Stocks back in the red, Bitcoin struggling

More profit taking as we await Powell speech and US data

Stock markets are back in the red on Tuesday, continuing to give back some of the gains from the last couple of weeks.

There has been no shortage of optimism in the markets recently as they’ve slowly but surely hit new record highs. I don’t think much has fundamentally changed, rather we’re just seeing a little profit taking during a relatively quiet period.

There is still concern about the spread of delta, particularly in China, where a tech crackdown once again hit shares overnight. But European and US markets have overlooked these issues to a great extent in recent weeks so I don’t think it’s having much of an impact now.

We’re essentially in a bit of a holding period ahead of Jackson Hole later in the month. While there is a fair amount of data releases this week, some of which may carry a little more weight than others, it’s all about the Fed in these markets at the minute and that’s unlikely to change unless the delta situation gets dramatically worse.

We’ll hear from Jerome Powell today as he speaks at an online town hall event. While his comments will no doubt be picked apart for any Jackson Hole giveaways, I struggle to see him saying anything of substance that deviates from anything we’ve heard previously.

The US retail sales release will likely be more notable, especially following the shocking UoM consumer sentiment reading on Friday. Obviously, retail sales covers last month and the survey is forward looking, but it’s also far more significant. And should it throw some weight behind the sentiment reading, it could trigger further profit taking.

Bitcoin still struggling for momentum

Bitcoin is continuing to struggle on approach to $50,000, with rallies increasingly happening on lower momentum and failing quite quickly. While momentum can shift in a heartbeat, particularly in the crypto market, it does seem that bitcoin may struggle to break $50,000-51,000 resistance at the first time of asking.

A correction wouldn’t be the end of the world though and it’s still in a very healthy position going into the final months of the year. A corrective move back towards $41,000 would be really interesting, with it marking a key fib region but also being such a major area of resistance between May and August. It’s probably a little premature to be discussing those kinds of levels though.

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