SVET Model's Market Prognosis (April 21, 2024)

21 Apr 2024 by rate3

In crypto channels there is always one opinion about the market direction: there are three directions - up, down and side.

Bears: "Macro and geopolitics are bad, plus, dollar is up, so we are going south:"

Bulls: "Not at all. It was a super-bullish falling wedge formed and confirmed by a break: The North Big Time!"

What about the SVET Model?

SVET Composite 1: (0)(1)(0)(1) = 0.5
SVET Composite 2: (-1)(-1)(-1)(0) = -0.77
SVET Composite 3: (-1)(-1)(-1)(-1) = -1
SVET Composite 4: (1)(1)(1)(1) = 1
Total: -0.15

Ergo, the SVET Model is very lightly on a bearish side.

SUMMARY:

We need to remain extremely vigilant in the current market environment.

Firstly, we're entering a traditionally bearish period of the year from May to September. Most stocks are in the red, commodities are on the rise, and the dollar is strengthening significantly. Geopolitical tensions and the Federal Reserve's stance are two major negative drivers. While these factors may already be priced into the market, Friday's rocket strikes could introduce further negativity, depending on how aggressively the involved parties pursue military action.

Conversely, stocks have already corrected to the first Fibonacci retracement level. Additionally, there's increasing political pressure on Powell to lower interest rates. This pressure is compounded by deteriorating economic conditions in the EU and Asia, which could lead to diverging monetary policies among major central banks. Such a scenario is untenable, potentially prompting the Fed to pivot its narrative towards a more dovish stance, for example, if there's a downturn in the Personal Consumption Expenditures (PCE) index.

Moreover, many significant bulls in both the stock and crypto markets are looking to pump prices higher to maximize gains before the summer vacation period.

Given these dynamics, we can anticipate several potential scenarios:

a) A mid-term wait-and-see approach, awaiting bullish news;

b) A short-term bullish stop-hunt, where prices are driven up to trigger stop-loss orders;

c) A short-term bearish stop-hunt, where prices are driven down to trigger stop-loss orders.

In this complex landscape, flexibility and readiness to adapt to changing market conditions are crucial.