The Trend Letter – Page 4

S&P 500 Hits Channel Resistance: Is a 10% Pullback Ahead?

November 20, 2025/in Investing in stocks, The Trend Letter/by Trend Letter

The S&P 500 continues to trade within a well-defined long-term rising channel, and once again the top of that channel has proven to be formidable resistance. Each time the index has reached this upper boundary, buyers have faded and a correction has followed—exactly what we’re seeing now. Likewise, the lower boundary of the channel has repeatedly acted as reliable long-term support, marking important reversal points throughout 2021–2024. With the index rolling over after touching resistance, the current pullback will likely continue toward the 6100 area—a level that aligns with previous support and represents roughly a 10% decline from the recent peak.

Chart Description:

Upper yellow channel line: Major resistance. Every touch (late 2021, mid-2024, late-2025) has led to a reversal.
Lower yellow channel line: Strong long-term support marked by multiple rebounds (2021–2024).
Current action: Price is turning down after tagging the upper boundary.

The dashed green horizontal line at ~6100 corresponds to:

Previous support
Mid-channel equilibrium
A retracement of roughly 10% from recent highs

Given the technical setup, a pullback to the 6100 area is a very reasonable and likely target for this correction.

That level should act as the first meaningful support before any deeper test of the lower trend boundary.

Stay tuned!

Market Pulse: Semis & Bitcoin Hit Key Turning Points

November 19, 2025/in Investing in stocks, The Trend Letter/by Trend Letter

Semiconductors

Nvidia is about to report earnings, so it’s a good moment to look at the overall semiconductor sector. The chart we’re referring to shows the VanEck Semiconductor ETF (SMH) along with its long-term trend line (the 200-week moving average).

Here’s the key idea:

When the price of SMH gets far above this long-term trend line, the sector has often pulled back.
In the past, when SMH traded more than 100% above that trend line, it later dropped 45% and 32%.

Last week, SMH again climbed to about 105% above its long-term average—similar to those earlier warning levels. It has since started to pull back. While this doesn’t guarantee a drop, it suggests the sector may be at risk of a larger correction based on past patterns.

Bitcoin

The Bitcoin chart shows the price has been moving inside an upward channel since September 2023.

The top of the channel has repeatedly stopped Bitcoin’s rallies (shown by red arrows).
The bottom of the channel has repeatedly supported the price during pullbacks (shown by green arrows).

Today, Bitcoin is testing that lower support level — and this is important. If that support doesn’t hold, a bigger drop could follow.

From here, there are two likely scenarios:

Support holds → Bitcoin rebounds
- It could make another run toward its all-time highs near $125,000.
- But it might first stall around $100,000, then retest the lower channel again.
Support breaks → Larger decline
- If the lower channel fails, prices could slide much more sharply, possibly toward the $75,000 area.

In short: Bitcoin is at an important turning point where it could either bounce higher or break down into a deeper pullback.

Stay tuned!

$US banknotes falling with crowd silhouette in background, symbolizing wealth, money, success, and financial growth.

Inflation’s Hidden Impact: What Investors Need to Know Now

November 15, 2025/in Investing in bonds’, The Trend Letter/by Trend Letter

During the COVID-19 pandemic, inflation surged due to multiple factors. Governments worldwide shut down supply chains, drastically limiting the supply of goods. With fewer goods available and more buyers, prices rose. At the same time, massive government stimulus inflows, with the US alone distributing about $5 trillion, fueled demand further, accelerating inflation.

Central banks also played a role by injecting liquidity through bond-buying programs. The Federal Reserve pumped $4.7 trillion into the economy purchasing Treasuries and Mortgage-Backed Securities. This increased liquidity lowered real interest rates, which is inflationary. Initially, central banks responded slowly to rising inflation. Federal Reserve Chair Jerome Powell characterized early inflation as ‘transitory,’ a position now widely reevaluated, as inflation remains elevated four years later.

Politicians like to claim inflation is ‘down,’ but that’s misleading. Inflation measures the rate at which prices rise—not the prices themselves. If inflation is 6% one year and 3% the next, prices don’t fall; they’re now 9% higher over those two years. The pace of increase may slow, but the price level remains permanently higher.

