The S&P 500 just reclaimed a key technical level that paves the way for a year-end rally, Fundstrat says

NYSE trader
  • The S&P 500 closed above its 50-day moving average on Friday, signaling that stocks will continue to rise.
  • “This is a sign of the resumption of the uptrend. And given the following constellation of factors, we see stocks surging into year-end,” Fundstrat said Monday.
  • With the S&P 500 back above its 50-day moving average, the next level to watch is its record high.
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The S&P 500 reclaimed a key technical resistance level on Friday when it decisively closed above its rising 50-day moving average.

The near-1% surge on Friday ended an almost three-week consolidation period that sent the S&P 500 below its 50-day moving average amid a period of weak seasonality for the index. And while stocks opened lower Monday, the S&P 500 held above that key support level.

Now the only remaining resistance level for the S&P 500 is its prior record high, representing potential upside of about 2% from Friday’s close.

Fundstrat’s Tom Lee thinks the stock market can rise even higher into year-end as a number of bullish factors begin to line up.

“The S&P 500 managed to close [above] its 50-day moving average last Friday. This is a sign of the resumption of the uptrend. And given the following constellation of factors, we see stocks surging into year-end,” Lee said in a Monday note.

Those factors include third quarter earnings showing continued margin growth, supply-chain disruptions easing, technicals improving, COVID-19 cases falling, and the Federal Reserve remaining supportive of risk assets via its monthly bond purchases and near-zero interest rates, according to the note. The Fed has signaled it will start tapering bond buys this year though the process will last into next year.

And the move higher in stocks comes despite ongoing bearish positioning among investors and the nonstop tendency for pundits to call a top in the stock market this year, according to Lee. “For basically all of 2021, the S&P 500 has risen in the face of deep skepticism, particularly from market pundits.”

Those worries that made some think stocks would continue to fall included higher oil prices, the third wave of COVID-19, soaring commodity prices like lumber, and a surge in interest rates, among others. But the stock market has a tendency to climb a wall of worry, which was no doubt in place in 2021.

Lee previously has put a 4,700 year-end price target for the S&P 500, representing potential upside of 5% from Friday’s close.

S&P 500 price chart
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The first-ever bitcoin ETF will start trading on Tuesday

Bitcoin cryptocurrency coin and the green line of a graph
  • ProShares said it will launch the first-ever bitcoin-linked exchange-traded fund in the US on Tuesday, Oct. 19.
  • The ETF will begin trading Tuesday on the New York Stock Exchange under the “BITO” ticker symbol.
  • Investors are still waiting for the SEC to launch a bitcoin ETF with the cryptocurrency directly as the underlying security.

The first-ever bitcoin-linked exchange-traded fund will begin trading on Tuesday, the provider ProShares said in a statement. The launch will mark another milestone in a notable year for the cryptocurrency market.

The ProShares Bitcoin Strategy ETF will trade under the ticker symbol “BITO” on the New York Stock Exchange, the company said. The ETF will invest primarily in bitcoin futures contracts and will not directly invest in bitcoin.

The company said BITO can be bought and sold like a stock and doesn’t require investors to hold an account at a cryptocurrency exchange or to have a crypto wallet.

“We believe a multitude of investors have been eagerly awaiting the launch of a bitcoin-linked ETF after years of efforts to launch one,” ProShares CEO Michael Sapir said in the statement. Sapir told The New York Times – who first reported the news – that the company would be the first to market with a bitcoin-futures ETF, to trade on the NYSE.

The arrival of the bitcoin-futures ETF comes as the red-hot cryptocurrency has shattered the $1 trillion market capitalization threshold, helping the broader crypto market grow to a market value exceeding $2 trillion.

Bitcoin climbed as much as 6% to $62,667.51 on Monday, just 4% below its all-time high of $64,869.78 reached in mid-April.

Bloomberg reported late last week the Securities and Exchange Commission was set to allow the first US bitcoin futures to start soon.

Dozens of companies are still waiting for the SEC to approve an ETF with the cryptocurrency directly as the underlying asset.

