Trump Pump?

Bitcoin goes vertical while stocks hit resistance. Have we decorrelated? The US dollar shows strength yet prices still climb. Large bitcoin speculators are net short and fear and greed indicators seem to be recovering. 

It’s been a fierce rally so let’s pull apart the data.

While the falling DXY often provides a tailwind to risk assets, a rising US dollar is typically liquidity-negative, and there’s a strong correlation in CME COT data that shows bearish positioning typically resolves to the upside. 

Have we already had the best of the DXY rally? 

Even though the dollar ties strongly into global liquidity, maybe easing from abroad is playing its part? 

CrossBorder Capital’s global liquidity model has been ticking higher regardless, potentially confirming there’s still room to run.

Adding fuel to the rally, the COT data for bitcoin shows large speculators (in blue) have once again been superbly short at the worst possible time.

This move could still have legs as Bitcoin dishes out max pain to the maximum number of traders.

Fear and greed indicators show we have recovered back to the goldilocks zone: not too fearful with a healthy dose of greed. 

It’s been short and sharp compared to some of the other moves this cycle but is lining up confluence with the previous charts.

So what about stocks? That annoying asset class that keeps pulling us around with it? Have we lost the risk asset correlation and become as noble as gold? 

Well… not just yet. 

The real test is about to unfold as SPX butts up against major options resistance.

With a wall of calls between 5700 and 6000, SPX needs to push above that zone before the beautiful effects of positive gamma take over.

Bank of America data shows retail has furiously bought the dip - this could be a warning sign in itself.

So, we’re not out of the woods yet, but max speculation is creeping back into risk—and maybe even Raoul Pal’s mythical banana zone 🍌

Top 50 cryptos (blue) are starting to outperform and potentially pulling the top 200 (grey) along for the ride.

The coming weeks could be quite the decider for the months ahead.

We might just be one trade deal away from the burst to new highs.