S&P 500, XLI, BTC/USD and GBP/USD Forecast – Watching Risk Appetite on Monday

S&P 500 Technical Analysis

While I don’t see any major opportunities here, I am watching this as a proxy for risk appetite in general. Keep in mind that earnings season is still going on, so I would expect a lot of choppiness.

But we’ve basically been stuck in about a 250-point range between 6,750 and 7,000, and I just don’t see the power to break out. Now, if and when we do, and we get a daily close above 7,000, obviously that’s a very bullish sign. We will probably go looking to 7,250 pretty quick. I don’t have any interest in shorting this market, but I’m just keeping an eye on US stock indices in general.

XLI Technical Analysis

I look at the ETF market. This chart is the XLI or the Industrials. Big industrial companies that make up this ETF all look fairly strong and as a result, we’ve seen quite a bit of upward pressure. I like this ETF on dips with a $167.50 short-term support level.

Quite frankly, if you do it with a lack of leverage, I really don’t have any concerns about buying it here. You just have to understand that we could see a $2 or $3 drop, but it wouldn’t really mean much. It looks like it’s going to open pretty much flat, which is a good sign considering it was such a bullish session on Friday.

Bitcoin Technical Analysis

Speaking of risk appetite, Bitcoin still looks horrible. And this is another kind of indicator that I’ll use to determine whether or not you want to stick with major things such as the XLI. With Bitcoin struggling the way it is, I think that tells you everything you need to know about crypto because if Bitcoin can’t go higher, then you’re going to have a hard time with pretty much anything else.

I do think eventually things turn around, but this is a pretty ugly beaten down that we’ve seen as of late. This is different than the other ones because it is now an institutional problem. That’s not something that the market has gone through, so you can’t just simply say, well, Bitcoin’s dropped 60% before, it’s not that big of a deal.

The reality is we are in a completely different market at this point now that you have Wall Street involved. They won’t try to pump it up anytime soon; they will wait for something to fundamentally shift and the first thing, of course, that they need is risk appetite. A return to $60,000 is very possible here.

GBP/USD Technical Analysis

Lastly, I’m looking at the British pound because this is one of those currencies that has done either less bad or quite a bit better than its competitors against the US dollar and you’ll see that it is rallying again during the trading session here on Monday.

I think we will probably try to get back to the 1.3750 level with the 1.35 level as a floor. This is more or less for short-term traders, I think, buying on the dip, taking advantage of cheap pounds, probably getting out multiple times on the way up there because despite the fact that it is bullish, I don’t expect an explosive move, but it offers an opportunity that I think a lot of you might be interested in.