Read more: A crypto trader and consultant shares why he believes bitcoin can hit $300,000 this bull cycle – and breaks down the 4 chart signals that he’s watching right now

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US stocks slip as China growth slowdown, energy crisis dampen bullishness

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange.

US stocks slipped on Monday as a slowdown in China’s growth and a continuing energy crisis dampened investors’ sentiment.

The Dow Jones Industrial Average fell at the start of the trading week, so did the other two major indexes. Among the biggest drags is the mega-cap tech giant Apple.

Here’s where US indexes stood at the 9:30 a.m. ET open on Monday:

While China’s economy expanded by 4.9% in the third quarter, according to data from the National Bureau of Statistics, the growth was slower than the 7.9% rise the country tacked on in the previous quarter and was the nation’s weakest pace since the third quarter of 2020.

Industrial output posted its worst performance since the start of the pandemic, made worse by power shortages, supply-chain woes, and debt problems in its property sector.

Outside of China, the crises in commodities continued to hound global markets, particularly the ongoing energy crunch.

“There is also much discussion on how long-term forward-looking inflation expectations are now spiking,” Hans Mikkelsen, Bank of America Credit Strategist, said in a Monday note. “Obviously, there are many drivers in inflation – such as reopening related bottlenecks that also leave labor unions with more bargaining power, higher energy prices.”

Mikkelsen said the economy is now looking at a “high growth, high inflation environment, in which reopening trades and cyclicals outperform.”

Previously, Francisco Blanch, Bank of America Global Commodities and Derivatives Research Head, provided Insider with four possible paths he sees through early 2022 from an economic crash to an interest rate hike.

Oil prices rose Monday. West Texas Intermediate crude tacked on 1.59% at $83.59 per barrel. Brent oil, the international benchmark, added on 1.10% to $85.79 after notching its eighth consecutive week of gains last week in what is so far its longest streak since a 10-week period through April 1999.

Gold dropped 0.46% to $1,762.79 per ounce.

The 10-year Treasury note yield edged up to 1.619% from Friday’s 1.574%. Yields rise when prices fall.

In cryptocurrencies, bitcoin surged 5.5% to $62,667 ahead of an imminent exchange-traded fund approval this week. Bitcoin’s rally has pushed the entire cryptocurrency market capitalization above $2.6 trillion over the weekend for the first time since May.

Meanwhile, Square CEO Jack Dorsey said his digital payments company is weighing up whether to create a simple-to-use bitcoin mining rig and laid out how it could help the industry.

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Brace for market volatility if the Fed pulls back on stimulus and the liquidity wave breaks, El-Erian says

Mohamed El-Erian
Mohamed El-Erian.

  • Mohamed El-Erian said the “wonderful world” of low market volatility may soon end.
  • The well-known economist said the Fed needs to “ease off on its pedal-to-the-metal” stimulus.
  • As for shortages, he said things will get worse before they get better.

Mohamed El-Erian said investors should brace for market volatility and worsening shortages as the holidays approach.

The economist and chief economic advisor for Allianz told Fox News’ Chris Wallace that the “wonderful world” of low volatility may come to a halt.

“If I were an investor, I would recognize I’m riding a huge liquidity wave thanks to the Fed,” he said Sunday. “But I would remember that waves tend to break at some point, so I would be very attentive.”

El-Erian said the Fed should “ease off the pedal-to-the-metal monetary stimulus” as it continues to inject billions into the economy each month despite rising inflation.

“We’ve got to look very seriously at excess financial risk because what’s going to happen if we’re not careful is inflation, if it persists, would disrupt the financial markets that would then undermine the economy,” he said.

El-Erian has long advised that the Fed should adjust its tapering timeline. He made the comment after September’s big jobs-report miss and also said previously the central bank is responsible for turmoil in the bond markets.

When asked what investors should expect ahead of the holidays, El-Erian said things will get worse before they get better.

“We’re going to have more shortages of goods. We’re going to have higher prices. Inflation will remain in the 4-5% level, and it’s just going to take time to sort these things out,” he said.

