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On "Markets Daily," host Jennifer Sanasie speaks with Katie Stockton, founder and managing partner of Fairlead Strategies, as she breaks down the models and charts she's watching this week, meaningful changes to the bitcoin versus ether ratio and updates on altcoin market moves.
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This episode was hosted by Jennifer Sanasie. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl, alongside Senior Booking Producer Melissa Montañez. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
JENNIFER SANASIE:
First thing in the morning, we got to talk about the markets. I've just unpacked what's going on for bitcoin and ether, talk to me about what you're watching this morning.
KATIE STOCKTON:
I mean, it's relatively subdued as a day today in terms of volatility. However, we are watching very closely some key levels that are basically in line with current levels. And so there's not much wiggle room is the way I would put it for bitcoin or for Ether in regards to support levels that we're watching. These are short term levels or not major levels. They're derived from our daily cloud model. It's a model called Ichimoku. It's a very popular among technical analysts, and it helps us understand where their support and resistance on the chart, those are potential areas of buying and selling pressure. And it also helps us understand the prevailing trend. And right now, it's still does say that the prevailing intermediate term trend is higher. It even says that the long term trend is higher. But if we were to see a little incremental decline from either bitcoin and or ether, both of those would be at risk of breaking the short term support level, let's call it roughly $43,000. So if we do see a little downside, we would see this break down, it would actually target for bitcoin next support of roughly $40,000. And would tell us that the uptrend drawn back to the October low has sort of petered off or reversed and it wouldn't impact our long term gauges or long term gauges still do point higher. But we are watching this key level that's basically in mind.
JENNIFER SANASIE:
You and I have talked about Ichimoku before but for the audience break it down for us, Why watch Ichimoku over some of the other analyses out there?
KATIE STOCKTON:
We watch it in conjunction with other forms of technical and analysis. And we're looking at things like the MACD indicator and moving averages. So we are looking at it alongside other tools. And yet, it tends to be very relevant. This Ichimoku for FX. And we've found that bitcoin and ether trade a lot like FX and could arguably be described as such, and that they have this sort of local, very deep liquid market, it's trading constantly. And with that, you tend to see this more pure supply demand relationship. It's not skewed by headlines like we have in the world of individual stocks, for example. So we have a chart that really is very clean in a way. And that kind of chart tends to lend itself very well to Ichimoku which is designed to create one look of support resistance, the prevailing trends. So we found it really very valuable over time in terms of identifying these key levels. And as mentioned, there is one that's in line, it's just a short term metric. But you know, we do care about this because the volatility can be so elevated for cryptocurrencies, it is still sort of a high beta area of of investing. So we want to make sure to be aware of the short term moves, which are other gauges right now, the cloud model does point higher, but it's in line, the MACD is point higher. So it would suggest that support actually has a good chance of holding in here but it's just right in line so we're watching it closely.
JENNIFER SANASIE:
In your notes, you also know an important resistance is that 61.8% Fibonacci retracement level tell us more about that.
KATIE STOCKTON:
Not to get too technical, I guess. But you know the Fibonacci retracement levels can be really valuable as well as gauges of support and resistance. So our last breakout from bitcoin targeted and objective based on that Fibonacci retracement. It's around $48,600 or so. And these are objectives that have an intermediate term time horizon that's maybe weeks to months, not years. So this is a nice sort of near term objective that's had us with a bullish bias of late. We have been sort of on board with this intermediate term uptrend, which of course is being tested. So we do watch these Fibonacci Retracement Levels, there's none exactly in line. But that's still our upside objective for bitcoin based in the last breakout that we saw. As you know, last year, we saw basing phases completed by both bitcoin and ether and as basin phases have long term bullish implications for cryptocurrencies really broadly, because they are broad based breakouts that we've seen. So that's our sort of backdrop our long term bullish backdrop, within which we watch these short term metrics to try to help us really time the market and manage risk.
JENNIFER SANASIE:
Talk to me a little bit about the intermediate term.
KATIE STOCKTON:
I know overall, it's looking quite bullish for bitcoin and ether. But what needs to happen for both of those for the intermediate term to turn neutral, let's say yeah, so if they just drift a little sideways to lower here, unfortunately, they will take out that cloud based support. So with that, I would say that shifts the intermediate term uptrend to something more neutral or even supports a corrective phase short term. So it could happen very easily. In fact, for that to occur, obviously, if just sideways action. However, the short term Mac DS, which are gauge of momentum, they do actually support a positive follow through here. So we're looking for support to hold or we're assuming that it will hold until it proves us otherwise, which is usually the right thing to do. From a technical perspective, you want to trust that an existing trend will uphold itself, right? So that trend is your friend until it ends, right. So if it ends, you know, and we see that breach of support, then of course, we'll react to that. So it's somewhat reactive, but it's a way to help manage risk.
