The uptrend is still very much alive and well, says Fairlead's Katie Stockton

Joe Kernen (Squawk Box Co-Anchor) 00:00.070

here joining us now to talk next technicals katie stockton fair lead strategies founder and a CNBC contributor i think katie you were looking for some some tough head like advances but not as even and easy as we had following the april sell off but the market is is continued to

Joe Kernen (Squawk Box Co-Anchor) 00:22.110

grind higher

Katie Stockton (Founder & Managing Partner) 00:24.520

yeah you know i wouldn't call it a grind higher but it certainly is very close to new highs since october mid october we've seen a loss of momentum and you've seen you feel it right you feel the ups and downs it's more volatile it does feel like it's taken on a different

Katie Stockton (Founder & Managing Partner) 00:39.840

character than it had in the earlier stages off the april low that's not necessarily bearish but what we have seen is a loss of intermediate term momentum that puts us on watch for a deeper corrective phase we're always believers in breakouts so if we do see the S and P breakout

Katie Stockton (Founder & Managing Partner) 00:55.910

to new highs that would mean for us a couple of good solid closes above final resistance that sixty nine eleven that would be a short-term positive catalyst but otherwise we're going to assume that we're still in this kind of corrective mode and wait for a better entry point and

Katie Stockton (Founder & Managing Partner) 01:12.390

that can be triggered by things like oversold upturns so there are positive catalysts that we would certainly adhere to if we see them just noting that of course the uptrend is still very much alive and well why

Joe Kernen (Squawk Box Co-Anchor) 01:25.350

doesn't a new high count as a breakout we've already gotten that what do you mean if we get a breakout yeah

Katie Stockton (Founder & Managing Partner) 01:31.750

so it's really important to see confirmation we found that new highs just incremental new highs or if you hit it intraday if you're not holding up there can very easily be a whipsaw especially right now of course the market has low volume especially in environments that emotions

Katie Stockton (Founder & Managing Partner) 01:49.910

are running high i don't know if i would argue that this is one of them but do you just want to make sure that i holds for or if it's a short-term breakout a couple of days to prevent any kind of whipsaws to the upside and the same would go for the downside so it's more of a

Katie Stockton (Founder & Managing Partner) 02:05.070

confirmation that we're looking for versus just an incremental new high

Joe Kernen (Squawk Box Co-Anchor) 02:09.390

so you can have a resistance that that is above the level where the market has ever traded it's hard to how do you come up with a number if the markets never

Katie Stockton (Founder & Managing Partner) 02:20.270

yeah if you recall in the the breakout that occurred in the springtime we assigned a measured move projection of about sixty eight eighty and that's why in part we think that we're seeing some of this consolidation that sixty eighty was just assuming the trajectory of the

Katie Stockton (Founder & Managing Partner) 02:35.350

uptrend the longer term uptrend would maintain itself if we were to see another breakout here very short term you could get to maybe seventy one hundred off that it's not a very impressive breakout especially since the support is about three percent below as well so risk reward

Katie Stockton (Founder & Managing Partner) 02:51.270

isn't great in terms of those measured move projections you had said before or the break you know seven percent it's really eight or nine percent upside to a longer term objective that's more aggressive with the best we can get to is about seventy five hundred and these measured

Katie Stockton (Founder & Managing Partner) 03:06.990

moves are essentially they become resistance just by the nature of the uptrend it's kind of the character of the uptrend it's not an actual area that we've seen selling pressure before

Joe Kernen (Squawk Box Co-Anchor) 03:18.190

if you were purely basing things on fundamentals you would think that the bond market you would think that a you know a move lower in yields because of the weak labor market on the ten year would be forthcoming maybe down below four maybe a three handle but with the number

Joe Kernen (Squawk Box Co-Anchor) 03:39.950

yesterday with the GDP we saw you know a couple of basis points added to the yield what what do the charts say about and we've had the fed cutting so there's a lot of reasons to think i mean that doesn't always hold with the long end if if the fed cuts obviously but is it more

Joe Kernen (Squawk Box Co-Anchor) 03:58.990

likely that we go to four and a half or go down into the threes katie

Katie Stockton (Founder & Managing Partner) 04:03.390

you know i'm more in the threes camp but whenever a chart is confusing where you have indications from different time frames that are different which is what we have right now now it's usually a trading range so of course we've seen ten year treasury yields pretty much range

Katie Stockton (Founder & Managing Partner) 04:19.110

bound for a long time even short-term range bound so until we see some meaningful move out of that range to the upside or downside we're just going to assume more of a neutral bias if you look at the monthly indicators they do mostly point lower for yield so that's where my sort

Katie Stockton (Founder & Managing Partner) 04:36.030

of threes bias comes from but not until we see a more decisive breakdown from what you could call a longer term triangle would we make that call more aggressively so just in terms of the next support level which is around three sixty seven

Joe Kernen (Squawk Box Co-Anchor) 04:51.030

support level on bitcoin it was at seventy eight or what we're i don't remember last time around but you said it could get down in the seventies

Katie Stockton (Founder & Managing Partner) 04:59.150

eighty thousand six hundred was the bottom boundary of our cloud model which has been really relevant for bitcoin it's since risen to about eighty four eighty five thousand so that is where their support we have a more constructive near term bias on bitcoin just given some

Katie Stockton (Founder & Managing Partner) 05:15.190

indications that it's responding to oversold conditions however if you look at the monthly chart of bitcoin there's been some real deterioration for those that track the momentum gauges they've mostly rolled over to suggest that maybe it's not going to be the the cyclical

Katie Stockton (Founder & Managing Partner) 05:29.310

uptrend that we would hope maybe it's more of a trading range or a down cycle for cryptocurrencies as we come into twenty six

Joe Kernen (Squawk Box Co-Anchor) 05:37.510

reason to think that that volatility is less than it was two years ago and because we had someone say that you know there used to be a possibility of an there were several eighty percent drawdowns in in the on the price of bitcoin this is anthony pompliano said maybe you get

Joe Kernen (Squawk Box Co-Anchor) 05:55.310

four maybe it's half this vault maybe you get forty percent drawdowns which is what we've already had is there any reason to think that or is eighty percent still possible

Katie Stockton (Founder & Managing Partner) 06:03.520

i mean well i would i think it's still possible frankly but i don't think it necessarily is is imminent or something people should worry about you would you would suspect that with more institutional involvement that the volatility would go down but as it stands i don't think

Katie Stockton (Founder & Managing Partner) 06:17.590

we're quite there yet and volatility is cyclical even just looking at something like the vix you can see the cycles and volatility you kind of move from a high volatility regime to a lower volatility one and and i i would argue that this probably is not going to be necessarily a

Katie Stockton (Founder & Managing Partner) 06:32.110

low volatility cycle usually when you see that loss of long term momentum it is a more volatile environment and it doesn't mean it we can't take advantage of that we can simply use shorter term indicators to sort of leverage those moves in bitcoin and that volatility can be a

Katie Stockton (Founder & Managing Partner) 06:48.230

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