{"id":21787,"date":"2024-05-14T07:30:45","date_gmt":"2024-05-14T11:30:45","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21787"},"modified":"2024-05-14T07:30:45","modified_gmt":"2024-05-14T11:30:45","slug":"what-to-do-when-bitcoin-starts-moving","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/what-to-do-when-bitcoin-starts-moving\/","title":{"rendered":"What to Do When Bitcoin Starts Moving"},"content":{"rendered":"

Managing Editor’s Note: <\/strong>Today, we’re handing the reins to colleague Larry Benedict – a market wizard and legendary hedge fund manager.<\/p>\n

And he says if you follow bitcoin’s price action closely enough, you’ll see that it can hint at the next move in the stock market.<\/p>\n

So when bitcoin starts moving, pay attention.<\/p>\n

Here’s what Larry thinks will happen next…<\/p>\n

\n

There’s a lot of noise around bitcoin.<\/p>\n

But there’s a message for stock investors in bitcoin’s noisy movements.<\/p>\n

Because if you follow bitcoin’s price action closely enough, you’ll see that it can hint at the next move in the stock market.<\/p>\n

That’s because it can help us figure out investors’ mood and their willingness to take risks.<\/p>\n

When the crowd starts making more bullish bets in speculative asset classes like cryptocurrencies, that’s a good sign that stocks will follow.<\/p>\n

The opposite can be true as well.<\/p>\n

So when bitcoin starts moving, pay attention.<\/p>\n

Today, let’s take a look at what it’s saying could happen next…<\/p>\n

Tipping the Stock Market’s Trend<\/h2>\n

Bitcoin has a history of leading key directional changes in the stock market.<\/p>\n

Just look at the price action over the past year to see what I mean.<\/p>\n

In the chart below, you can see that bitcoin peaked last summer at “1” several weeks ahead of the S&P 500 (“a”). The market went on to decline by 10%.<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

Then bitcoin found a bottom at “2” and started moving higher well ahead of the S&P 500 (“b”).<\/p>\n

In fact, bitcoin led the S&P 500’s recovery by over a month. It suggested investor greed was still present… and that stocks could recover.<\/p>\n

But look at what happened at “3.”<\/p>\n

Bitcoin recently peaked and turned lower on March 13. That preceded the peak in the S&P 500 (“c”) by about two weeks.<\/p>\n

The S&P 500 went on to decline by 5%. But it’s now recovering and is close to testing the prior high.<\/p>\n

And bitcoin isn’t keeping up.<\/p>\n

So this diverging bitcoin trend could spell trouble for the stock market…<\/p>\n

Bitcoin Is Bearish<\/h2>\n

During the March peak, bitcoin was flashing a major warning sign of a top. The Relative Strength Index (RSI) was diverging negatively from price at that time.<\/p>\n

You can see that in the chart below. Bitcoin moved above the $70,000 level in March. But the RSI started making lower highs (shown with the dashed trend line).<\/p>\n

The RSI got even worse when bitcoin came back to retest $70,000 again in early April.<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

Since then, the RSI has been under 50. That shows weak price action.<\/p>\n

This is also evident in bitcoin’s downtrend, making lower highs and lower lows.<\/p>\n

But here’s where things get concerning…<\/p>\n

Bitcoin’s price action has stayed<\/em> bearish despite the S&P 500 trying to recover.<\/p>\n

<\/p>\n

\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n

<\/p>\n

The S&P 500 made a recent low on April 19 and is moving back above its 50-day moving average (MA).<\/p>\n

But bitcoin’s price action remains stuck in a downtrend.<\/p>\n

Bitcoin is also below its 50-day MA (blue line in the chart) while the RSI is under resistance at 50.<\/p>\n

With this in mind, investors have another reason to approach the recent rally in the S&P 500 with caution.<\/p>\n

Regards,<\/p>\n

Larry Benedict
Editor, Trading With Larry Benedict<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

There\u2019s a lot of noise around bitcoin.<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[58],"newsletter-type":[],"ticker":[],"class_list":["post-21787","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-larry-benedict"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21787","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21787"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21787\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21787"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21787"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21787"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21787"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21787"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21787"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21787"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}