Market Slice: There and Back Again

market slice there and back again bear market

An Excursion to the 200-Day Moving Average

Sparked by Fed Chair Powell’s nominally dovish remarks last Wednesday, the market spiked up, soaring past the 200-day moving average for the first time since briefly touching it in August.

This 10-day chart shows last week’s jump and subsequent sideways move, and the down days on Monday and Tuesday, when the 200-day line was unable to hold. The red line at the top is the long-term downtrend.

ffr trading market slice

Chart courtesy of

Not only did the S&P bounce off the 200-day, but it also failed to test the downtrend. Here’s the 1-year chart for a longer-range view:

ffr trading market slice

Chart courtesy of


What’s abundantly clear from these charts is that, despite the leg up from the October lows, we are still in a distinctly down market.

Further, the technical failures of the past week affirm the bear trend. Despite Powell’s signal that interest rate hikes will be slower going forward, the rally stalled out.


A Double-Edged Sword

In recent weeks we’ve observed that professional money managers are loathe to get caught on the sidelines in a year-end rally, since that’s what investors see first when looking at year-end reports. However, there’s another side to this coin, which is that they also don’t want to get caught in a major downdraft in the event the normal seasonal pattern doesn’t hold.

2022 has been a tough year for institutional players, and the reversal of the decade-long bull market has upset a lot of assumptions driving investment decisions. While there’s still time for the Santa Claus rally to materialize, developments over the past week make this seem less likely.

As stocks – and particularly the tech leading FAANG companies – continue to scuffle, there is an increasing probability that the self-reinforcing cycle will invert. Declining prices will drive money managers to the safety of cash, and the Fall uptrend can turn into a downward spiral.

Meanwhile, the NASDAQ remains stuck in a sideways trading range. Like what we saw with the S&P, the most recent reversal occurred right on the 100-day moving average and the negative trend line. This chart from Market Ear illustrates the struggles in the tech sector:

ffr trading market slice

Chart courtesy of

As we’ve been suggesting for months, the driving force for a reversal is simply not present. Despite massive liquidity and the constant hopes for a Fed pivot, there simply is not enough buyer motivation to overcome the massive problems facing the real economy and the world at large. We remain in the grip of a secular bear market.


All Quiet on the FTX Front

In Monday’s Concierge letter, we made the following observations on the FTX-Sam Bankman-Fried scandal:

Last week we discussed the FTX debacle, and pointed out that there are several ticking time bombs lurking in the rubble.

  • Why is SBF getting the kid glove treatment? You would think that someone who has effectively stolen billions of dollars from investors would at least be under threat of arrest. Bankman-Fried, on the other hand, appeared on a NY Times panel last week, where he was treated to a bunch of softball questions that allowed him to gee-whiz away his misdeeds.

This rabbit hole goes deep. Since we are not investigative journalists, we will not attempt to unravel this puzzling aspect to the story. We will, however, provide a few breadcrumbs for readers who want to follow the money trail.

  • With the bankruptcy of crypto exchange BlockFi, the dominoes continue to fall in the crypto industry. There hasn’t been a lot of new news since last Monday; however, on Sunday night “citizen journalist” Autism Capital broke the story that Bankman-Fried’s confederate and part-time lover Caroline Ellison was in New York (not Hong Kong, as previously reported). Soon after came speculation that she plans to – or already has – spoken with investigators at the Fed’s Southern District of New York office, which specializes in financial crimes.

Part of SBF’s “I’m just a goofy do-gooder” public defense has been to shift blame for what happened at FTX onto others involved in running the Ponzi scheme. Apparently, Ellison does not appreciate being thrown under the bus and if she spills the beans on the inner workings of the Alameda-FTX cabal, it’s game over for Shabby Sam’s wiggle play.

  • After slipping below $16,000, Bitcoin has found its footing, trading around $17,400 on Sunday night. [$16,950 on Tuesday night as we write.] There is reason to hope that this could be a floor…however, another crypto shock could shake the tree again. Thursday, we’ll look at the technical picture for BTC.

