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Jurrien Timmer

@TimmerFidelity

23 Jun

With all the speculation about the Fed raising interest rates sooner than later, let's take a look at how past "liftoff" attempts by the Fed affected the markets, and how the Fed then responded. (THREAD)

There have been four major liftoff attempts since the Global Financial Crisis. The first was in April 2010, after an 80% run in the S&P 500. The Fed ended QE1, producing a three month, 16% drawdown for stocks, which forced the Fed to start QE2 a few months later. /2

The second attempted liftoff gave us the infamous taper tantrum in May 2013 (8% drawdown). The third was the actual liftoff in 2018, which ultimately produced a brief but scary 20% decline for stocks. And now we are in the early stages of the fourth liftoff attempt. /3

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Jurrien Timmer

@TimmerFidelity

22 Jun

My “failed 5th” call last week was premature, but today’s undercut & subsequent reversal still fits with my 5th-wave thesis outlined earlier. Now too we have some interesting divergences, which only increases my conviction that bitcoin is bottoming. (THREAD)

Here is the 14-day slow stochastic: bearish divergence at the high and bullish divergence now. /2

The GS Bitcoin-sensitive equities basket remains in an up-trend (higher highs, higher lows), and in the process also appears to be flashing a bullish divergence against btc’s new low. /3

Read 4 tweets

Jurrien Timmer

@TimmerFidelity

8 Jun

https://twitter.com/TimmerFidelity/status/1399825837172707335

Bitcoin’s 5th wave seems to be underway, in what has been a textbook pattern so far (

https://twitter.com/TimmerFidelity/status/1399825837172707335

). A classic 5th (where 5=1) would target 23,076. But sometimes 5th waves can fall short & reach only 0.618x1 (29,872). THREAD/1

Sometimes there can even be a “failed 5th” (retest of the wave 3 low at 30,017). Yes EWT is as much art as science. With all the attention out there on the triangle breakdown, it wouldn’t surprise me if we end up with a shorter 5th. /2

If so, it’ll be important that the retest gets rejected with a powerful reversal. That could trigger a bullish momentum divergence (the opposite of what we saw at the high). But if BTC makes a new low and stays there, that would be a bearish sign. /3

Read 5 tweets

Jurrien Timmer

@TimmerFidelity

1 Jun

As a “lifelong” technician, I am finding that bitcoin lends itself well to technical analysis. Here is my take on the recent price action. (THREAD)

Elliott Wave Theory: Looking at the chart pattern since the recent high of 64,870, I can't help but notice that a textbook 5-wave decline may be unfolding. According to EWT, primary trends move in 5 waves and corrections are 3 waves. /2

The typical progression is that wave 1 is generally dismissed as noise, then wave 2 is a sharp and deep retracement of wave 1 (at least 62% but sometimes 75% or more), which creates the false comfort that it was indeed just a minor correction. /3

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Jurrien Timmer

@TimmerFidelity

26 May

A year into a new bull market cycle, the valuation-driven phase is giving way to a more mature earnings-driven cycle. This chart shows the interplay between the deltas of total return, valuation & earnings. Note the similarities of our current cycle & the GFC. THREAD/1

In March 2009, the S&P 500 finally bottomed after a 57% decline. As is typical for this type of cycle, price bottomed several quarters before earnings. The blue bars below show the year-over-year change in the P/E ratio and the pink bars show the change in EPS. /2

Note how changes in earnings and valuation tend to be almost a mirror image of each other. The dark blue line is the year-over-year total return for the SPX. /3

Read 5 tweets

Jurrien Timmer

@TimmerFidelity

26 May

While the S&P 500 has hovered around the 4100 level since April, there has been a lot of churn beneath the surface, with the highest fliers rising to truly spectacular levels before crashing back to earth. THREAD/1

To help visualize this, I indexed the various sectors & styles to the Feb 2020 (pre-Covid) high in the S&P 500. This first chart shows the S&P 500 w/ its eleven sectors. The dispersion in sector performance was very wide last fall (mostly due to energy), but it has tightened. /2

Next, the four style boxes (Russell indices). See the recent lopsided performance by large-cap growth, which then passed the baton to value and small caps a few months ago. Whatever dispersion existed last fall has dwindled, while the S&P 500 churns sideways. /3

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