#948 - Prepare for Takeoff? With Dave Floyd

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0:40is it time to prepare for takeoff hi everyone welcome to the real vision daily briefing with me today's dave floyd host of the day trader podcast and founder of aspen trading group we're going to catch up with dave in just a minute but first ash bennington is here as well to give us an update on what is sure to be really big news event this week and that is a regulatory decision on the spot Bitcoin ETF. Ash, I know this is sort of what everyone's talking about, especially in your world. So what do we know at this point? So here's the latest, Maggie. What we've got is a lot of speculation about what is going to happen on January 10th.

1:17The reason that date is so important is because that's the date that SEC has to provide guidance or a response on the first filing. This is the one that comes from ARK. 21 shares is the fund. This is essentially the first Bitcoin spot ETF in the United States that SEC is going to rule on. That's the deadline that's been assigned by the courts. The reason that that data is especially important is because there's speculation, again, speculation, that with that ruling from SEC may come a series of other rulings for other applicants who have apply to have similar products put on the market, Maggie.

1:54Okay, so ARK is the kind of the first one, but the feeling is they're going to finally say, okay, like you get approval or no, this is not going to happen. And it seems like, I mean, we saw another rally in crypto. It seems like the feeling is that they're going to go ahead and approve it. Is that what the sort of the betting is right now? Well, that's the speculation, Maggie. And obviously, we know that crypto is very sentiment-driven. It's incredibly volatile. We see these types of rallies on all kinds of speculation, all kinds of emotion, whether or not this will actually play out. By the way, it doesn't necessarily mean one is going to get approved.

2:31There could, again, I want to stress, could be a scenario where on January 10th, SEC declines the first application from ARK and doesn't rule on any of the others. So there's a sense, as you say, there's a feeling that things are coming to a head. Whether or not that actually plays out remains to be seen. obviously a lot of speculation about this right now. That's a really, really excellent point, Ash. And that's what makes this kind of tough, I think. So if we take a step back, why is this such a big deal? Why is everyone waiting for it? What are the implications of this for people who maybe haven't been following it as closely?

3:05Well, it's a big deal because people who want exposure to Bitcoin don't really have any great ways to do it without figuring out either how to custody the coins or going through a crypto exchange like a Coinbase. And the thinking here is, if this is something that's just available in your brokerage account, you can call up your RIA and buy it that way. It dramatically simplifies the process of owning the underlying Bitcoin. It eliminates any of the potential custodial risk that you would be taking on yourself. Someone else who presumably is well qualified to do that will be taking on that risk.

3:40So the thought here is that this puts the asset, the Bitcoin itself, exposure to the asset, the long, short exposure to the asset into the hands of a much greater variety of people than the kind of folks, for example, who watch Real Vision Pro Crypto, who are really passionate about this technology, who want to own the underlying coins themselves. It's seen as a moment potentially where it could have a democratizing effect. Yeah. Well, it's going to be super exciting. Bitcoin up 5.8%. But we really saw it rollercoaster around last week. So this is going to be interesting to see how we get through this week.

4:13Ash, I know that you and the team are all over it. We're going to be covering it really from all angles once we get that news. We look forward to it. Maggie, let me add just one more point here. One of the things that's been speculated about here is that this is going to be a buy the rumor, sell the news type event, which could happen. There are those who say that it's been fully priced in. Others who say it hasn't been fully priced in. And again, with the nature of Bitcoin and cryptocurrency more generally, obviously highly volatile asset classes, that's what makes a market. Yeah, absolutely.

4:45We'll see. We'll see, Ash. Thanks so much. So let's get Dave. I want to bring you in. Very interesting. So how do you approach a news event like this? First of all, are you looking at Bitcoin? And what does the chart tell you? But also, just from your, we talk a lot about your style, just from your point of view, especially something like Bitcoin. Do you try to get ahead of news like that? Do you want to wait and see what happens? How would you think about something like that? It's a great question, Maggie. Thanks for having me back, first of all, and Happy New Year. I don't trade Bitcoin, but I do watch it because it's one of those instruments that you have to be aware of because it does have an impact and it drives sentiment, et cetera, et cetera.

5:28I mean, I think the idea of having an ETF for Bitcoin, it makes a tremendous amount of sense. A lot of people don't want to go and open a brokerage account at a crypto firm or even go buy futures on Bitcoin. So I think the ETF makes a ton of sense. Is it possible that we'll get that, you know, sell the news, sell the news, you know, buy or buy the rumor, sell the news situation? Yeah, it's entirely possible. but speculation and at best, you get a 50-50 shot of being right there. Technically speaking, here's what I see right now. Bitcoin's had obviously a great rally. And for me, we're above all of the critical levels that we came into the year looking to take out.

