Weekly Market Bites

THE YOUNG INVESTOR

becoming a great investor one mistake a time

Welcome to your weekly market wrap-up.

Grab a cup of coffee, get comfortable, and catch up on financial markets.

I’ve been doing the reading and scrolling, to bring you the most relevant updates.

Before we dive-in, take a look at:

MARKETS YEAR-TO-DATE

Another “art-of-the-deal” pivot

This week was another curve-ball for financial markets.

It started rough.

1) First the economic headlines were all negative.

More CEOs talking slowdown. More soft data turning sour.

Surveys, sentiment, expectations: all really bad.

(Although hard data, like employment or sales, has yet to register any negative effects).

2) Then, there was still no trade deals in sight.

Even with friendly nations like Japan and South Korea, whose national security hinges on staying tight with the U.S.:

3) And just to spice things up more: Trump talking again about firing Jerome Powell.

4) And financial markets feeling all of it. With investors fleeing to safety.

Things have started so bad for Trump.

If you stack up presidential market performance since inauguration, his ranks as the worst in 125 years (since 1900).

Then came the MID-WEEK PIVOT.

Suddenly, Trump said Powell was “safe”.

And the +150% tariffs placed on China? “Likely to come down substantially”.

The result?
Markets snapped back big time 💥 

Searching for a bottom?

Markets have been hammered with bad news lately.

But here’s the twist: they’ve stopped going down.

So… does that mean we’ve hit the bottom? Maybe. Maybe not.

But if you had to make an educated guess, what would you look for?

Warren Pies over at 3Fourteen Research has one of my favorite takes on this. He’s watching two key signals:

1) Sentiment capitulation ✅

Last week, inverse ETF volume (bets that the market keeps falling), hit 53% of all speculative ETF trading.

Pies says 50% is the magic threshold that often marks a bottom.

And just from a vibes perspective: when the headlines are consistently gloomy, a lot of that fear is probably already priced in.

2) Breadth confirmation ❌ 

This one’s a bit more technical. He’s looking for a “breadth thrust” (90% of S&P 500 stocks pushing above their 10-day moving average). It’s a historical pattern that tends to show the worst is over.

Alternatively, he’s watching for a retest of the market’s low (4,982).

Just to give you an idea: out of the last S&P 500 18 bear markets, 13 had a classic double-bottom pattern.

Where stocks hit a low, bounce, come back to test it, then rally for real. If that plays out and the low holds, that’s the green light.

My thoughts:

If you think all this “breadth thrust / double bottom” stuff sounds like astrology for finance bros…

Yeah, I get it 🤣 🤣 

But when you're trying to forecast something as impossible as markets, looking for signals in the noise and using historical patterns isn't the craziest idea out there.

Lastly, I know the U.S. feels like dog shit right now. The S&P is lagging the rest of the world YTD by the largest margin in decades (see charts below).

But as they saying goes, for long-term investing the USA is still the “cleanest dirty shirt in the closet”.

The bottom might be closer off than we know.

Bitcoin is acting weird (but good weird)

One of the most interesting things in markets lately hasn’t been happening on Wall Street. But in in crypto land, where few are paying attention.

While stocks have been sliding, Bitcoin’s been rising. And not just once or twice. This has happened across multiple trading days.

Take this Monday morning, for example:

Markets opened and equities tanked (red line)... but Bitcoin? Straight up (orange line).
Total opposite direction.

Zoom out, and April’s turbulence has shown something surprising: Bitcoin is behaving more like gold than stocks for the first time:

Why does this matter?

Because for all the talk of BTC being a “store of value” or “digital gold,” historically it’s acted more like a leveraged tech stock. Super volatile, and highly correlated to risk-on sentiment.

But this month has been an outlier.

What’s going on? Nobody really knows. It’s too early to say this is a long-term shift.

One take?

• When U.S. stocks drop, money usually goes to to US treasuries (safety)

• But US treasury yields haven’t come down (so not here)

• While the U.S. dollar has dropped as well (so they didn’t go to cash either)

So where is that money going? We have seen an actual exodus of capital from USD assets.

Where? To gold and other currencies. Just look at the USD versus other major currencies:

But there’s really no substitute to the US dollar. So capital is being spread around multiple places.

And bitcoin is soaking up a little of that. While trump’s pro-crypto policies are a boost as well.

If this continues, BTC will emerge out of this crisis stronger.

INTERESTING CHARTS of the week

The S&P500 is trailing the rest of the world stocks by more than 15% YTD.

This is the biggest underperformance for the S&P 500 in 32 years vs the rest of the world.

In more detail: The S&P 500 is the third worst performing stock market across the world since Inauguration day:

Probably, this might be one of the first times you see two Latam countries (Mexico and Argentina) ranking first among stock market returns.

PARTING WISDOM

from ANTHONY BOURDAIN:

The man behind the QUOTE → chef, storyteller, wanderer. Turned meals into meaning and showed us the world, one raw, unfiltered bite at a time. If your looking to watch something to disconnect at the end of the day, his shows are always a great option to rewatch.

thanks for reading and have a great weekend,

Al Atencio 🦉