VRA Weekly Update: We Bought The Dip in Stocks and Cryptos. US and Global Bull Markets Have FOREVER To Run.

Good Thursday morning all. China’s warnings about “unreasonable commodity price rises” and their latest verbal attacks against crypto’s/Bitcoin resulted in an “everything must go” sell-off yesterday morning. From stocks, bonds, commodities to cryptos, everything “was” lower. But then, just as we bulls wanted to see, yesterdays smart money hour was excellent resulting in positive closes in the semis, QQQ (nasdaq 100) and just a 3 point loss in Nasdaq. Liquidity events like this tend to mark either capitulation or the start of something bigger. Our view is unchanged; capitulation in tech/growth looks to have taken place last week. Capitulation in Bitcoin/cryptos looks very likely to have occurred yesterday.

Once again, Bitcoin continues its roughly 4 year “risk on, risk off” correlation. From BTC’s high of near $65k in early April, to yesterdays crash lows of $30,200 (last $41,500), BTC and other leading cryptos are reminding us that “no, they are not a replacement for gold, but yes, they do continue to lead equity markets in both directions”. And as to China’s latest threat to Bitcoin, it’s important to separate the noise from the facts. Here’s what the creator of Dogecoin had to say about it; “China has never actually banned cryptos”.

We are long term believers in BTC, ETH as well, and it’s sell-offs like this that represent our best buying opportunities.

I repeat, THIS was what capitulation looks and feels like. Certainly modern day capitulation, post $22 trillion in global stimulus and “Don’t fight the Fed”.

If BTC has bottomed, and I believe it has, so has the stock market. Repeating pattern on steroids.

And one last repeating pattern; prior to each major round of stimulus/QE, we tend to have a short term sell-off. It’s motivated congress to act. Much easier to justify new trillions (infrastructure in this case) of spending when there’s a bit of turmoil in the stock market.

Many continue to miss the most important points of our new bull market. They include:

-This IS a new bull market. It will last for years. Dips are to be bought.

-It’s driven by massive liquidity and a surging US and global economy. The Fed continues with $120 billion/month in QE. Even when the Fed begins to taper…whenever that may be…it will only “taper” their purchases. And even when the Fed starts hiking rates (circa 2023), history tells us that the markets continue to rise through “at least” the first 3 rate hikes.

-Millennials (the public) have fallen back in love with investing/stocks/real estate. We have cryptos to thank for this. Millennials are in the process of inheriting $70 trillion and they are plowing it into stocks/real estate/cryptos…and they have diamond hands. Massively underreported and hyper-important short-medium and long term investment theme.

-The Fear and Greed Index just hit 30, deep into “fear” territory, even as we’re just 9 trading days away from ATH and SPX just 3.7% off of its highs. It’s hard to express my amazement at this action in investor sentiment except to say “this is not how sentiment reacts when we’re at any kind of market top”.

-This remains a PSYOP. The Big Bribe, meant to make us forget about CV insanity, a rigged and stolen election and the ongoing theft of our constitutional rights. And if Dems want any shot at retaining their across the board power in DC…unless they find a way to rig congressional races all across the country…they require a strong economy and market. And of course, their besties….the Federal Reserve…will do everything in their power to make that happen. AKA “lower rates for longer”.

If capitulation took place in tech/growth last week, as we expect, these levels will hold.

Here are the equity levels we’re watching most closely…the levels that need to hold for my “capitulation” call of last week in tech/growth to be proven right.

Nasdaq: needs to hold last weeks capitulation lows of 13,002 (last 13,299)

QQQ: needs to hold last weeks cap. lows of 316 (last 323)

SMH: needs to hold last weeks cap lows of 222 (last 234)

If we’re about to bottom and move higher, tech/semis will continue to lead, just as they did yesterday. Semis lead nasdaq, nasdaq leads the market.

Until next time, thanks again for reading…

Kip

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