiet, weak rebounds.

At any rate, this correlation does not bode well for stocks, in view of the fact that BTC has a long term target of 5000 below zero.
 

Meanwhile, at 6:30 AM in New York, stocks are rallying as the 3 day cycle has turned up. But it’s not clear that the 5 day cycle is finished on the downside. For now, I’ll assume that it has, because yesterday’s low almost hit a 5 day cycle projection of 3640. But who knows what the junior traders will do in the last hours before the weekend. Take off their shorts before a dip, or dump their longs before heading for Jones Beach.
 

The numbers to watch for a breakout either way on this chart are 3639 and 3730. Anything in between is noise. However,  dropping below 3674 would give bears the edge on a breakdown this afternoon.

Meanwhile, the 10 year yield has pulled back just enough this morning that it is no longer a long term base breakout. 3.261 looks like the magic number. Stay below that, no breakout. Above that, todamoon. Here’s the weekly view.