Bitcoin Price, Tech ETF See Clear Breakouts in Dull Trading Week
During a dull week in the market, we've seen two very clear and very different breakouts.
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Never short a dull market.
And it does not get duller than a summer Friday session after a Thursday holiday. I guess most traders are enjoying a four-day weekend rather than sitting in front of a computer screen today.
The first half of this year has proven much the same as last year. Large-cap tech continues to lead, paced by AI-related names and the semiconductor industry, while small-cap stocks plod along a path to nowhere. It is hard to imagine this scenario changing until the market projects easing as a foregone conclusion rather than a distant possibility.
The Fed does not have much motivation to reduce rates this year. The economy keeps humming, inflation is slowing but still above the sweet spot, and employment isn’t a concern. This may not be the soft landing consumers want as interest rates remain high, essentially locking people with low-rate mortgages into their homes, and inflation has kept food and travel prices elevated. However, we’re still spending, and business keeps chugging along without any major red flags.
Wednesday gave us two clean breakouts. One that wasn’t much of a surprise and another that might be the polar opposite of what we’d expect.
The Invesco QQQ Trust QQQ pushed to new highs yet again. Technology has been carrying the market for as long as anyone can remember, so this isn’t surprising. The end of June gave us a shallow pullback, with the 10-day exponential moving average (EMA) working as support.
The QQQ closed above resistance on Wednesday, setting us up for a run to $500, although we may have to wait for traders to return next week to see any real fireworks on big volume.
The other breakout came courtesy of gold. The SPDR Gold Shares GLD pushed the ETF above June’s consolidation pennant pattern. I would like to see another day or two above the recent trading range, but gold may be catching a bid as money appears to be rotating out of bitcoin, potentially at a governmental level.
The correlation between the two has been muddled over the past few months, so I can’t say that is the cause, but it’s a relationship I will continue to watch. For now, gold just needs another day of strength and should land on the radar of momentum traders.
At the time of publication, Byrne had no positions in any securities mentioned.