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Bitcoin extends climb above $60,000 threshold on imminent ETF approval

Bitcoin seen on display
Bitcoin seen on display.

  • Bitcoin is extending its ascent to test a new price record ahead of a futures ETF launch this week.
  • The world’s largest digital asset by market cap rose as much as 5.5% on Monday to trade at $62,667 based on Bloomberg data.
  • A bitcoin-linked ETF would make it easier for investors to gain exposure to the cryptocurrency.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bitcoin is extending its recent ascent to test a new price record as crypto “hodlers” cheer a futures exchange-traded fund that will start trading this week.

The world’s largest digital asset by market capitalization rose as much as 5.5% on Monday to trade at $62,667, according to Bloomberg data. Bitcoin pared gains to $61,094 as of 8:20 a.m. ET. The price slipped over the weekend to around $59,000 after scaling the $60,000-level on Friday.

In April, bitcoin peaked at its all-time high of $64,869 amid exuberance ahead of the direct listing of Coinbase, the largest cryptocurrency exchange in the US, in what many viewed as a milestone for the digital asset ecosystem.

This time around, another milestone may just yet push bitcoin’s price to its new record high.

“Today’s spike appears to have been triggered by investors’ growing confidence that US regulators will approve the launch of an ETF based on bitcoin futures contracts,” Simon Peters, cryptoasset analyst at eToro, said in a note.

He continued: “But a rise past $60,000 has been looking likely for a while now after weeks of positive net inflows into bitcoin from institutional investors, a growing migration of bitcoin from short-term holders to long-term holders, and the attendant squeeze on bitcoin supply.”

The fund in question is the ProShares ETF, which will track bitcoin futures rather than bitcoin itself. On Monday, ProShares said its ETF will start trading Tuesday, after an almost decade-long attempt by the $6.7 trillion ETF industry to try to get one approved.

The US Securities and Exchange ecosystem has long been reluctant to approve a bitcoin ETF, but Chair Gary Gensler earlier this year has signaled that is more open to a futures-based one.

Futures are contracts to buy and sell an asset at a predetermined price and time. They track movements in the price of bitcoin pretty closely but mean investors do not have to physically own the token, which has long been criticized for its price volatility.

The price of bitcoin has rallied 109% year-to-date despite headwinds such as China’s multiple clampdowns from banning bitcoin miners from operating in a southwest region in June and labeling all cryptocurrency transactions as illegal in September.

In step with bitcoin’s rally is ether, the second-largest digital asset, which has risen a whopping 404% year-to-date. It is now trading around $3,743.

The rise of the two cryptocurrencies has pushed the entire market capitalization above $2.6 trillion for the first time since May.

And as Nicholas Cawley, analyst at DailyFX, there is much to look forward to for the entire industry.

“When these futures-based ETFs are given the green light, the market will soon turn their attention to both Ethereum ETFs and, more importantly, cash-based Bitcoin ETFs. If the latter gets approval, there will likely be repeated fresh Bitcoin highs over the coming months,” he said in a note.

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Elon Musk teased Warren Buffett for being so much poorer than him – and suggested the investor buy Tesla stock to catch up

Warren Buffett and Elon Musk
Warren Buffett (left) and Elon Musk (right).

  • Elon Musk joked that Warren Buffett should buy Tesla stock if he wants to get richer.
  • The Tesla and SpaceX chief’s net worth is more than double the size of the investor’s fortune.
  • Musk and Buffett have clashed before, on issues such as the importance of brands.

Elon Musk teased Warren Buffett for being poorer than him in a recent tweet, suggesting the investor should buy a stake in his electric-vehicle company if he wants to catch up.

“Maybe Buffett should invest in Tesla haha,” Musk said. The Tesla and SpaceX CEO commands a net worth of $236 billion, or more than double the Berkshire Hathaway CEO’s $103 billion fortune, according to the Bloomberg Billionaires Index.

Musk tweeted in response to a Twitter thread highlighting that he was worth more than Buffett and Microsoft cofounder Bill Gates combined. He probably doesn’t expect Buffett to become a Tesla shareholder, as the 91-year-old famously looks for bargains and sticks to businesses he understands. Tesla’s market capitalization has ballooned almost 10-fold since the start of 2020, and the company has made big bets on artificial intelligence and bitcoin.

