If you’re a trader, you know that every week is a new opportunity to make money in the #crypto2023 market. But you also know that you need to be smart and informed to beat the competition. That’s why I’m going to tell you the top five things you need to watch this week to make the best decisions for your portfolio.
1. NVIDIA Earnings
NVIDIA is the king of the stock market right now. It’s the leader in artificial intelligence, which is changing the world as we know it. Everyone wants a piece of this company, and that’s why it’s worth over a trillion dollars. But can it keep up the hype?
On Wednesday, after the market closes, NVIDIA will report its earnings for the last quarter. The expectations are high: analysts think it will make $2.07 per share on $11.09 billion in revenue. But some people think it will do even better: $2.13 per share.
To keep its stock price high, NVIDIA will have to beat those numbers by a lot. Maybe $2.25 per share and $11.50 billion in revenue. That’s not impossible, but it’s not easy either. I give it a 50/50 chance.
This earnings report will be huge for the whole market, especially after Apple and Microsoft disappointed investors last week. If NVIDIA kills it, it will boost the confidence of the bulls. If it misses, it will scare the bears.
2. Jerome Powell’s Speech
Jerome Powell is the boss of the Federal Reserve, which controls the money supply and interest rates in the US. He has a lot of power over the economy and the markets. On Friday, he will give a speech at Jackson Hole, Wyoming, where he will talk about his plans for the future.
The markets are nervous about what he will say, because they don’t know if he will raise interest rates soon or not. Interest rates affect how much it costs to borrow money, and how much money people have to spend or invest. Higher interest rates mean less money for the economy and the markets.
Last week, the Fed released some minutes from its previous meeting, and they sounded very hawkish. That means they are worried about inflation and ready to raise interest rates sooner than expected. But since then, things have changed: China’s economy is slowing down, and bond yields are rising to levels not seen in decades.
So Powell has a chance to calm down the markets and guide them into the next Fed meeting in September. By Friday morning, we will have a good idea of what he will do next.
3. 10 Year Yields
The 10 year yield is the interest rate that the US government pays to borrow money for 10 years. It’s a very important indicator of how investors feel about the economy and the markets. It also affects how much other borrowers pay for their loans, like mortgages and car loans.
The 10 year yield hit 4.33% last Thursday, which is very high compared to recent history. The last time it was this high was in October '22, when the stock market was 20% lower than today. This means that investors are demanding more return for their money, because they think there are more risks and opportunities elsewhere.
The markets have been hoping that the Fed will be more dovish and keep interest rates low for longer, but they keep getting disappointed. Now they see that inflation expectations are above 2.5% for the next five years, which means that prices will keep rising faster than incomes.
At some point, the markets have to realize that inflation may not go away so easily, and that the Fed may have to keep interest rates higher for longer to fight it.
Keep in mind that as the yield increases, more funds are lured away from stocks towards the security of bonds, which offer a guaranteed return.
The 2 and 10 year yields are getting closer together. That means that investors think that short-term and long-term interest rates will be similar in the future. This is usually a bad sign for the economy and the markets, because it means that growth will slow down or even reverse.
Historically, when the 2 and 10 year yields flip-flop (called an inversion), a recession follows soon after. With the jobs market still super strong, a recession may not happen until late 2023 or early 2024. But watch out for an un-inversion as a warning signal.
4. Japan
Most investors don’t realize how important Japan is to US markets…but it is. Japan has had near zero interest rates for over 40 years, which made them buy a lot of US debt. In fact, they hold more US debt than any other country in the world.
But things are changing in Japan: inflation is finally picking up, and they are loosening their control over their bond market. This may make US debt less attractive to them, and they may sell some of it to buy other assets.
Watch the USD/JPY exchange rate, which shows how much one US dollar is worth in Japanese yen. If the dollar gets weaker against the yen, it means that Japan is selling US debt and buying yen. This could push US interest rates higher and hurt US stocks.
5. China
China is the second largest economy in the world, and a major trading partner of the US. But China is in big trouble right now. Its growth is slowing down, its debt is piling up, its real estate market is crashing, and its government is cracking down on its tech sector.
But China has one advantage over the US: it can print money at will, without worrying about democracy or inflation. This gives it more flexibility to stimulate its economy and avoid a hard landing.
I expect China to announce some sort of massive stimulus package early this week, to try to stop the panic and boost confidence. US markets should like this, because it means more demand for US goods and services, and less risk of a global slowdown.
What about Bitcoin?
Bitcoin is holding above $25,000, which is a key support level. If it stays above this level, it could bounce back to $28,000, which is a resistance level. But if it breaks below $25,000, it could drop to $21,000, which is the next support level.
I have a feeling that something big is coming with one of th major exchanges. This could affect the price of #BTC and other #cryptocurrency
As a technician, I just watch the $25,000 level. That’s the line in the sand for me.
I still think that the only way we see Bitcoin break below $20,000 is if the US stock market crashes by 20% or more in the next 6-12 months. I think there is a real possibility of that happening.
There you have it: the top five things you need to watch this week to crush it in the stock market. Remember: knowledge is power, and information is money. Stay informed, stay smart, and stay ahead of the game. And don’t forget to have fun! Trading is not just a job, it’s a lifestyle. And you’re living it!