Retail Investors Get Played… Again!

Do You Understand The Economic Environment?

The market completely misinterpreted Powell’s most recent address as bullish. The media is now “conveniently” reporting from “trusted” sources that there was actually nothing in the statement that could actually be interpreted as dovish. I did mention this as soon as it was released. I immediately mentioned it in a short post on Noise.cash and was, as expected confronted by the “we are going to $35K” moon boys. My only question is, based on what? I have been stating the fundamental data for ages now. There is no volume, which is a clear sign that the whales have been selling into these pumps. Whale wallets have been decreasing holdings and of course, it doesn’t make sense to sell low and buy higher, does it?

Image Source – Noise.cash

The entire pump on ETH from the $1450 level was executed on decreasing volume. At the time of writing Ethereum is down 7% for the day. I posted a quick post three days ago stating that I had begun building a short position on ETH. I short with very modest leverage and build my positions over time. I don’t go all in on a single order. I have mentioned this a few times and how I ultimately protect my capital utilizing this approach. I am also able to take advantage of scenarios that counter my thesis if they are to arise.

Consider The Macro

If the S&P performs as I expect, I will publish an article on how I was able to predict this level. one of the biggest issues I am currently seeing amongst traders and investors is a lack of confluence. For some reason, the majority don’t see or understand the effects of happenings outside of the Crypto world. As mentioned before, signals function in a hierarchy and it really doesn’t matter much if a “low level” signal is bullish. You need to make moves based on data that is further supported by confluence. It is interesting to note how so many are bullish based on what they want and not facts. Bear market rallies are not uncommon, which is why I prefer to sell holdings at the peak and then repurchase lower. In this way, I can increase holdings by 30% to 50% on each dead cat bounce.

Magnetic Attraction

Price action is naturally drawn back to the lows and often requires a number of attempts before reclaiming higher ground. Here is something to consider. How is it that previous bear markets had numerous rallies, only to collapse lower, and yet some somehow think that this time around will be different? Especially since those bear markets were merely typical retracements. They were not accompanied by a recession, staggering inflation, and ever-increasing rate hikes. The DXY has retraced from recent highs but is currently sitting on support, which means that we cannot factor out the possibility of it making another move higher. It appears as if there is a massive disconnect between data and the appropriation of that data.

I guess we have to wait and see how things play out but I am still firmly convinced that this market will edge lower. Thanks for stopping by and see you in the next one!

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