6:14So we're kind of in open space right now. And that can be a really good thing if you're long. There's really not anything preventing it from going higher from a price action standpoint. But if we did get that pullback, this news comes out on Thursday, I think is what Ash said. And let's say it's bullish for Bitcoin. We could get a sell off. And if we did, the levels I'd be looking for, not that far below us, 45 ,240, all the way down to about 44 ,400. I think if we got back into that area, the news was beneficial and prices looked as though they wanted to hold those levels, that would probably be a good entry point.

6:54I think the line in the sand right now would be down at$41 ,940. We go below there, probably represents more of a deep pullback. But again, now I'm going to start speaking above my pay grade because it's not an instrument that I trade, but it is an instrument that I monitor. Yeah. Listen, it's an instrument. A lot of people haven't been trading. So what we know, especially if it goes mass, what we think we know about it and then what happens is very interesting. As usual, Well, the chat's on fire. And Paul English, hi, Paul, is saying VanEck is estimating$1 billion of inflows into spot Bitcoin ETFs within the first few days.

7:30Let's remember, I believe VanEck is one of the people who have an application for the ETF, so they could be talking their book. But it's all speculation, right? We just don't know, which is why it's going to be such a fascinating story. And by the way, it's education month. We are going to be doing Crypto Week. We're going to have Raoul rolling up as soon as the news is out to give his thoughts on this. And we're going to be pulling a lot of people in to talk about how they approach this, both people who are newer and involved in the kind of ETF side of it once that gets going, and also people who have been trading crypto for a long time and who have some experience through some of the ups and downs.

8:08And we've got the Crypto Academy as well. So if this is something that's on your radar, stay tuned and stay with us because we're going to have a lot for you. Okay, Dave, another news item I know you're watching is Boeing. I'm sure everyone saw the incredible footage. It's all over the internet of the blown off door. So terrifying and incredible. And of course, the investigative side of that is going to continue. The stock took a hit, though, down 6.5 % when I last checked. I'm not sure where it closed. But what are you looking at from a technical point of view on Boeing here? Yeah, it's really interesting.

8:41And if you just completely tune out the headlines and the potentially bad news, again, the market's always right. The market figures out where to price things. It's our job to get in line with where the market wants to take it. So not that this makes it easy in terms of a trade, but I think we have two levels that will pretty much dictate what does happen in terms of this Boeing situation, barring any more headlines being negative per se. And And the levels are pretty clear for me. $234.34, that's upside. We're right now at$229.90, basically close to$230. And then down to$222.91. Until we break above that upper level or below that upper level, in my view, that's going to dictate the bull bear case going forward.

9:32And given the overall tone of the market and given the overall tone or the general direction, the general trend of Boeing, if we get above, I would lean more towards above the 234 level because we did open lower today, but we didn't really, we came well off the low. So if I had to make a bet right now, I'd say we'd probably go back above that 234 level. But again, that's speculation. If I were trading Boeing, I'm going to wait for a break above that level and buy the pullback or break below that level and sell that rally. And I think that's the best way to do it. Anything else is really just speculation and a coin flip.

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11:21Yeah, and it is. It's hard when you not only get a lot of noise and news around a stock like that, but also it's sort of viral because of the nature of it. Then you get a lot of people sort of jumping on with sentiment. So great to have those levels to look at. So if we look at the overall stock market, talk about sentiment. It's been a little bit of a rough year. I think everyone expected to see a pullback. I don't think that surprised anyone. But then we kind of come back in today and we see stocks higher. In fact, tech leading again, which is kind of, again, the fake out that everyone struggled with last year.

11:59There's a lot of people who feel like that's overvalued. And yet, when we get these pullbacks, it seems like technology leads us out. What are you looking at when we look at the broader market, the overall market? Well, for the S &P 500, again, I go back to price levels. And it's one thing to say price levels. What do I mean by that? I mean, for me, price levels are dictated by where a tremendous amount of volume and trades took place over a period of time. So it's basically the market leaving a footprint. It's not just an arbitrary price level, because that doesn't really mean anything. What drives markets is where a whole bunch of trades took place at a particular level.

12:39That creates an inflection point. And the inflection point is where you can make your trades, whether it be a bullish trade, a bearish trade. then, of course, you have to go into your overall trading strategy and take the temperature of the market. But that's getting a little too into the weeds for what your question is. Yeah, coming into this year, I think everybody's maybe on round two of the question of when will the recession be, because everybody got it wrong last year, by and large. It seemed logical that we would go into a recession, but we didn't. Now, everybody's thinking the same thing.

