BOJ Action Spooks Markets, Yields Rise, Triple Witching, Oil Turns Higher, Gold Holds Strong

My name is Gareth Soloway and I was a losing trader until I mastered technical analysis. Logic and charts beat hype and narratives every time. Now I teach investors the same techniques that made me a multi-millionaire. This is my trading game plan. Good morning, everybody. Happy Friday. My name is Gareth Soloway, chief market strategist here at verifiedinvesting.com. All right, Bank of Japan raising interest rates by 25 basis points. However, we're seeing the yen weaken significantly against the U.S. dollar. Why is this happening? The big story of the day. Japan, basically the bank, didn't guide towards raising again significantly. And this is a big change in character. So you have central banks that have been raising rates across the board. The U.S. did. The ECB, the Japanese central bank did. And really, everyone was expecting a continued hawkish stance from Japan. It didn't happen. Now, is this a crack in the glass? Is this a crack in the ice that's going to signal to other central banks they may not want to raise quite as much as everyone's anticipating? We're going to find out. But I'll tell you one thing. This is spooking the U.S. bond market just a little bit. And we're seeing interest rates start to climb back up. In other words, they don't trust these governments. They're saying, hey, listen, these governments may not be serious. These central banks may not be serious about getting their debt under control. And that means that the market will push rates up even if they won't. All right. Let's jump into the futures here. We have a lot to discuss. Today is triple witching, the final expiration of the third quarter. We'll discuss that. But look at the futures here. This is fascinating. So this was yesterday's price action. We dipped early in the day and then we kind of rallied up. It was a solid update on the S&P 500. Overnight, markets were doing nothing. And then we caught a beautiful rally in the late night, early morning this morning. And then all of a sudden we peaked and the S&P futures have fallen off a cliff. What's causing this? What do you guys think it was? If you're talking about the Bank of Japan, you would be exactly right. As soon as the Bank of Japan showed that they are not as hawkish as they probably should be, the market started to see the 10-year yield in the U.S. go up and then the markets did the opposite. The markets in reverse went down when the 10-year yield shot up. Take a look at the 10-year yield on the U.S. It is back to 4.984%. But more importantly, look at this intraday chart. Here's 3 a.m. eastern time. That's when yields were actually down in the overnight. Look at the move on the 10-year yield. Now flip over to the ES futures chart. Here's 3 in the morning on the S&P futures. Notice that as we've seen the yields go up, the stock market has declined. Flipping back to the 10-year yield, 10-year yield rallies to the upside here and moves higher. And again, what happens to the yield or the S&P futures? They head right down. So this is really a cat and mouse game being played between the 10-year yield or interest rates here in the U.S. and the S&P futures. One goes up, the other goes down. It's that simple, unfortunately. And again, it's not simple, obviously, because you're dealing with massive amounts of debt. Now let's break this down on Japan. So when you have 230% debt to GDP, can you afford, as a country, to let your interest rates go up indefinitely? Think about the amount of interest that you're going to be paying on your debt. It's going to cripple your economy. And so I get why the ECB is like, or I should say the Bank of Japan is a little bit nervous about what's going on with rates continuing to go up, because it will eventually break their economy. Just like here in the U.S., we see the government very nervous about the long end going up, and they're trying to intervene. The problem is this, is that this is an issue that we made, all of us, the politicians, the governments, et cetera. Now you and I, probably not so much, but our government that we elected, that's just the nature of the beast. We have voted for governments that have not put fiscal responsibility as a top priority, and now they're literally caught between a rock and a hard place. Do you let rates go up, and then the market says, okay, they're getting their house in order, but it bankrupts you? Or do you artificially push rates down, which inevitably causes a catastrophic result? All right, listen, it is not good out there, folks. Listen, and again, I want to be clear, this doesn't actually change my bias on the S&P. As long as we maintain the levels, I'm still bullish on the S&P near term, but it just continues to reinforce that down the line, there is going to be catastrophe. And that's what I'm continuing to prep for right here and guide you guys to understanding the ultimate outcome. Maybe years down the line, but it is coming, and you've got to start to prepare. All right, back to the charts we go. So the S&P futures, again, moving lower this morning after being up sharply. Going to the S&P daily chart. Again, we're only slightly down, so we're only going to open down here. We remain above the bullish trend line here. So as long as we maintain above here, remember, we dipped on that panic selling on the back of the Fed. And then again, yesterday, we rallied