The Tesla chief has butted heads with the investor before, most recently when he dismissed Berkshire’s proposal to build 10 natural-gas power plants across Texas in preparation for the state’s next power crisis.

While Musk has quoted Buffett in the past, he’s admitted that he’s not the investor’s “biggest fan.” He’s described allocating capital across Berkshire as “kind of a boring job,” and questioned Buffett’s “kindly grandfather” persona.

Notably, the Tesla chief labeled Buffett’s idea of economic moats – or enduring competitive advantages such as a beloved brand or patented technology – as “lame” on an earnings call in 2018. He argued that a company’s pace of innovation is the key determinant of its competitiveness instead.

Buffett defended the concept at Berkshire’s annual shareholder meeting that year. He pointed to Geico’s low costs, and customers’ loyalty to brands such as Coca-Cola and Snickers, as examples of powerful moats that keep rivals at bay.

“Elon may turn things upside down in some areas,” the investor said. “I don’t think he’d want to take us on in candy,” he quipped, referring to Berkshire-owned See’s Candies.

“I’m starting a candy company, and it’s going to be amazing,” Musk jokingly tweeted in response. In contrast, Buffett signaled that he won’t be competing with Musk in the car business.

“I don’t really have the same urge to produce automobiles that he apparently has to produce candy,” he said in a CNBC interview in 2018.

Buffett has previously praised Musk as a “remarkable guy,” but suggested he has “room for improvement” and should be more selective about what he tweets.

Read more: Warren Buffett expert Robert Hagstrom breaks down the 3 key elements of the investor’s ‘ultimate money mind’ – and explains why he won’t rush to make another elephant-sized acquisition

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Elon Musk reclaims the world’s richest person title from Jeff Bezos as Tesla’s stock hits an 8-month-high

Elon Musk, Tesla CEO, stands on a stage at the Tesla Gigafactory for the open day
Elon Musk, Tesla CEO.

Elon Musk regained the title of the world’s richest person on Friday, according to the Bloomberg Billionaires Index, as his wealth climbed thanks to Tesla’s soaring stock.

Tesla’s shares closed at $843.03 per share Friday, up 3% on the day. That takes the automaker’s year-to-date gains to roughly 20%.

That helped boost Musk’s net worth to $236 billion, eclipsing Amazon founder Jeff Bezos’ fortune of $196 billion.

Musk responded to a Twitter user who said the Tesla boss’ fortune is now equal to 861 billion dogecoins, and that he is worth more than Bill Gates and Warren Buffett combined.

“Hopefully enough to extend life to Mars,” Musk said.

The Tesla and SpaceX CEO’s net worth has risen by $60 billion this year alone, driven by the electric-car maker’s robust performance and a recent stock sale at SpaceX that took its valuation to above $100 billion.

The aerospace manufacturer is now the second-most valuable private company in the world, and a SpaceX agreement with investors added $11 billion to Musk’s wealth, according to Bloomberg.

Bezos, whose personal wealth is mostly in Amazon shares, has often been switching places with Musk on the Billionaires Index this year, depending on stock performance.

Musk took a playful swipe at Bezos last week, replying to a tweet about Amazon’s success with a silver-medal emoji. After the Tesla boss overtook Bezos as the world’s wealthiest man last month, he told Forbes he would send the former Amazon CEO a silver medal and a giant statue of a 2.

LVMH CEO Bernard Arnault and Microsoft co-founder Bill Gates stand at third and fourth positions on the Bloomberg list, with net worth of $164 billion and $130 billion, respectively. Meanwhile, Berkshire Hathaway boss Warren Buffett sits at number 10 with a net worth of $103 billion.

Tesla is scheduled to report its third-quarter earnings on Wednesday. It is expected to perform across the board, with Wall Street analysts’ average estimates of $13.7 billion for revenue and $1.54 per share for profit.