13:10And what I heard people saying last week when the market was selling off. It's like, OK, here we go finally. But guess what? We held above a couple of key price levels. And if you look at the context of the price action last week, relative to what we've seen since the end of October when we had that big rally, this looks like just a standard correction. And the move today is the resumption of the trend higher. So So absent some really crappy CPI data tomorrow that forces everybody to reevaluate what the Fed's going to do, I don't think that 4840 level is out of the question. And if we get above there, 4970 would be on my radar.

13:53So again, I think it's tempting to want to say, oh, we've gone too far too quick. We're going into a recession. The Fed's not going to cut as much. Maybe. I don't know. Again, speculation. I'd rather just try to get in line with what the market's doing. And today, the market gave a pretty clear indication that it took out what it wanted to take out last week, and people are rebuilding. Wow. That does seem surprising. How do you, I think it's a good juncture to talk about how you think about and deal with sentiment versus trying to stay true to what you're seeing happening on the charts. Because I think that we all know we struggle with that.

14:33But the narrative about just the market, that huge rally just being so overbought and people chasing performance, you know, you know all the arguments that it just went too far too fast. There was such a kind of feeling that maybe that was the case and that there were a lot more as we entered 24, it seemed like there was a lot more like worry and concern in the market. How do you separate that sort of sentiment game from what you're seeing on the charts? MARK BLYTH Well, oftentimes, the sentiment gain can be wrong. Or even if it is right, it takes so much longer to play out, meaning that if the sentiment's overly bullish, it goes on longer than you think, and vice versa.

15:14I think the key thing is, and Mike Green talked about this many years ago, you have an underlying bid in the market through all these passive inflows into index funds. To the best of my knowledge, that still continues. And I think that just keeps an underlying bid in the market that you have to be cognizant of. It's really hard to fight that. Absent some real big negative catalyst, it's kind of like adding slow drips of gasoline to the fire. The fire will never go out. It might wane, but then more gasoline gets added and the flames spark up again. So yeah, I think you have to look at that as an underlying driver of the market, because until that changes, And there's no way to know when it changes, but people presumably are always going to dollar cost average, add to their 401k.

16:03And I think the other thing, too, and this is much harder, and I'm certainly no expert at it, but I talked to enough people who have better insights than I do, is options flow. Options have grown tremendously in the last year. The popularity of them, the volume, et cetera, et cetera. That there or that too has a knock on effect because dealers have to hedge their positions. And that usually involves buying the underlying stock or the underlying futures contract. So you've got structural components of the market currently that just kind of keep a bid in it. And again, that doesn't make it, you know, you go on autopilot and, you know, go play rounds of golf and expect to make tons of money.

16:44But it's really hard to be bearish with those structural components underlying the market. I think that's a really, really great observation, Dave. And I think it's something we forget sometimes. We talk about it and we know that it's happening. And a lot of people who are listening are in the options market and they're participating. And we're all contributing to our 401s. Certainly in the US, we have to fund our own pensions. So we sort of know it's happening, but it is easy to forget, especially because online, certainly on Twitter, the voices, the bare voices are very loud, you know, so you don't hear as much that sort of, you know, steady flow.

17:24And that's why a lot of people are watching flows so closely. So really great reminder for all of us. So when we're, you know, there used to be stocks used to be the only game in town. But last year that got interesting. Right. And so now we're all paying a lot more attention to bonds. And a lot of people argued that bonds were actually the driver of a lot last year as we saw those yields whip around. Before we get your thoughts, we usually don't do this, but we have another technician on actually ProCrypto. He does his regular updates, Peter Pencas-Hassoff. And he is talking all assets. And he was talking about the 10-year because it's had an impact on risk assets, including crypto as well.

18:09And he's watching the 10-year Treasury bond very closely. Let's have a listen to what he has to say. You're going to see him talking over his chart, but let's listen to what he had to say. And then I want to get your thoughts on the other side. I do think that this support at 3.75 on the 10-year yield is just the clearest that I've seen in a while. And in fact, we're 8 out of 9 on that TD9 buy setup. up. So, um, and TDST support at 3.67. So this area is, is just a huge, huge, huge level of support. And we are probably, I think going to go test back up to 4.4%. That's going to be the real, in my opinion, the real, real real test for where we are in the inflation cycle, where we are on how much, uh, interest rates control the environment.

18:54If we start to probe back about four and a half percent, it's, it's not going to be looking good for anything. And that full episode in Outlook is on the platform. If you are not a member, go over to realvision.com and figure out how you can get your membership. Or if you want to upgrade to be able to see Peter's stuff all of the time, you can find out how to do that as well. Dave, what are you thinking about for bonds? This is a trade that I feel is so painful for so many people last year. So there's a little bit of, I think people are coming at it a little tentatively. And yet again, we started to see a little bit of wobble with the, you know, look like yields were going straight down.

