Hello Traders and Investors and thank you for joining me for another edition of the Magnelibra Markets Podcast, I’m your host Mike Agne and today’s episode #22 is entitled “Breakout Confirmed Everyone Dragged In Now!”
But first a quick regulatory disclaimer:
DISCLAIMER: The following podcast is for educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and may not be appropriate for all listeners.
Ok so let’s just get right down to it, we know that the Univ. of Michigan inflation expectations were lower than expected and the green light for risk on was lit. As we noted yesterday our big level in the Nasdaq was 17100, well we didn’t even get close to it, it was well bid out of the gate and the Nasdaq finished +328.5 points + 1.92% a straight up massive move:
When we look at the weekly chart, well 19144 doesn’t seem unrealistic and we now have posted a red trend line on our chart as our base case bid line for support. As far as the SP500 futures it is also confirming a break out of the double top:
It will be amazing to see if the liquidation of the RRP which is now down to $625bn will continue to see outflows turn into risk on inflows. We also know the BTFP program continues to see a greater uptake in the program now $154Bn +9Bn last week. We also know China has laid down the gauntlet and brokers there have basically suspended any short selling in stocks there. When we look at these two in our spread format the SP500 vs Nasdaq is now breaking out lower again, which is leading toward the continuation of the concentration of wealth into tech:
Ok let’s unpack the settlements from Friday, bonds were mixed but the front end was weaker flattening the curve there, all the equities were well bid led by the Nasdaq but the SP was +58.25 and the Dow +386. FX was stronger with the Euro leading the way, energies were all lower and metals were mixed with Silver the weak link there:
Bitcoin continues to flirt with that 40k level and that is really the big level for the bulls and bears for now:
Also let’s just take a quick look at Copper, we know China is fundamentally flawed but we like the technical set up here and the 21p VWMA holding has prompted a more bullish theme here now:
Ok as far as our Futures Model Tracker it has now flipped to a hedged long based upon the moves today, please note the equity additions, the Aussie long, Nat Gas long as it dipped into our support areas and additional Silver now in the tracker:
When we look at the MEGA8s over $226 Bn in market cap added to this group Friday as the systematic buy programs are ramping up and sticking with the concentration of capital theme, as if the deniers who had thought 2023 was going to be a down year are starting out 2024 kinda like fool me once shame on you fool me twice shame on me and they are not going to miss out this time around! Once again Nvidia the big kid on the block +$23.84 or 4.81%!
When we look at the Magnelibra MEGA8 Index chart trailing top line support is moving up and now for us 2287 area becomes the key back test level by which long propositions can be confident in the trend as long as we continue to trade above this:
As far as the market cap chart the bulls are running wild:
We talked about this stock a lot at the end of last year and it is on our radar both technically and fundamentally. PayPal Holdings Inc. (PYPL) and we saw CEO Alex Chriss on CNBC last week and we share in his excitement. One data point that really stuck out was that he said that PayPal has,
“25% of the worlds eCommerce running through PayPal.”
They have announced a new innovation that will be announced on the 25th for consumers and merchants and no doubt related to reconciling the treasure trove of data that will see some sort of AI customization here in the near term future. Improving merchant conversion data to grow small business will be the key. We like what we hear and you guys should be looking at this.
We are shocked that PayPal hasn’t created their own token to eliminate currency risk for its global merchants and consumers, perhaps creating something structured as a derivative of Bitcoin in a way where pricing can be essentially locked at any given moment depending upon the given agreed value of exchange at any single point in time.
We feel the first company or payment system that perfects this locking fiat pricing mechanism to eliminate the friction of cross border payments will succeed in the future.
What do we mean, well its simple to understand, imagine you are a producer in Japan and you sell to Germany a part for something, Well they pay in Euro’s you then have to convert to Yen. What if there is an alternative payment token say PayPal token and its value is derived off of the current Bitcoin Price at that moment they agree to receive and send X amount of PayPal Token to be converted at any point in the future or not, maybe your wallet of PayPal is simply used to receive and send PayPal tokens in return for the receipt of goods and services as well as for payment remittance of goods and services.
This is the layering upon the Bitcoin Network that we believe someone like PayPal could enact. They already own 25% of the eCommerce of the world, now if their brand can have a trusted token, we know they are working on something like this with Paxos Trust, so its probably only a matter of time. We also would not be shocked at any agreement between Musks X and PayPal here going forward, we know the two companies are very close and this would not surprise us in the least any new collaboration going forward.
Alight so the fundamentals are very good here for PayPal, how about the technicals? Well look at this basing and breakout on the daily chart. What we like about this technical formation is the basing pattern breakout to the lows down at $50 the trade back into the basing channel which is layered between $63 and $55 and now the break out above trading $65.82 currently:
However and even more significant is the weekly chart when we show you this you will be shocked as PayPal is down 79% from its highs in Q4 2021! We believe the institutions are stepping in here and will continue to do so:
Now this is just our fundamental and technical analysis, as always you guys need to do your homework and confirm your own biases. We can only show you the path you have to walk it yourselves. I guess on some of our followers minds the big question becomes, does PayPal have a chance to go 3x quicker than Bitcoin can go 3x? Well that is up to you, but we like both prospects and to be honest, we know they are not the same one is an equity, the other a technology, but to not have any exposure, well now that’s plain lunacy, no matter how conservative your investment approach is!
When we look at the possibilities, we could easily see a move back above $100 initially here. A move like that would add about $37Bn to its market cap and something we view as very plausible given the beat down in the equity till now.
If we look at the options for expiration on June 21st, the $80/$100 Call spread is trading $2.15, this might not be out of the realm for a decent asymmetrical risk reward play for those inclined and looking for exposure in a different way, so take a look at those and create other possibilities to ponder. As we said, there are many ways to go from A to B we just try to point a few of them out!
Alright we will be back with more on Monday, this week we have new auctions for the U.S. debt pile in the staggering but new normal amount of $383Bn, which includes new 2s,5s and 7s! Its data light for the beginning of the week with LEI on Monday expecting -0.3% and more data coming Wednesday thru Friday.
Ok we hope you learned something today, as always thank you to all of our subscribers for your continued support. We hope we inspire you to think outside the box as we navigate these complex issues. Please share our work if you can, give it a like at the minimum or more importantly think about hitting that subscribe button! We want our subscribers to stay ahead of the game, to be able to have the necessary data and information to impress your friends and colleagues and most likely to correct their faulty logic and analysis! This is why we do what we do, we do it for you, to be well informed of the things that matter, not simply a subject to the main stream narrative! Till next time…Cheers
Share this post