MARKET WRAP

SPX closed above 6100, up 0.5% on the day and now up about 6% since Jan 13th. QQQ closed the day +0.2% and only 1% shy of its all time high. The US10y was higher again today and now 4.65% (TLT was lower by 1%). Yields could start to become a problem for equities again if that move continues. Shorter duration yields like the 2 year were a tick lower, lessening the negative effect of the 10 year. IWM opened lower but reversed and closed up 0.5%. The VIX is now below 15 but actually ticked higher on SPX spike into the close. Oil/USO was down again and is now about 6% off its recent spike. BTC is about 103K after a high of 106k. Keep an eye on BTC as its volatile price action can sometimes be early predictive of sudden shifts in equity sentiment/euphoria. (More on BTC at the bottom of this email.). MRKT Call today looks at equities at the highs, and Dan sits down with Tommy Vietor on OTT.

MRKT MATRIX: January 23, 2025

Today’s Top Stories:

• S&P 500 touches record high after Trump pushes for low rates, oil (CNBC)

• President Donald Trump says he’ll ‘demand that interest rates drop immediately’ (CNBC)

• Stock-Market Bulls Are Staring Down Positioning for Rally Clues (Bloomberg)

• Morgan Stanley Wealth Management is worried — and tells clients to get diversified and cut back on U.S. stocks (CNBC)

• Markets are feeling a monster vibe shift, says this strategist. Here’s what could happen next (MarketWatch)

• Where Economists Think the Trump Economy Is Headed (WSJ)

• Oracle Takes Run at Cloud’s Big Three With Trump-Backed AI Pact (Bloomberg)

• OpenAI’s Stargate Deal Heralds Shift Away From Microsoft (WSJ)

• Investors lose their appetite for the obesity trade (Financial Times)

• EA cuts 2025 bookings forecast as prominent soccer title stumbles (Reuters)

Today’s MRKT Call is Presented by CME Group

Stocks Hover Near All-Time Highs

Guy and Dan check in on equities at all time highs, in particular the Nasdaq e-minis, 10 year yield, the dollar, oil and more with an eye on the FOMC meeting next week. Chart of the day is DE. Call of the day is EA. A lot covered today, watch above.

Click here to access all of the charts mentioned in today’s MRKT Call.

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Today’s On The Tape is Presented by CME Group, iConnections, and Robinhood

Pod Save Wall Street with Tommy Vietor

Dan Nathan hosts a special edition of the 'On the Tape' podcast, featuring Tommy Vietor, co-founder of 'Pod Save America' and 'Pod Save the World.' They delve into Vietor's experience in the Obama White House and discuss the interplay between politics and policy, emphasizing the importance of connecting the two for the general public. The conversation covers a range of topics including the influence of tech industry giants, the political landscape, and the impact of economic policies on markets and society. They also address the global political climate, the challenges posed by influential tech figures like Elon Musk, and the ongoing geopolitical tensions. The discussion concludes with reflections on how political and economic strategies shape the future.

What's Next?

Bitcoin (BTC) has surged back above the $100K level, buoyed by the anticipated strategic reserve news, which is now somewhat official. The key question: What’s next for BTC’s price? Will it push into new uncharted territory, or is this a sell the news moment to take profits and prepare for one of those HODL-testing pullbacks?

Historical Context and Probabilities

• Big Round Numbers:

  • At a headline-grabbing level like $100K, history suggests a period of sideways movement is the highest-probability scenario. This movement may be volatile but not necessarily trend-defining in either direction.

  • Similar patterns have occurred after previous major rallies.

• BTC’s 2-Year Rally:

  • BTC has rallied from $16K to $100K over the past two years, achieving this through a series of explosive rallies.

  • After these rallies, BTC often entered a choppy sideways phase, with the longest lasting more than 6 months.

• Volatile Trading Ranges:

  • BTC’s sideways phases can still be highly volatile. For example, from March to November of this year, BTC traded in a $20k range before breaking out.

  • A similar scenario could now unfold, with $100K acting as the center of a new trading range. (Could!)

  • Moves into the $110k–$120k range may offer good opportunities to take profits or generate income using option credit spreads (There are several BTC ETFs with options) 

  • Sell-offs, unless they break below $80K, could present opportunities to add back exposure. Consider strategies like scalping or selling credit put spreads via BTC ETF options in the 90k-80k range.

  • (Psychology) Potential mistakes of chasing upside euphoria or panic selling during dips will be less likely to occur near term if using $100K as the center of a potential trading range.

While anything could change quickly, the recent action suggests the possibility for volatile but sideways chop. 

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