19:33And then we saw a little bit of a wobble. What are you looking at for the 10-year? I follow the 10-year really close, as you know. I mean, let's face it, it is the price of money globally. So it's so important to financial markets in general, whether it be currencies, options, crypto, whatever. But that being said, again, I try to keep things as straightforward as possible. And ever since, what was it, about November, we've had rates moving lower. And that's obviously going to be driving 10-year note prices higher. I don't see any real reason to get in the way of that particular forecast or that particular trend.

20:18The other thing, too, is, again, going back to price levels, there's a whole stack of levels above us in terms of the yield, those levels being 4.15, 4.22, and 4.29. Not too far from where we are right now. We're at 403. Then I think the market's going to have a really hard time getting through. It doesn't mean that they can't. But again, when you've got a whole cluster of these levels that have very long look back periods, meaning a lot of trades took place at those levels, market usually takes a lot to get through those. And number two, and again, this is a little bit more on the macro, maybe subjective.

20:57So maybe not subjective. I mean, if the Fed's made it clear, they're willing to consider cutting rates. Now, you may disagree with the Fed, you may agree with the Fed, that's a hot topic. And that's not really what the question is. But they do kind of call the shots. And if they're saying that they're seeing lower rates in 2024, I'm going to believe that to some degree, if it lines up with what I'm seeing technically. So for me personally, I think this little rally in rates, i.e. pullback in 10-year notes over the last few days, is probably going to be an opportunity for those that may not have got long 10-year notes back in late November, early December to do just that.

21:38And we could go a little bit higher. Again, tomorrow's inflation data could be a real game changer. Who knows what that's going to entail and who knows how the market will react. But I think ultimately rates will probably push lower based purely from a technical standpoint. And again, kind of using the Fed's own language. Yeah, that's so interesting. And I think that Peter also brought up the point, you're so right. it's been so pivotal. And a lot of asset markets are keying off what's happening with these US rates. I think Peter said if it starts to go back above 4.5%, it's not going to be looking good for anything.

22:14It's going to have a dampering effect. The macro butler asking, Dave, what do you think of the chart of the US 10-year yield consolidating above 4 %? So you just said there's a lot of levels that are going to be hard to push through. It doesn't mean they can't, but it's going to be a little bit of a battle if yields were to go higher again. Does it look like the path is much easier going lower, or is there a probability that we just kind of sit in this range as people try to figure out what's going on with the US economy? It's a great question. I think a lot depends on what happens from an economic data standpoint.

22:51That's the one thing a lot of people don't think about. It's so easy to come into situations and expect a reaction up or down off of levels. But a lot of people, myself included, sometimes forget that the third action is nothing at all. And I think he brings up a good, he or she brings up a good point there. Maybe the market just muddles through at 4 % for a while or just under this 4.2 level, and we go nowhere. That's entirely possible. But that will probably only happen if we're just getting a lot of nuanced market data that doesn't really offer any real clues. I don't think that'll be the case in 2024, but time will tell.

23:30We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

23:41So the other big sort of asset a lot of people want to get right at the start of the year that has a big impact is the dollar. I know you watch currencies really closely. What are you looking at for the US dollar? Well, the dollar index, I don't have that chart up right now, but I can pull it up. So give me a moment here. I'll touch upon euro as well because that would be the natural conduit to that. So give me just a moment here. I'll get that dollar index up. No worries. While you do that, I just want to mention, I think we were talking to Ash at the top about this news that's coming out. 13 companies have filed for spot Bitcoin ETFs.

24:23So it's going to be an interesting, when we get that news, we're going to have a lot to weed through. Do we hear about all of them? Do we hear some? Do we only hear a yes or no on ARK? And then we have to wait for the others. There's a lot to go through. I just saw that list come up in front of me. So I just wanted to mention that. And VanEck is one of them that we talked about earlier. You know, you asked about the dollar index and it ties in really nicely, or yes, with the dollar. I'm going to look at the dollar index. Again, that ties in really nicely with where interest rates are going, because the cost of money impacts what happens in terms of flows into and out of the dollar, especially dollar yen.

25:02I know you didn't ask about that, but that would be a side note to that. The dollar index is pretty tricky. If you look from February of last year to where we are now, it's just been a very big sideways range. Currently, we're kind of in the lower end of that range. That doesn't mean we're going to spike higher per se. I think I would only really get bullish on the dollar if we got back above 103.56, and that's on the dollar index. I think if we get back below 101.45, which is where we're closer to now, I think we'll see the dollar lose more ground. And that would imply, presumably, lower rates in the U.S.