right back as yields pulled back on confidence that fiscal adult fiscally was going to be in the room, a.k.a. Kevin Warsh and the Fed were going to do the right things to get the situation under control. Now, the Bank of Japan has just thrown a wrench into that of will central banks really follow through? I've been a skeptic longer term, and I continue to be a skeptic longer term. All right, so that's where we are, guys. Again, we'll continue to monitor. But S&P 500 still above the bullish bias line. But again, any sort of move down here, I go to neutral. And then below here, watch out. That's your emergency pull the parachute run for cover trend line on the S&P 500. All right, next up, let's look at the dollar. The dollar is up into resistance. Again, we talked about this yesterday. Ascending trend line connecting the major lows here through this low here. And that's where we currently are. And then look at this little pivot point right up here. Beautiful flat horizontal zone and the dollars into that. I would continue to expect rejection in price off of that level. All right. Now, I did talk about Japan. Right. And we talked about the dollar yen. I want to show this because this is really dramatic. Remember, the dollar yen had a big correction in it, meaning that the yen strengthened significantly against the dollar recently. That is being unwound over the last few days, culminating with the decision from the BOJ today. Taking a look here, we have the Japanese, the US dollar JPY or the dollar yen popping significantly today. We had this big drop. And now, again, with any sort of hesitation from the BOJ, the yen is weakening against the dollar. And that's what this is showing when this chart goes up. It tells us the the yen is weakening against the US dollar. Now, if we rally up, there'll be significant resistance right up here if we continue up. But right now, it's been a significant move to the upside. All right. Now, we talked about the 10 year yield, the 10 year yield. I do want to show the daily chart because this is really where it matters. So, again, this is your daily candle. Nice pop right back up. Almost negating yesterday's pullback post Fed of the 10 year yield. But we're right back up today. And the big thing that we're watching into next week, I was thinking next week might be a little relaxation, maybe not so crazy. There's not a huge amount of earnings next week. In fact, very quiet on earnings and not a huge amount of economic data. We're not to the jobs report yet. And then this right away, if we're going to go retest this line, it could be a massively important week next week. Watch the 5.02% on the 10 year yield. If we break above that, there is literally no major resistance in the immediate term. We got to flip to the weekly chart to go all the way back. And you'd be talking about 5.3% to 5.5% on the 10 year yield. And again, folks, this is the issue that we just talked about, is that you have the lack of fiscal responsibility starting to come home to roost, whether it's in Japan, whether it's here in the US, you have the government now panicking to try to control the yield curve and push the long end down versus keep the short end doing its thing. We saw a one day reprieve. I'm hopeful that the Fed or something comes out that reestablishes after this Bank of Japan decision that maybe the fiscal responsibility is there a little bit. Although, again, folks, longer term, I don't believe it. Not even from the Fed, not even from Kevin Warsh. They'll go back to their playbook the second the economy weakens significantly here. And let's be fair with oil, where it is with diesel, where it is hitting a new all time high of six dollars and forty five cents. It is very possible that the economy over the next couple of months will weaken significantly. All right. Let's speak. Speaking of which, let's go to crude oil here. WTI was down early in the day. It is now green on the day. The market just can't buy more than a day reprieve on any front here, as again, oil is now green trading above one hundred and two dollars a barrel in early trading. All right. Now, we still have good significant resistance here. So we draw a trend line through here. There's still good, solid resistance right in this vicinity. But suffice it to say is that, again, even just going back to 106 could be a problem for the markets in the near term. And remember, oil going up, it also pushes the 10 year up. So it's not just the fear of fiscal irresponsibility emerging again, whether it's Bank of Japan or here in the US or anywhere else, but it's also oil prices. The longer oil stays higher, the longer diesel stays at now six dollars and forty five cents a gallon. Think about all those Amazon trucks that come to your door. Think about now some of them are electric now, which is nice. But again, all of the trucks that are driving goods all over the country, they are burning gallons and gallons and gallons, tens of gallons, hundreds of gallons a day at six dollars and forty five cents on diesel. And that is troublesome. Think about airlines flying and the cost of jet fuel is skyrocketing. All right. All of those people out there looking to fly for vacation coming Christmas are going to be looking at much higher plane ticket fares out there as well. And again, the question is, eventually this gets passed through to our food supply. So you go to the grocery store, remember all those