The rumor about Ellison meeting with prosecutors jibes with reports that the Feds are beating the bushes for incriminating information on the chubby no-goodnik ex-billionaire. ZeroHedge reports that “according to Bloomberg, the US Attorney’s Office for the Southern District of New York (SDNY) has recently sent out a flood of requests seeking information on a list of FTX employees and associates.”

Perhaps in response to the tightening noose, SBF was reported on Tuesday to have hired former assistant U.S. attorney Mark S. Cohen, who most recently represented Ghislaine Maxwell, to head up his defense.

Lest the Maxwell connection be dismissed as coincidence, consider these two facts:

  • Maxwell apparently cut a deal that prevented the naming of clients of her partner Jeffery Epstein’s sex trafficking business; and,
  • Bankman-Fried is deeply entwined with the same power elites, constellated around Bill Clinton, where Epstein and Maxwell traveled.

As we remarked on Monday, we have no interest in political questions. However, numerous researchers have highlighted Bankman-Fried’s connections, and it’s an established fact that he was the second-largest donor to the Democratic Party, behind only George Soros.

This raises a number of serious questions about why he is being treated so gently by the mainstream media. In particular the money laundering angle — which poses the obvious question of “who benefits “ — could lead in some highly volatile directions.

Mathew Crawford of Rounding the Earth published the most comprehensive research piece I’ve seen on the FTX story. Those who want to go down the rabbit hole can read it here.

Here’s the 3-month BTC chart. As you can see, there has been no substantive bounce back from the FTX-inspired selloff in early November, and Bitcoin is now in a very narrow sideways band.

Is this the bottom? As we said above, there is reason to hope that it could be. But there are also many causes for concern, and below the support at 16,000, it’s a long way down to the next support level, around 11,000.

As always, Bitcoin remains a highly speculative, risk-on asset for any except the most dedicated HODLers.

ffr trading market slice

Chart courtesy of


But Wait, There’s More

Here’s the other huge story we covered in this week’s concierge:

There’s another explosive development in the news, one which could end up introducing an element of political uncertainty and upset market stability. This weekend, journalist Matt Taibbi released, with Elon Musk’s blessing, the initial results of his investigation into internal Twitter docs showing that the social media giant collaborated with individuals in positions of governmental authority to cover up the Hunter Biden laptop story.

Again, we aren’t political here, and we aren’t going to comment on the implications of this interference in the 2020 election. However, the clear cooperation of Big Tech with forces (at least) connected to the government – if not in an official capacity – in suppressing a vital news story has profound implications.

Questions some people will now be asking:

  • What other stories were falsified, covered up, or otherwise manipulated? What was the relationship between Pharma reps and Twitter “fact checkers” in the censoring of alternate COVID research and opinions?
  • Did Twitter (and other social media platforms) play a part in suppressing reporting on the Wuhan lab leak theory, which was virulently attacked as a “conspiracy theory” but now appears to be the most likely explanation for the virus’ origin? (The release of Dr. Fauci’s unredacted emails around this cover-up is truly damning, as Senator Rand Paul has pointed out.)
  • If – since — the Hunter laptop is a real story, what about the contents of the computer or computers in question? Specifically, exactly what was Biden Jr. doing with his business interests in Ukraine? Did his old man have any knowledge or involvement in it, and is there any connection with current developments in the region? (we won’t even touch the more, um, unsavory aspects of Hunter’s personal peccadillos.)

Regardless of one’s political views, it’s not hard to see how the opening of Twitter’s files could lead to a major bombshell – as if the current revelations aren’t already spectacular enough. We’ll be keeping our eyes on this one.

As we saw in March of 2020, there are times when big stories in the news turn the markets. These political stories are important because they carry the threat of blowing up the Biden administration, or otherwise disrupting the status quo. 

The market hates uncertainty, and while there is no clear path to massive disruption or critical uncertainty in these developments, the possibility is there.

As if the economic situation wasn’t scary enough by itself.

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