Wedbush analyst Dan Ives said “an evolving green tidal wave” will push Tesla’s stock higher despite a near-term chip shortage, and third-quarter earnings should be another positive catalyst for the electric-vehicle company.

“While the skeptics will remain, we believe the EV evolution is still in the early innings, with Tesla leading the charge, as today only 3% of automotive sales are EV globally and on pace to hit 10% by 2025,” Ives said.

Tesla shares were trading 0.7% higher at $848.99 per share in Monday’s premarket session.

Read More: Crypto seems like nonsense. But lots of people keep getting rich from it. So am I the dumb one?

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Crypto asset manager Grayscale has filed to convert its bitcoin fund into a spot ETF: report

Bitcoin Balloon 2
Bitcoin Balloon 2

  • Grayscale intends to file an application with the SEC to convert its bitcoin fund into a spot ETF, according to CNBC Friday.
  • The company’s spot ETF would be backed by bitcoin and have no derivatives attached to it.
  • The first bitcoin futures ETF is set to start trading this week after the SEC approved it on Friday.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Grayscale intends on converting its main bitcoin trust, which is the largest such fund in the world, to a spot exchange-traded fund (ETF) this week, according to a CNBC report Friday.

The spot bitcoin ETF would be backed purely by bitcoin and have no derivatives attached to it, unlike bitcoin futures ETFs.

Grayscale was waiting for the Securities and Exchange Commission to approve the first bitcoin futures ETF before they filed for this change, a person with knowledge of the matter told CNBC. The idea was if the SEC approved a bitcoin futures ETF, it would indicate the regulator was comfortable with how the underlying spot market functions.

Grayscale was not immediately available to comment when contacted by Insider.

The SEC approved ProShares’ Bitcoin Strategy ETF on Friday – a market first. The fund is set to start trading this week. This will give investors exposure to the bitcoin futures market, but not the spot market.

Bitcoin has been steadily rallying in recent weeks and was last heading towards this year’s record highs near $65,000.

The Grayscale Bitcoin Trust has $38.7 billion assets under management. Cathie Woods’ Ark Invest is one fund that has bought into the trust as a means of participating in crypto.

Grayscale has recently expanded its offering of cryptocurrencies and added the likes of decentralized finance token sol and decentralized exchange token uniswap to its funds.

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A bitcoin futures ETF is coming next week. It could soon send the token soaring to $85,000, one analyst says.

Crypto bitcoin ATM symbol
Bitcoin soared to around $61,000 on Sunday.

  • A bitcoin futures exchange-traded fund is set to launch next week and is exciting investors.
  • It could help power the price of bitcoin to a record high of $85,000, one analyst said.
  • A bitcoin-linked ETF would make it easier for investors to gain exposure to the cryptocurrency.

A bitcoin futures exchange-traded fund is set to launch next week and is making the crypto industry very excited.

It’s not quite the pure bitcoin ETF that many crypto enthusiasts were hoping for, but analysts say it should still drive institutions towards the digital-asset market like never before.

If investors buy into the fund heavily, bitcoin could hit a record high of $85,000 in the coming months, according to Edward Moya, senior market analyst at trading platform Oanda.

Bitcoin crossed $60,000 last week for the first time since April as excitement built. It was roughly flat on Sunday at $61,050, according to Bloomberg prices, putting it within reach of April’s all-time high of just under $65,000.

“A successful bitcoin ETF launch next week could easily support bitcoin’s run to record territory,” Moya said. “Bitcoin mania has been brewing on social media platforms over the past couple weeks.”

“[If] initial trading volumes are strong, bitcoin could have enough momentum to target the $74,500 region,” Moya said. He added that bitcoin “could have a path towards $85,000” in the coming months.

Simon Peters, cryptoasset analyst at eToro, said: “The market is clearly reacting positively as we edge ever closer to the ‘holy grail’ of a bitcoin ETF of the underlying asset.”

ProShares, a US specialist in exchange-traded products, is due to launch a bitcoin futures ETF next week, according to a filing with the Securities and Exchange Commission. CNBC reported that a person familiar with the SEC’s thinking said the ETF should start trading in the coming days.