vegetables, all that stuff had to be trucked to that store. It's all going to get passed through to the consumer, to you and to I. Remarkable. All right, let's go into a couple other things here. Gold today is showing a little sign of strength inching up. This is good to see on gold. And I'll tell you why is because yields are up and the dollars up. So if gold can actually eke out a green day when this is happening, that's a good day for gold. We're also seeing it in silver today. Now, silver, I have this intriguing new trend line I'm watching descending from the all time high to this first pivot to the second pivot. Are we about to break out on silver to the next leg up? Let's watch this closely today on the chart of silver. Now, as I mentioned, folks, today is triple witching. Triple witching is the third Friday of the third month every three months in the market because it's a quarterly expiration. So you have multiple expirations. Citadel, the big financial player, estimated that today options, the amount of options expiring will be the biggest ever. All right, 7.7 trillion dollars or more in options. That's trillion with a T in options expiring. What does that mean for us as traders? Later today, between 130 and probably 330, look for incredible swings in stocks. Now, is it tradable? Not so much because it's not based on anything like it's more the big money is going to push around charts and stocks and even commodities to maybe a little bit of an extent because they're trying to maximize their profits. So it's not like, oh, this technical this technical level can work. We can wipe out a technical level very, very quickly because an institution is saying, hey, well, we got to get priced down here so that we make the money we want to make on these options contracts. It's kind of that shady game of options. It's why I love options. I trade options on occasion. In fact, we're launching a great option service in just a few weeks. But at the same time, you also have to know the game. The game can be brutal if you don't know what you're doing and you don't know what the institutions are doing in the options market. Remember, institutions sell the options to the public. Ninety nine percent of all options being sold are sold by institutions to retail. So you have to understand there's a game there. There's a lot of money they can make if those options expire worthless, which means it's a game that's rigged to some extent if you don't know the game. Understand that, guys. And again, that option service should be debuting soon. All right. Couple other charts here. I got to say the copper chart looks very intriguing here. Classic retrace to the scene of the crime. We have this wedge pattern that broke down. I was short copper up in here. We did take profits when it came down here with smart money, commodity and minor members. I'm going to look to reshort copper probably today if it inches up just a tiny bit into that trend line. I'll use the CPR. That's usually been my vehicle, which is an ETF that is tracks the copper index fund. All right. So watch copper here, guys. I do think it's a good opportunity on the short side. Let's look at natural gas real quick. We'll touch on oil again as well. But now gas today is showing again just nothing going on. And really, what's remarkable about natural gas is that really from July, early July price has done almost nothing. All walk crude oil has had this massive move up. Is at some point going to be is it going to be the day where natural gas starts to really participate? We'll watch and see. Obviously, the dynamics are different. The natural gas issue isn't the same as what's going on in the Middle East. But at the same time, seasonality is coming. You have a shortage in Europe that's massive. All of these things going on. Speaking of which, and this is a big one, the refiners, the crack spread has been so good. And we've even seen even with oil pulling back the last couple of days, the crack spreads gotten better for them. So their stocks have actually gone up. Valero, MPC, Phillips 99, which is PSX. But this is this is an outlier. I just heard about this today is that in Europe they're talking about instituting a windfall tax on the refiners because they're making so much money that could signal a change in narrative in those stocks where you could start to see those stocks starting to fall as speculators run for cover. If it was if it was passed, if it was announced and passed a windfall tax, even just out of Europe, the stocks would probably drop 15 to 20 percent as again, it would wipe out a lot of the profits that they are making. All right. So again, just keep that in mind. We'll continue to follow that story here at verified investing dot com. All right. I have a bunch of charts I want to go through. But before we do that, guys, I want to touch base. This show, along with other shows here at Verified Investing, would not be made possible without our sponsors. Rumble and the Rumble Wallet is one of our best sponsors here. I love them. They're a big company, multibillion dollar publicly traded company, which always when anytime I'm dealing with a wallet with crypto, I'm always like, OK, is this a legit company or is it kind of shady? Well, Rumble is seven, I think it's a seven or eight billion dollar publicly traded, which means SEC regulated company. And they again offer the Rumble Wallet. I've been using it on my phone to