US stock markets are experiencing a downturn, marking a third consecutive day of declines. In a recent segment, Yahoo Finance’s Jared Blikre provided insights on the current market conditions, emphasizing that while the situation may seem bleak, it is not unprecedented.
Market Trends and September’s Historical Context
Blikre pointed out that the current drop, although notable, is less than 1%. He noted that this is occurring during a bull market characterized by low volatility, which tends to amplify minor fluctuations in stock prices. He reminded viewers that September has historically been a challenging month for stocks, and the anticipated weaker performance typically manifests in the latter half of the month. Additionally, he highlighted that the U.S. Treasury has been increasing its account balance, which has resulted in significant liquidity being drained from the market—around hundreds of billions of dollars. However, this trend is expected to change shortly.
Identifying Bullish Signals in the Energy Sector
Blikre transitioned to discussing potential bullish opportunities, particularly within the energy sector. He showcased the XLE, a large-cap energy ETF, which has bucked the trend by showing positive performance. He presented a one-year chart, illustrating a trend line that indicates a breakout, hinting at a bullish momentum for energy stocks. The XLE’s performance is particularly significant, as it approaches all-time highs not seen in over 15 years, indicating strong market interest in this sector.
Market Strategies: Fakeouts and Breakouts
In a discussion with Kenny Glick, the owner of Hit the Bid radio, Blikre explored trading strategies, specifically the concept of a “fake out, shake out, breakout.” Glick explained that many stocks may dip slightly before making a turn upward, effectively testing investors’ resolve. This strategy has proven successful over the years, especially when trading around the VWAP (Volume Weighted Average Price) indicator. According to Glick, this pattern has historically led to winning trades.
Current State of Cryptocurrency
Turning to the cryptocurrency market, Blikre noted recent liquidations impacting Bitcoin, which has faced its worst day and week, dropping approximately 4%. He highlighted that Bitcoin is currently trading below critical support levels, specifically around $109,235. This dip could either signify a deeper downturn or a potential shakeout, as cryptocurrencies are known for their extreme volatility. Blikre indicated that if Bitcoin fails to recover swiftly, further declines could follow; however, if this is merely a temporary fluctuation, a rebound might be on the horizon.
The Impact of the US Dollar on Markets
Concluding the segment, Blikre connected the recent performance of cryptocurrencies to movements in the US dollar, which has seen gains over the past two days. He presented data showing that the US Dollar Index has risen over 1%, a notable increase that tends to put pressure on risk assets and commodities. He cautioned that, despite the current bearish sentiment surrounding the dollar, it is positioned at the lower end of a long-term trading range, and any significant upward movement could create unexpected challenges for investors.