Key current drivers of inflation include government spending and debt growth. The US is adding about $2 trillion annually to its debt. Canada recently announced a record $78 billion deficit. In the US, the cost of servicing the debt has surged – from $32 billion in 1970 to over $1.16 trillion today. The total US debt surpassed $38 trillion, equating to roughly $111,000 per citizen and $328,000 per taxpayer.

This rising debt burden lowers the purchasing power of the currency, pushing up goods and service costs. President Trump calls for Fed rate cuts to reduce interest payments, but Powell resists because inflation officially remains above 3%, and anyone shopping for groceries knows that real inflation is much higher.

If rate cuts happen under a new Trump-appointed Fed Chair, economic conditions differ from previous easing cycles. Then, the Fed cut rates during weak economic growth and low inflation. Today, the economy is quite strong, inflation is persistent, and unemployment, although rising, is low. This is not an ideal setting for major stimulus.

Persistent inflation and surging government debt strain the bond market. Inflation erodes the value of fixed payments, pushing investors to demand higher yields and driving bond prices lower. Large deficits require more bond issuance, raising borrowing costs and term premiums as fiscal worries grow. Together, rising inflation, heavy debt, and a ‘dovish’ Fed will increase bond-market volatility, making bonds less reliable safe havens.

In this environment, investors who fail to adapt may pay the highest price.

Stay tuned.

‘Key Support Levels Tested Across Stocks, Gold, and Bitcoin”

November 14, 2025/in Investing in gold, Investing in stocks, The Trend Letter/by Trend Letter

S&P 500

The S&P 500 opened sharply lower on Friday, weighed down by heavy losses in European markets. The index quickly stabilized, however, with its session low set within the first five minutes. Early selling pressure was tied to uncertainty over the Federal Reserve’s December decision – whether they act or hold steady – as well as growing chatter that the AI-driven rally may have overheated.

From there, buyers stepped in, lifting the index for most of the day. But a sharp spike in interest rates late in the session erased those gains, leaving the S&P unable to hold its footing into the close.

In yesterday’s update, we noted that the S&P was approaching its short-term trend line (the diagonal line on the chart) and that a break could lead to a test of stronger support at 6535 (the green horizontal line). The index opened below this trend line but managed to close right on it. Monday’s session will be key – holding above this level would signal that upward momentum remains intact.

Gold

Gold dropped more than $90 on Friday, pulling back toward its established uptrend line. As noted previously, a decisive break below this support would set the stage for a retest of the 3900 area.

Bitcoin

Bitcoin is now pressing against the lower boundary of its uptrend channel, a level that has held on four separate occasions since October 2023. This makes the current support zone especially important. For buyers to regain the upper hand, Bitcoin needs to rebound and firmly reclaim the psychologically key 100,000 level. A move above that threshold could trigger short covering and fuel a sharp rally.

However, if this support breaks, the door opens to a deeper correction, with next major support near the 77,000 area.

Stay tuned!

Volatility Returns: Stocks Sink, Gold Firms, Bitcoin Wobbles

November 13, 2025/in Investing in gold, The Trend Letter, Trend Letter/by Trend Letter

S&P 500

The S&P 500 closed sharply lower today, dropping 1.7% as technology shares led a broad selloff across the index. Major tech and AI-related stocks -including Tesla (-6.6%), Robinhood Markets (-8.6%), and Coinbase (-6.9%) – were among the worst performers. Meanwhile, some defensive and materials names such as Cisco Systems (+4.6%) and NIKE (+2.9%) bucked the trend, registering gains.

The S&P 500 is approaching its near-term trend line (diagonal line on chart). A breach of that level opens the door for a test of stronger support at 6535 (green horizontal line).

The main reasons for today’s S&P 500 decline were largely profit-taking after recent gains and growing market skepticism about the likelihood of a Federal Reserve rate cut in December, which is now seen as only 50.7% probable.

This has pressured technology and growth stocks heavily, leading to a broad-based selloff across most sectors. Investors are also digesting mixed economic signals and geopolitical developments, but the focus remains on monetary policy uncertainty and valuation concerns as primary market drivers today.

Gold

Gold eased by 18.57 on the day, settling at 4,176. The metal opened stronger but retreated as a broad stock market selloff briefly pulled investors out of safe-haven positions. Even with the dip, gold remains sharply higher year-to-date, supported by ongoing economic uncertainty, fading expectations for near-term Fed rate cuts, and persistent inflation pressures. Overall, gold continues to act as a key defensive asset and a proven long-term store of value in an environment shaped by heavy fiscal deficits and aggressive monetary expansion.

