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JICPT| Omicron, VIX, BTC and global markets for CME_MINI:NQ1! by JICPT

Hello everyone. What a volatile week for investors. I just got the time to write down something after a busy week.

First of all, Fed turned to be hawkish. Taper may be accelerated according to what the Fed chair said earlier this week. In addition, He said transitory should no longer be used to describe inflation . It seems fed started to realize inflation became an issue. What feared the market is that rate hike may happen much sooner than expected.

Secondly, the first case of omicron variant of Covid was detected in U.S on Wednesday. That’s another blow to the market caused by uncertainty. I see VIX continues going up after the downtrend line got violated last week. Also, the weak economic projection has been reflected in the US 10Y yield. I see it went all the way back to the old range(0.994-1.386). So far, we still need at least 2 weeks to understand the features of omicron, especially, if it can make the current vaccines less effective. If omicron intensifies the severity of the situation, fed may postpone the rate hike.

Thirdly, it’s job data released on Friday. Nonfarm payrolls increased by 210K in Nov. ,well below the wall street estimation of 573K. Market shrugged off the data at the first place, then turned negative at the open. Nasdaq was down more than 300 points.

I did some research on the relationships between inflation and S&P 500 . Guess what, high inflation doesn’t mean weak broad market index.
inflation S&P performance

1980: 13.5% 25.8%

1979: 11.3% 12.3%

1974: 11.1% -29.7%

1981: 10.3% -9.7%

1978: 7.6% 1.1%

1977: 6.5% -11.5%

1973: 6.2% -17.4%

1982: 6.1% 14.8%

BTC is another asset I want to discuss here. After the institution joined in, its the correlation with stock market became very high. With limited liquidity, volatility is expected to be high until it reaches attractive buy zone.

Finally, I’d like to recommend a potential buying opportunity for Nasdaq around 15200 where the long-term MA meets demand zone . The long-term MA in red color has been respected well since April of last year.

Give me a like if you’re with my view. Thank you for your support.

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