Something occurred to me. It happened during an interview that I gave yesterday for one of our media partners in France.
It must have been the 100th question that I’ve been asked about the correlation between the cryptocurrencies and the stock markets. So I gave my usual answer, which is that at this time there isn’t any direct correlation.
Hearing Fabian translate this answer in real time gave me a bit of time to reflect and suddenly it clicked. There is a real connection and for a simple reason.
Both continue to zoom higher and higher into record breaking territory. This could likely be due to the reckless policies implemented by the world’s central banks over the past decade. Policies that make money extremely cheap and available.
The lack of interest rates entices the common man to invest his savings and forces Wall Street investors into risky trading patterns. Now this pattern has been going on for long enough that many don’t even notice it.
However, the Governor of the People’s Bank of China did warn yesterday that we may be headed for a “Minsky Moment.”
Today’s Highlights
- Fear Leads to Lust
- Dash Triangle
- Elections Weekend
Please note: All data, figures & graphs are valid as of October 20th. All trading carries risk. Only risk capital you can afford to lose.
Market Overview
The opening bell in New York was a bit shaky yesterday and stocks started to sell early in the session. The VIX fear index shot up as the Dow Jones sank 100 points.
By lunchtime of course, everything seemed to have sorted itself out, fears subsided and traders managed to pull the indexes well into the green by the end of the day.
The fear may have been sparked by the news that one of the coolest features of the new Apple watch was just blocked in China. Apple shares fell 2.4% out of the gate.
Though Apple still has a huge gap the dip in the Dow Jones was more temptation than traders could handle and they brought it back in short order. Some great news from Adobe after hours sent the benchmark index to the stars.
Quick Look at Dash
The cryptocurrency known as Dash (digital cash) has been growing steadily in popularity across the internet. Like many digital assets, Dash has seen a virtual explosion in volumes at the beginning of the year. A growth that has so far levelled off but not tapered out.
Over the last few weeks, as the cryptomarkets have been volatile and a bit unpredictable Dash has put out a very interesting steady pattern on the charts.
Here we can see a classic rising triangle that has been formed since the all time high at the end of August.
A pattern like this is just begging for a breakout.
What Else?
Elections in Japan and the Czech Republic. The Japanese votes seem to be a foregone conclusion with polls indicating a two-thirds victory for the incumbent Shinzo Abe and his money printing tough stance on North Korea.
You might want to Czech your exposure to the Euro going into the weekend though. The Republic is currently set to elect their own populist billionaire, just like the United States. Andrej Babis is not a fan of Euro integration though he does have some business ties in Germany that could be interesting.
As well, the Euro could be affected by updates from Catalonia, which are still far from resolved.
Also, keep an ear open for Janet Yellen’s speech this evening. The markets will be closed but they’ll certainly be listening. Lately, the Fed has been expressing confounding confusion regarding the lack of inflation and earlier this week even resorted to guessing games.
So let’s get this straight… The person with the most power in the world over the economy doesn’t know what’s happening or why and is now hoping that her models will play out. Not very reassuring.
Have an awesome weekend!
