(WELCOME TO THE WHIPLASH MARKET)
March 10, 2025
Hello everyone
WEEK AHEAD CALENDAR
TUESDAY MARCH 11
6:00 a.m. NFIB Small Business Index (February)
10:00 a.m. JOLTS Job Openings (January)
WEDNESDAY MARCH 12
8:30 a.m. Consumer Price Index (February)
8:30 a.m. Hourly Earnings final (February)
8:30 a.m. Average Workweek final (February)
2:00 p.m. Treasury Budget (February)
THURSDAY MARCH 13
8:30 a.m. Continuing Jobless Claims (03/01)
8:30 a.m. Initial Claims (03/08)
8:30 a.m. Producer Price Index (February)
FRIDAY MARCH 14
8:30 a.m. Michigan Sentiment preliminary (March)
Expiration of Congressional continuing budget resolution from December
Cyclone Alfred has given me a couple of sleepless nights here on the Gold Coast. In my area, there are huge branches and some trees down, powerlines down across roads, traffic lights out, people missing, presumed dead, in raging floodwaters, and major shopping centres closed due to power outages. If this had been a Category 4 or 5, the coast would have been wiped out. The buildings here are not built to withstand that type of ferocity.
It's Sunday morning as I am typing this, and we are still without power. (I’m relying on battery power.) Thursday evening, the power went out, and I have no idea when it will be reconnected. It could be up to a week before we have power again, so it is all about making do.
It’s Monday morning, and at long last, it has stopped raining. 250,000 people are still without power, and I am one of them. In the last 24 hours, Brisbane had its wettest day in 51 years, with 275mm of rain falling.
Since Thursday evening last week, I have been working by torchlight and daylight. Reading books in my downtime. Listening to howling winds and rain belt the roof, windows, and doors, and hoping that the building structure can withstand all the punishment mother nature throws at it.
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So, to the markets. And this week, investors will be looking for some reassurance and clarity about trade and economic growth. And that is going to be difficult to capture, when President Trump keeps changing his mind on the timing of trade tariffs and their extent, and Musk keeps executing his DOGE agenda.
But inflation data out on Wednesday may settle some nerves about the economy. According to economists polled by FactSet, the consumer price index is set to have risen 2.9% on an annual basis, down from 3.0% in the prior report. Core inflation, excluding food and energy prices, is expected to have risen 3.2%, down from 3.3% previously.
The Producer Price Index on Thursday is also expected to have eased to 3.1% year over year, according to FactSet consensus estimates. That’s down from 3.5% previously. Core inflation is expected to have fallen to 3.5% from 3.6%.
But these numbers could go pear-shaped if companies start to pass along higher costs to consumers and inflationary pressures from Trump’s tariffs eventually start to show up in the data. That could be like a big black storm cloud over the market/economy. At the moment, no one is thinking recession. Remember that data is a lagging indicator.
MARKET UPDATE
S&P500
The S&P500 failed to breach the 6000-mark last week. The index has fallen through the 5773 mark, which I marked as a bearish break/the base of a rising wedge. This significant break arguably confirms that the S&P500’s rally from the October 27, 2023, low of 4103.78 is finally over. It would be no surprise to me to see the S&P500 make a sustained break through 5700 this week. I am anticipating a break of 5400 by around mid-April, or even sooner. (That will depend on the whiplash we are getting from Trump’s “change of mind” notions, which seem to happen almost daily now). Investors should use all the rallies to exit equities or to buy put options or (SH) for hedging. S&P500 has multiple supports between 5693 and 5650, so if you want to take profits, do so in a pullback toward 5773 to 5850.
Support =$5655/75 and $5570/95
Resistance =$5775/85/ $5845/55 and $5895/10 areas
GOLD
Gold’s April futures made a new all-time high of 2968.5. Gold closed at 2908.09 on Friday. Most see gold’s movement from the Feb 24th high at $2956 as corrective and believe gold will show eventual new highs after some consolidation. Yes, that’s possible. But there is another point of view here. Gold could continue to show further weakness if it falls and holds below 2845 levels. And the bigger confirmation of a bearish move for gold would be if/when it closes below USD 2700 levels. This down move could continue for many months and may even take gold towards USD 2000-2250 levels. So, with this outlook, you should be looking to book profits in every rally and sell short once the sell signal confirms. The risk reward matrix may have moved away from the buyers. Trade carefully.
Support =$2887/92 and lower down $2857/62
Resistance = $2928/33
BITCOIN
Bitcoin remains lower from the Jan peak at 109.4k. In the big picture view, the downside is seen as corrective and with eventual new highs after. There is potential for further weakness below the Feb. 28th low at 78.2k, although that weakness would likely be short-lived and part of that larger correction. A break/close above the $95.0 area would argue that the large correction since January is complete.
It is important to note that once Bitcoin does reach its $128-$160 target, the coin may possibly fall into a bearish phase, where it could see a level of $32,000 or so. So, after this rally, I would be a seller.
And remember, keep a sell-stop in place at $70 or at a maximum low of $60k, as it could spike down to these levels before it rallies. If it breaks these levels, observe your sell-stops.
Last week, Trump signed an Executive Order relating to the establishment of a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile, as well as the first Crypto Summit at the White House. This marks the first time Bitcoin has been formally recognised as a reserve asset of the United States government and sets a powerful precedent – not just for sovereign entities but also for corporations, financial institutions, and institutional investors.
Support = $78k/$70k
Resistance = $92.5k/$95.0k area
QI CORNER
HISTORY CORNER
SOMETHING TO THINK ABOUT
Cheers
Jacquie