After forming solid support near 3,900, gold has been attempting another move higher. A retest of the recent all-time high around 4,375 (red horizontal line) would likely serve as major resistance. A decisive break and close above that level would be strongly bullish. On the downside, a failure to hold the rising trendline (green diagonal) would increase the likelihood of a pullback toward near-term support at 3,900.

Bitcoin

Earlier in 2025, Bitcoin tracked the Nasdaq closely, with their 30-day correlation reaching about 70% as both responded to shifts in global economic conditions and interest rate expectations. More recently, however, that relationship has weakened. Bitcoin now trades more than 30% below its Nasdaq-implied fair value, reflecting a shift of investor focus back toward traditional equities. It has also tended to fall more sharply on equity down days than it rises on up days.

Adding to the pressure, Bitcoin is now hovering uncomfortably close to slipping below the key psychological $100,000 level.

Stay tuned!

‘The Art of the Deal: $2,000 Cheques & 50‑Year Mortgages’

November 11, 2025/in Investing in bonds’, The Trend Letter/by Trend Letter

President Donald Trump has proposed two attention-grabbing economic ideas: $2,000 stimulus cheques for Americans and 50‑year mortgages to make homeownership ‘affordable.’ Both aim to ease financial pressure, but a closer look reveals serious pitfalls and potential political maneuvering.

The $2,000 Cheques

Trump has long pushed for $2,000 cheques, arguing that previous $600 payments were insufficient. His current proposal frames them as a broad ‘dividend’ from tariffs, targeting most Americans outside high-income brackets.

Appeal:

Immediate relief: cash in households’ pockets.
Populist messaging: positions Trump as a champion of working-class voters.

Concerns:

Inflation: Adding cash into a tight economy could worsen price pressures.
Funding uncertainty: Using tariff revenue is legally complex, and the plan could face court challenges.
Political optics: With tariffs now heading to the Supreme Court, Trump could blame the Court if stimulus cheques fail, turning a policy setback into a political talking point.

While the checks may provide short-term relief, they risk economic consequences and political theatrics over substance.

The 50-Year Mortgage

Trump’s 50-year mortgage idea aims to lower monthly payments, but the long-term costs are staggering.

Example: $500,000 home, 20% down ($100,000), 6% interest:

Term	Monthly Payment	Total Interest
30 years	$2,398	~$463,000
50 years	$1,998	>$900,000

While monthly payments fall, the borrower pays nearly double in interest and may never fully own the home without extra principal payments.

Other risks:

Slow equity growth, leaving homeowners tied to decades of debt.
Regulatory hurdles: Federal rules and Fannie/Freddie limits make 50-year loans legally complicated.
Market distortions: Easier access may push home prices higher rather than improve affordability.

The policy trades short-term comfort for long-term financial strain, creating the risk of perpetual debt.

The Big Picture

Together, these proposals target symptoms rather than root causes. Cash cheques may ease spending temporarily, and ultra-long mortgages reduce monthly burdens, but neither addresses wage stagnation, supply-side constraints, or structural inflation pressures.

Politically, they also offer flexibility: if the Supreme Court blocks the tariff-based funding, Trump can portray the setback as judicial obstruction, deflecting responsibility. Economically, however, Americans could face higher debt loads, slower wealth accumulation, and inflated housing costs.

Bottom Line

Trump’s stimulus vision is flashy but flawed. $2,000 cheques offer short-term relief with legal and inflation risks; 50-year mortgages lower monthly payments but saddle homeowners with enormous long-term interest costs. What appears to be affordability may hide extended debt, financial vulnerability, and a political narrative ready to blame the courts for any failures.

As investors, these proposals would certainly be bullish for gold, silver, and bitcoin as hedges for more inflation.

Market Pulse: AMD, Gold, Bitcoin & the S&P 500

October 6, 2025/in Investing in gold, Investing in stocks, The Trend Letter/by Martin

A quick review of some key market sectors.