trade my crypto in swing trading positions. And even gold via gold tether, which tether buys the physical backed gold to match that, which is awesome as well. But the bottom line is use code verified 10. They'll give you a free 10 bucks, 10 bucks for free free is for me, as they say, use the QR code or the link in the description. You can fund the account with your credit card, your your bank account, your your debit card, Moonpay, all of those things. They are awesome. I do thank them for being a sponsor of the game plan today. All right, let's jump back into the charts and take a look here. Couple stocks on the radar. We'll get to Bitcoin in just a minute, but let's go through a couple of these stocks. I'm watching Apple closely. Apple yesterday filled this gap. Look at the big gap here and then another gap here. This big drop on the back. I believe that was earnings if I'm if I remember correctly. But either way, the gap fill now signals that I am now interested in a swing trade short on Apple. I haven't taken a position yet, but I'm going to be buying this today. The iPhone, the new iPhone apparently is starting to take orders, put presale and the amount of delay. So it shows how much demand there is. It's slightly better than last year, but it's not overwhelming, probably because gas and diesel prices are so high and everyone's getting stretched. Right. But the point is, is that this move back up might have gotten a little extended. The chart is now signaling a short on Apple, and I am listening very closely to that chart. Netflix got downgraded today. I have a key level here. We're almost at this key level around seventy one fifty or so. That is the first area of support. They got a downgrade today, I believe, and this was kind of sad to see, but it is what it is. The analyst downgraded the company to a I believe it was like a fifty two dollar price target. So it's not a good price target. They highlighted the second half of the year, their their quality of content degrading, maybe not as being as strong and lots of other factors out there, which, listen, in all fairness is kind of true. I don't know how many of you guys have been on Netflix, but I am struggling these days to find good stuff to watch. Maybe there is some maybe I just don't have the time to research it at this point. But either way, the downgrade is pushing the stock down. Do I like it as a swing trade here? No, but as a day trade, it is peaking my interest today. So Netflix is on the radar. CrowdStrike is a swing trade. I love this technical trend line up here. Doesn't mean it won't go a little bit higher, but we're starting to get into overbought scenarios on the cybersecurity aspect of the trade. I'm looking for an eventual swing trade drop down to one ninety two to one eighty eight gap fill ascending trend line right there. We talked about Valero, Valero trading basically flat in the pre market again. Look at the rise just going back to June. This stock has rallied a whopping let's see here, 77 percent in just a few months. And again, you looked if you showed me this chart, I'd be like, oh, that's got to be like the latest, hottest stock. Right. I mean, they must have technology that's going to cure cancer. No, actually, they probably have stuff that's causing cancer. But that's besides the point. The point is, is that this stock has gotten way ahead of its skis, especially now the political atmosphere is starting to look at who's making so much money off of high gas prices and diesel prices. And the politicians will start attacking these players and talking about that windfall tax. And then also remember, historically, we've seen crack spreads get big and wide with them making lots of money and then it shrinks back down. And so inevitably, these stocks have boom and bust cycles, much like cyclical players, and they will have it as well. So I continue to like it. I am short Valero myself, and I do think these will come in heavily over the coming weeks and months. All right. Couple other ones to talk about. We didn't talk about Bitcoin yet, so let me talk about it. Then I got to get to my trading room as the market will be opening. Look at how Bitcoin held the major support, even with the Clarity Act basically done for the year. Bitcoin is starting to push back up. And the tell was that it held this level. This is still a bull flag on Bitcoin. I still remain bullish. In fact, in smart money crypto, where I show my live account in my of my crypto positions, I am long Bitcoin. We got long right above seventy six thousand right here. I said, you know what? Let's buy it right at the level. Worst case, we stop out if it gets below and I lose a couple hundred bucks. But let's jump in here. And so far it is working out beautifully. And we're seeing crypto like Z cash, hyper liquid. A lot of these cryptos are going up sharply, although I will say that I just shorted a little bit with smart money crypto on hyper liquid upper end of a parallel. If you're part of that service, you see the position I took. All right. I got to get going here, guys. Happy Friday. I'll be back with the weekly wrap up later today at 4 20 p.m. Wild stuff in the markets. Hang on to your hats, folks. We're here to guide you and verified investing. You spend your time with us. We're going to make sure we give you the best. The best stuff that we have is for you. Thank you so much, guys. Have a great rest of your day. Take care.