By J.C. Parets & All Star Charts
1/ Bitcoin Surges Off Support
2/ Tech Reasserts Leadership
3/ Mastercard Makes New Highs
4/ Commodities Bring the Base
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1/ Bitcoin Surges Off Support
Bitcoin (BTC/USD) surged more than 6% in today’s session after the D.C. Court of Appeals gave the green light to the first Bitcoin ETF. Crypto stocks like Coinbase (COIN) and Microstrategy (MSTR) also enjoyed big gains.
As you can see, Bitcoin’s price bounced off a shelf of former highs, printing its best single day since mid-March:
This level also represents the anchored volume-weighted average price (AVWAP) from last year’s lows, making it a crucial area of former resistance turned support. As long as BTC stays above this polarity zone at $25,000, the chart has the looks of a textbook reversal pattern.
Bitcoin bulls will be looking for confirmation at the pivot highs and $30,000 level. If and when we get it, we could see a big rally from the world’s largest cryptocurrency.
2/ Tech Reasserts Leadership
Over the past two months, technology stocks have endured a corrective period in both absolute and relative terms. However, the charts suggest that this may be changing.
As you can see, after a massive base breakout this year, the large-cap technology sector (XLK) has pulled back to a shelf of former highs relative to the S&P 500 (SPY):
A rising 200-day moving average is also at this level, making it a logical place for the sector to reassert its old leadership.
As long as XLK/SPY remains above support, tech stocks are likely to continue outperforming the broader market over longer time frames.
3/ Mastercard Makes New Highs
With the market showing bullish follow-through this week, a tradable low could be in for U.S. stocks. With the late-summer selling pressure receding, some of the strongest stocks are making moves back to fresh all-time highs.
As the 20th largest public company in the world, Mastercard (MA) is a major component in many large-cap indexes. It is also one of the first among its mega-cap peers to achieve new all-time highs.
Here is a weekly chart showing the credit services stock resolving higher from a multi-year base that formed following its rally off the COVID lows.
As long as Mastercard stock holds above its pivot highs just beneath $400, the bias is higher, and we could see a fresh mark-up phase. Stocks that show relative strength by falling the least during corrective phases tend to be the same ones that rally the most when the trend resumes. This could be the case with Mastercard in the coming weeks and months.
4/ Commodities Bring the Base
Big bases proliferate commodity charts. It doesn’t matter what group we’re reviewing—from energy to precious metals—massive decade-plus bottoming formations are the norm.
Check out our Equal-Weight Livestock Index (comprising live cattle, feeder cattle, and lean hog futures):
The index finds resistance at its former 2014 highs as the individual cattle contracts advance.
October contracts for live and feeder cattle are challenging fresh highs. This comes after new all-time highs were reached for both cattle futures earlier this year.
While the cure for high prices is often higher prices, the uptrend for cattle has matured. Perhaps livestock contracts are due for a period of digestion below the 2014 highs.
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Originally posted 29th August 2023
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