AMD

AMD surged today on the news that OpenAI will ~ $100 billion in AMD. The deal also grants OpenAI a warrant to acquire up to 160 million AMD shares – roughly 10% of the company – at $0.01 per share, with the stake earned progressively as key technology and revenue milestones are achieved. This enormous commitment is anticipated to generate tens of billions in revenue for AMD and further accelerate OpenAI’s buildout of advanced data centers, mirroring the controversial Nvidia arrangement that combined massive hardware supply with equity participation and market concentration concerns.

S&P 500

The S&P 500 remains technically overbought but continues to trade above its established uptrend line, which still acts as key support. As long as this trend line holds, the broader bullish structure—defined by a series of higher lows—remains intact, implying the long-term trend favors further upside. While short-term volatility or minor pullbacks are possible, the technical outlook still supports maintaining positions. Only a decisive break below the uptrend line would signal a potential shift in momentum and justify a more defensive stance. Initial support sits at the horizontal line around 6570.

Gold

From mid-May to late August, gold traded in a sideways wedge pattern, basically doing nothing for about 4.5 months. Then in late August it broke out of that wedge pattern and has been setting new highs on a regular basis. Like the S&P 500 chart, gold remains in a solid uptrend until the uptrend line is broken. Should that occur, the initial support level would be about 3800.

Bitcoin

Bitcoin just hit a new all-time high above $125,000, testing a strong resistance level that dates back to 2017. This resistance is crucial for investors to watch closely because if it holds, Bitcoin is likely to face a pullback as selling pressure increases at this long-established ceiling. However, if Bitcoin can decisively break above this resistance, it could trigger a strong bullish momentum, potentially pushing prices toward $135,000 to $160,000 in the near to medium term. This breakout would signal renewed strength driven by institutional adoption, favorable macro conditions, and technical momentum. Therefore, this resistance level acts as a key decision point, where the market could either consolidate or launch into a substantial new rally, making it essential for investors to monitor price action around this level carefully.

Stay tuned!

Martin

Gold at Technical Resistance

September 23, 2025/in Investing in gold, The Trend Letter/by Martin

Gold is once again approaching major parallel trend line resistance – a key juncture for both short-term traders and long-term investors. After months of sharp gains, the charts now suggest a likely pullback. Parallel trend channels have historically provided strong support and resistance, and we see this in action: the upper band held after the post-April Liberation Day rally (red arrow), and it is being tested again today.

Technical Picture: Momentum Meets Resistance

Gold’s 2024 rally began under $2,000, doubling to nearly $3,800.
After weeks of bullish consolidation (a classic bull flag), the breakout carried prices roughly 13% higher from the base.

Historically, bull flag breakouts often retrace back toward the prior high before resuming their uptrend.
This suggests a pullback toward the $3,500 support zone –about 8% lower than current levels.

Investor Implications

Traders: A pullback could present tactical opportunities to profit from short-term swings.
Long-term investors: Any correction looks routine within the broader bull cycle. Gold’s trajectory still points toward a possible $5,000 -$6,000 target before this bull market peaks.
Accumulation strategy: The $3,500 level may offer an attractive entry for those looking to build positions.

Final Take: Pause, Don’t Panic

Gold’s chart signals a likely correction, not a collapse – a pause within a powerful uptrend. Volatility may dominate the near term, but the long-term case for gold remains intact.

Cheers!

Martin

ORCL enterprise software and infrastructure stocks perform positively in the tech sector, reflecting growth trends; AMD and NVDA semiconductors decline amid market fluctuations.

Warning Sign? S&P and Nasdaq Flash Outside Reversal Patterns

July 31, 2025/in Investing in stocks, The Trend Letter/by Trend Letter

Market Pulse – July 31, 2025

Here are a few key charts that capture today’s market story.

We start with the S&P 500 heatmap for Thursday. Outside of a handful of Big Tech names – most notably META and Microsoft, which delivered standout earnings -the broader index was awash in red.

Despite strong results from those leaders, both the Nasdaq and S&P 500 posted what’s known as outside reversal days.

Here’s what that means specifically:

‘Outside day’:
The day’s high is higher and low is lower than the previous day’s range – so it completely ‘engulfs’ the prior day’s trading range.

‘Reversal lower’:
The index closes below the previous day’s close, despite opening strong (and possibly making new highs intraday).

