Warren Buffett, the American businessman and philanthropist, has put most of Berkshire Hathaway’s cash in short-term United States Treasury bills since they offer as much as 3.43% in yields.
Worst Awaits Risk Assets in September
2022-09-01 • Updated
In 2021, the S&P 500 lost 4.76% in September. What will happen this time?
There is a possibility that this scenario may repeat itself. Investors' fears are not unfounded because September is the worst month for the index. According to the historical dynamics, S&P 500 (US500) has been declining in September by 0.65% over the past 38 years.
September S&P500 (US500) index performance since 1985.
Average change of the S&P 500 (US500) index during the past 36 years.
The Crypto market usually also has a rough time in September. Bitcoin lost 12.7% in September 2021, 17.4% in 2020, 17.5% in 2018, 21.4% in 2017 and 45.4% in 2015. The main cryptocurrency increased by 13.3% and 3.95% in 2016 and 2019, respectively.
However, the extrapolation of statistical data to the current situation makes little sense if it is not tied to the economic context.
Several factors confirm a possibility of a deeper correction:
- Weak numbers might relate to the financial year ending in the United States, which starts on October 1 and finishes on September 31.
- Traders bet on a 75-basis-points rate hike at the Federal Reserve meeting on September 21, which will boost the USD and add pressure on the risk assets.
- Guru traders sell stocks and invest in T-bills ahead of the deeper correction.
US dollar index, H4
The RSI repeats the same pattern, which has also appeared twice in 5 previous months.
The H4 RSI goes to 84 -> RSI declines, while the price stays at the same level -> Another pump when RSI reaches 70 - 75 -> divergence appears -> deeper correction happens.
The US dollar index is already breaking above a recent high, and currently, the price is aiming at the 111.50 level.
US500 keeps moving inside an inverted falling wedge. The price has formed a massive range between 3500 and 3650, and it seems like sellers are aiming for it. Moreover, the 200-week moving average, which always acts as the main support for the US500, also stands in this range. If the Fed increases the rate by 75-basis-points, the price will easily decline to this support, where we expect to see the overall market reversal.
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US100 broke through the strong resistance trendline, following July's inflation numbers on Wednesday, which were less than analysts expected…
US stocks have delivered their worst first half of a year in more than 50 years triggered by the Fed's attempt to control inflation and growing concerns about recession.
For those who may be unfamiliar with Price Action trading, the horizontal arrows represent areas where the market structure was broken. As you can see in the scenario above, price broke below the previous low at the two marked instances
Let's start off with a look at the Daily timeframe on Bitcoin. We currently see price reacting to the rally-base-rally demand zone between the 15,600 - 14,300 price area. Price also seems to have found support off the trendline support as marked in the image above. Interestingly, this means the overall bias on BTCUSD is Bullish.
Central Bank Digital Currencies (CBDCs) are virtual national money. The idea of creating such currencies came to the authorities after the success of cryptocurrencies, which also exist only in digital form.