JENNIFER SANASIE:
The trend is your friend until it ends. It's oddly philosophical. Talk to you about what you're seeing when it comes to the ratio of bitcoin versus ether.
KATIE STOCKTON:
You know, the long term trend in bitcoin versus ether has favored bitcoin. So there's a gradual long term uptrend, they're favoring bitcoin, and we saw it accelerate ahead of the spot ETF news, probably unsurprisingly, people were sort of betting up bitcoin ahead of that news, which became sort of a sell the news short term event. Now we have some rotation into ether. So perhaps there's some speculation that that you know, we'll see a spot ether ETF and now it's sort of ether's turn to have a phase of outperformance so we are looking for that from the ratio that we'll see ether have a bit of a moment here in terms of relative performance versus bitcoin. But the long term trend does still favor bitcoin, which of course, is really the market leader from a big picture perspective.
JENNIFER SANASIE:
I want to move the conversation over to alts. Now, for anyone who previously watched first mover where we would do our market segment, they would know that I love your relative rotation graphs, they are just so fun to look at. We can't see them now. People who are listening to this are listening to it on podcast, but talk to me about what you're seeing on your 12 week relative rotation graph.
KATIE STOCKTON:
We're taking a look at alts here, normalized versus bitcoin. That's right. And we're looking at them on typically an intermediate term basis, meaning that we're looking at about a quarter of market history and looking at these rotations. As you mentioned, normalized versus bitcoin. It's really wild to see it in motion because, you know, markets are cyclical, and it's a way to almost visualize that using these relative rotation graphs which are from Julius de Kempenaer's company.
JENNIFER SANASIE:
I just want to interject here quickly. We had Julius on the show on February 5, if you're listening to this episode, go and check that one out. It was awesome. But Katie, I want to get back to you back to that relative rotation graph.
KATIE STOCKTON:
So we have this graph, and it suggests that we'll see that app performance start to manifest itself and ether. For one. It's supported Avalanche, Cardano, Solana. And those trends are still there. But they're petering off a little bit. So we'll see how it goes. But the rotations do suggest that we're going to start to see some shifts in here. There's a lot that are very much like close to neutral, meaning they're close to the middle of this chart, sort of the crosshairs, if you will, meaning that the relative performance has been somewhat tight of late. And when we start to see them break away like the Avalanche had done, well, then that's where we feel like we have some opportunities.
JENNIFER SANASIE:
Tell me about what we're seeing with Litecoin of course, Solana and chainlink. They've been in the news headlines lately, but we haven't heard a lot about Litecoin. And this note said showing favorable intermediate term trajectories.
KATIE STOCKTON:
That's right. And so I had to look down at my RG there, there are so many to watch. But the litecoin has emerged from what we call a sort of weakening quadrant. So it's gone from sort of a weakening to an improving posture in the relative rotation graph. It's still somewhat close to the middle, but we do have the potential for it to break away as mentioned, and that would be something that would support app performance by light coin. And we have seen you know, when we look at beyond the ratios and the relatives, we have seen certainly positive action in absolute terms. Right. So with the uptrend that has been so widespread as of the October lows, and by widespread I mean, even beyond cryptocurrencies, right, we have that inequities as well. We've seen a lot of breakouts unfold on the back of that. And these are not short term breakouts necessarily, but actually long term bullish developments that we've had on these charts. So even if we do see bitcoin, ether, take out their short term support levels and go into a bit more of a neutral mode here. That's okay, because we've already had these breakouts that have the bullish long term implications. So for folks that are longer term in their objective, which honestly, we probably wouldn't be in this market, which is, you know, so early in its stages, you know, if they're trying to make a bet long term on an altcoin. I think they just kind of hold through any existing consolidation to take advantage of those breakouts that have unfolded.
JENNIFER SANASIE:
All right. And if we move completely away from crypto markets now, any stocks equities that you're looking at for 2024?
KATIE STOCKTON:
No, of course, yes. I mean, we have a bull market cycle underway. The S&P 500 is near all time highs, we had a big trading range breakout in small cap benchmarks like the Russell 2000 index last year. So there's a lot to do in the equity market right now, we have much better breath as of Q4 behind the market, and that means more stocks are participating on up days in the equity market. And to take advantage of that, you know, we are looking always for stocks that have positive technical catalysts. These are things like the MACD crossovers or breakouts above resistance levels, things that are reacting to long term oversold reading, which is somewhat commonplace right now. So we have sort of widespread setups to take advantage of, but we still always favor stocks that are in long term uptrend that have the support of positive momentum ideally across different timeframes.
JENNIFER SANASIE:
Katie, thanks so much for joining the show. That was Fairlead Strategies Founder and Managing Partner Katie Stockton. That's it for today's show.