Nasdaq – Outside Reversal

S&P 500 – Outside Reversal

What it suggests:

Early strength was overwhelmed by selling pressure, showing a loss of momentum.
Outside reversals to the downside often act as short-term warning signals—especially during extended rallies.
When combined with heavy volume, it can add conviction to the bearish setup.

This doesn’t guarantee a major top, but it raises a caution flag that a pullback or period of consolidation may be near.

Stay informed!

Martin

Market Pulse – July 18/25

July 18, 2025/in Investing in Commodities, Investing in currencies, Investing in gold, Investing in stocks, The Trend Letter/by Trend Letter

Equities & Major Indices

The S&P 500 and Nasdaq set new record highs early in the week, before slipping on profit-taking ahead of key earnings reports.
The Dow Jones Industrial Average also edged lower in the final sessions.
Despite Friday’s dip, the Canadian TSX posted a weekly gain of around +1.1%, marking a year-to-date increase of ~11%.
June retail sales rose +0.6% month-over-month, exceeding forecasts and reinforcing consumer strength and economic momentum.
Strong earnings from major names like Netflix boosted midweek sentiment.
Market gains faded late in the week amid renewed tariff concerns as Trump threatened even more tariffs on the EU.

(Click on images for larger view)

The S&P 500 heatmap shows Big Tech continuing to lead market performance.

Technical analysis of S&P 500

The S&P 500 is testing a key resistance convergence zone, with three short-term resistance levels (yellow lines) in play. So far, it hasn’t been able to break through. A clean breakout above this zone would be a bullish “blue sky” signal. However, if the index retreats, watch the green horizontal support line. If support fails, a deeper correction could follow.

Key Support Levels:
• Initial support: 6150
• Secondary support: 5940

Historic ‘Crypto Week’ in Washington

Lawmakers discussed and advanced several industry-defining bills, including the Anti-CBDC Surveillance State Act, the GENIUS Act, and the CLARITY Act, aiming to provide clearer regulation for cryptocurrencies and stablecoins.

The entire cryptocurrency market cap surged past the $4 trillion milestone, reflecting broad optimism and a fresh bull run across digital assets.

Bitcoin touched new all-time highs above $123,000, but dropped on Friday, it dropped over $2,300. Here’s a thought – Are we about to see a classic ‘buy the rumor, sell the fact’ in crypto? We’re seeing a surge of companies trying to copy MicroStrategy’s game—selling you a $5 bill for $10, wrapped in hype and buzzwords, hoping you won’t realize the value gap until it’s too late.

Recent examples, including the underwhelming CEPO debut could be a warning sign. You can now buy crypto assets directly, and at-par, while some stocks are trading at huge premiums to their real crypto holdings, which historically isn’t sustainable.

While 96 of the top 100 coins appreciated over the week, Ethereum (ETH) stole the spotlight with even stronger relative performance.

Profit-taking risk is high as the emotional mood in crypto has flipped from despair to euphoria in just three months. We would not be surprised to see Bitcoin pull back and test $110K level.

Big picture – traders and institutions seem to be loading up on hard, unmanipulable assets ahead of a possible Fed shakeup. If Trump installs an ultra-dove chair and pushes rates down to 1% while unleashing another wave of liquidity, crypto could rip higher—fast.

Currencies

After a steep decline the $US broke through its downtrend line (diagonal red line) in early July. Initial resistance will be 99.60 (red horizontal line).

Precious metals

Gold hasn’t done much this week, meandering sideways. Gold is in a wedge pattern and has been trading sideways, testing the lower rung of that wedge (green diagonal line).

Platinum has pulled back a touch, taking a breather from its amazing rise since April. If we see a continued pullback, watch for support at 1370.

Silver has been acting as the metallic version of Ethereum

Commodities

Copper spiked after Trump announced 50% tariffs last week. This week, it started to pullback, but closed Friday near an all-time high.

Oil has been trading in a range between 68.80 and 64.80 for the last 5 weeks. While we could have another black swan event that would push oil higher, unless we get one, we should see oil pull back.

There is plenty of oil available—enough in storage to last 50 days—and more supply from OPEC, the US, and Canada is on the way. European sanctions on Russian oil aren’t very effective, since Russia can sell at a discount elsewhere. If US policy pushes prices lower, it could trigger another oil price crash – in the short term. Long -term, we are bullish.

Trick bowling

That’s a wrap!

Martin