It is set to be called the ProShares Bitcoin Strategy ETF and trade with the ticker “BITO.”

An exchange-traded fund is a type of security that trades on an exchange – meaning investors can buy and sell shares – and tracks the performance of an asset or group of assets.

The ProShares ETF will track bitcoin futures rather than bitcoin itself. Futures are contracts to buy and sell an asset at a predetermined price and time. They track movements in the price of bitcoin pretty closely but mean investors do not have to physically own the token.

Read more: 2 ETF veterans-turned crypto investors break down why they think the SEC should approve a bitcoin ETF that invests in the digital currency itself instead of futures contracts

SEC chief Gary Gensler has been reluctant to approve a pure bitcoin ETF, due in part to concerns about the wild price swings in the market.

But the SEC reckons a futures ETF is safer. Bitcoin futures are offered by the Chicago Mercantile Exchange, a huge financial institution. Investors also have to put down collateral to trade futures.

The ETF would allow retail and institutional investors to much more easily gain exposure to bitcoin, analysts said. “An SEC bitcoin ETF approval is a watershed moment for the crypto industry as this could be the key driver for getting the next wave of crypto investors,” Moya said.

However, Matt Blom, global head of sales trading at crypto company Eqonex, said he thinks the SEC won’t approve an ETF based on bitcoin itself.

“As great as it is to finally have this asset class recognized, the supply squeeze we all really want to see is still, just out of reach,” he said.

Other companies – namely Invesco, Valkyrie and VanEck – have also applied to launch bitcoin futures ETFs and could see their products begin trading soon. ProShares did not immediately respond to a request for comment.

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2022 is shaping up to be a bad year for the stock market as investors grapple with these 3 ‘shocks,’ BofA says

Trader nyse stock market
  • The stock market’s strong gains so far this year are unlikely to see a repeat in 2022, BofA said in a note on Friday.
  • Rising interest rates represent the third “shock” that will cause a surge in volatility and ding stock prices, according to the note.
  • “We are on the cusp of a policy pivot from pro-growth to anti-inflation,” BofA said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

2022 is shaping up to be a difficult year for the stock market as the Federal Reserve prepares to make a policy pivot, Bank of America said in a note on Friday.

Investors shouldn’t expect the near 20% year-to-date gains in stocks repeat next year due to a “rates shock” that will occur when the Fed is forced to raise interest rates sooner than expected, according to the note.

Rising interest rates will represent the third “shock” investors have had to deal with over the past three years. While a growth shock turned stocks into winners in 2020, an inflation shock this year led to a surge in commodity prices, which will make it even more difficult for the Fed to avoid making a policy change next year, according to BofA.

“Bear case is pandemic ending and so is $30 trillion of emergency policy stimulus,” BofA said, referencing the liquidity provided by global central banks since the pandemic began. The bank pointed to three catalysts that give it confidence the Fed will raise interest rates next year instead of waiting until 2023 like most investors expect.

1. “Powell re-nomination triggers more hawkish Fed rhetoric.” Jerome Powell’s current term as Fed Chairman ends in February.

2. “Payroll recovers,” meaning the economy no longer needs near-zero interest rates as stimulus.

3. “Wage and rent inflation remains elevated,” which can be combated with higher interest rates.

“We are on the cusp of a policy pivot from pro-growth to anti-inflation, [and a] policy mistake has already happened,” BofA said, inferring that the Fed is behind the curve and should have already been reducing its stimulus programs.

The Fed has signaled that it plans to end its $120 billion monthly bond buying program by the middle of next year with a monthly tapering.

But despite the bleak outlook for 2022, investors shouldn’t sell their stocks just yet.

Instead, investors should wait to sell stock after an expected year-end rally due to already bearish investor positioning. “More bearish Wall St positioning reflects concerns [about] inflation and China, [which] supports a typical year-end rally. We say sell it,” BofA said.

Read more: ‘History repeats itself’: The manager of an inflation-focused ETF breaks down why she thinks stagflation is the ‘biggest threat’ to investors – despite Wall Street saying fears are overhyped

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