Good afternoon,
My daughter’s obsession with chess hit a new level last night. We watched Searching for Bobby Fischer, and she reenacted almost every scene on the chessboard.
I have seen that film so many times. I was bouncing back and forth between the film and a printout. Let me dive into some of the most important charts…
All that tells the story of the market…
No. 1: Why Bitcoin Keeps Rising
Why does Bitcoin keep rising? Don and I discussed this question during a live show. As I noted then… Bitcoin has a direct causal relationship to global liquidity…
You can track it against the M2 or expand the performance against the Howell definition of Global Liquidity (which includes capital forged by shadow banks like Hedge Funds).
Well, Bitcoin lags behind the expansion of capital globally. In effect, BTC is a hedge against expanding monetary inflation.
Syz Group
Crypto winters (where the price pulls back) tend to align with the backside of a global liquidity expansion. The last one hit in 2022. We expect it to experience a similar drop when that expansion hits the backside of the liquidity cycle.
Then, the next time the Federal Reserve takes drastic action, look for BTC to rebound aggressively as the cycle resets.
No. 2: Gold Takes a Hit For Once
After a massive run on gold over the last 12 months, we saw the first outflows since the start of the year.
Bank of America
The SPDR Gold Shares ETF (GLD) fell below its 20-day moving average.
If that holds, I’ll look to buy the ProShares UltraShort Gold -2x Shares (GLL) above its 20-day moving average.
No. 3: Zero Date Insanity
The percentage of Zero Date (ODTE) options as a percentage of contracts linked to the S&P 500… hit a new all-time high. As I’ve explained, … focus on Volume Weighted Average Price as an anchor if you trade these options.
CBOE Global Markets
Remember… market makers WANT to sell you these contracts. You must know exactly what your entry and exit should be.
No. 4: Money Flows Back
Since January, we’ve seen a lot of money flow out of the United States. But April was a strong month for foreign flows back into the U.S. (unless you’re a European investor).
Goldman Sachs, Bar Chart
This is important because the U.S. is trying to hold its dominance as the lion’s share of the MSCI Global Index. Foreign global flows back into America will help provide ample support to U.S. equities, especially when other parts of the world are expanding their fiscal state.
No. 5: China Has Been Selling Gold
China’s been selling gold in the last few weeks. That’s bearish for gold.
ZeroHedge
Again… I’m looking at the DGZ… and the GLL…
No. 6: Buybacks are Coming
In what could be increasingly bullish for the S&P 500 in May…
Buybacks. Apple (AAPL) just reauthorized another big purchase… and companies are prepared to unleash their finances to buy back stock.
Goldman Sachs
That said, many companies should keep capital available for a rainy day (especially in 2026-28 when we start to see challenges for refinancing in the global economy).
But buybacks offer support in a world that centers on enhancing shareholder return.
No. 7: Chinese Electricity Demand Surges
This chart needs to be on the wall of every congressional audience. While California is making refineries completely uneconomical… Chinese electricity demand will continue to surge in the years ahead.
Crescent Capital
So… there’s that… This chart is wild.
Tomorrow morning, I’ll focus on long-term market trends and the right way to address them.
Stay positive.
Garrett Baldwin