Navigating Bullish Momentum: An In-Depth Analysis of Current Equity and Crypto Markets

By Zion Zhao | 狮家社小赵

The U.S. equity and crypto markets are currently riding an extraordinary wave of bullish momentum, breaking new all-time highs and challenging conventional wisdom about market cycles and corrections. From the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) to high-profile names like Tesla, Nvidia, and Bitcoin, asset prices continue to surge, defying persistent calls for correction. In this essay, I integrated my experience of technical analysis and elaborates on the strategic implications for retail and institutional investors alike.

The Macro Picture: Equity Markets at Record Highs

First of all, it worth to emphasise the remarkable strength of the SPY and QQQ, with weekly candles closing above previous resistance and marking new all-time highs. Such price action underscores a prevailing bullish trend, as confirmed by technical indicators like the 21-day exponential moving average (EMA) and the respect for major support levels. According to recent data, the S&P 500 and Nasdaq indices have indeed continued to post record highs through mid-2024, reflecting persistent optimism fueled by robust earnings, continued AI enthusiasm, and resilient macroeconomic data (Bloomberg, 2024; Reuters, 2024).

A critical insight is the importance of not "chasing breakouts" at resistance. Instead, I always advocate for patience, waiting for price action to confirm a breakout or for a backtest of prior support. Let it come to you, don't chase it. This approach is well-supported in academic literature, as studies show that trading at support and resistance levels—especially when confirmed by volume and momentum indicators—enhances risk-adjusted returns (Lo et al., 2000).

Sector Highlights: Nvidia, Tesla, and the Power of Technicals

Nvidia (NVDA)

Nvidia's technical resilience is worth taking note, specifically its ability to maintain price above the crucial $152 level—a former resistance now acting as support. The "principle of polarity," whereby old resistance becomes new support, is a cornerstone of classical technical analysis (Pring, 2014). Nvidia's continued strength is further underpinned by its market leadership in AI chips, with recent earnings and forward guidance exceeding expectations (Nvidia, 2024; CNBC, 2024). The market’s reaction to these technical and fundamental factors suggests sustained institutional demand.

Tesla (TSLA)

Tesla's price behaviour reflects classic psychological support at the $300 level which is a significant price point. The stock has shown resilience, bouncing off this level despite prior volatility, and is now seeking confirmation above the 21-day EMA. This mirrors broader observations that round numbers often serve as psychological anchors in financial markets (Kahneman & Tversky, 1979). While the risk-reward may not be optimal for new entrants at current levels, Tesla’s long-term weekly chart hints at potential for a bullish pivot and a retest of its all-time highs.

Advanced Micro Devices (AMD)

AMD’s price action remains firmly bullish, with higher highs and lows above the 21-day EMA. While some analysts prefer a deeper pullback for more favourable entries, the current trend confirms continued institutional accumulation and sectoral strength in semiconductors—one of the best-performing segments of 2024 (IC Insights, 2024).

The Crypto Crossover: Bitcoin and Related Stocks

Bitcoin (BTC)

Bitcoin’s technical setup is characterised as being at a "final boss" resistance level around 109,500–109,741. The risk of retracement but remain optimistic about a breakout, citing the recent bullish engulfing candle—a statistically reliable reversal pattern (Bulkowski, 2008). This pattern’s reliability has been documented in academic research, with bullish engulfing formations often presaging further upside in trending markets (Caginalp & Laurent, 1998).

Coinbase, Marathon Digital, and Bitcoin Miners

Coinbase (COIN) and other crypto-related equities (such as Marathon Digital, Mara, Microstrategy) are highlighted as proxies for Bitcoin’s price action. The positive correlation between these stocks and the underlying crypto asset is well established (Baur et al., 2018). The technical call is clear: buying near support levels and selling at resistance remains the optimal strategy, consistent with risk management principles espoused in professional trading literature (Elder, 2014).

Key Technical Takeaways: The Importance of Support, Resistance, and Trend Confirmation

During this times of volatility, I need to emphases and underscore the following universally applicable trading principles:

• Trade Reactively, Not Predictively: Attempting to forecast exact tops or bottoms is generally futile. Instead, respond to price action at key inflection points (Murphy, 1999).

• Support and Resistance Are Paramount: Only act when price respects or violates well-established support/resistance, confirmed by secondary indicators.

• Risk Management Is Non-Negotiable: Use stop-losses to control downside, and always assess the risk-reward ratio before entering trades (Elder, 2014).

These tenets are not just anecdotal—they are supported by decades of empirical research and professional experience (Lo et al., 2000).

Conclusion: Navigating the Bull Market with Discipline and Strategy

The U.S. equity and crypto markets are currently demonstrating exceptional bullishness, driven by macroeconomic resilience, sectoral leadership in technology and AI, and strong technical underpinnings. While risks of correction always exist—especially at major resistance—there is no technical evidence of a market top as long as key support levels are respected. The judicious use of technical analysis, disciplined risk management, and a focus on trading reactively rather than predictively can help investors and traders navigate this extraordinary environment.

As the financial landscape evolves, the lessons distilled from these market commentaries remain timeless: trade with strategy, respect the charts, and always protect your downside.

Lastly my final advice, as hard as it is to hear this, if your annualised return is worst than 9-12%, you might want to consider dollar cost average into the major indexes such as SPY, QQQ, VTI or even SCHD. Trading might not be for everyone, but Investment is for everybody... 

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References

• Baur, D. G., Hong, K., & Lee, A. D. (2018). Bitcoin: Medium of exchange or speculative assets? Journal of International Financial Markets, Institutions and Money, 54, 177–189. https://doi.org/10.1016/j.intfin.2017.12.004

• Bloomberg. (2024). S&P 500 and Nasdaq notch fresh records on robust earnings, AI enthusiasm. https://www.bloomberg.com

• Bulkowski, T. N. (2008). Encyclopedia of Candlestick Charts. John Wiley & Sons.

• Caginalp, G., & Laurent, H. (1998). The predictive power of price patterns. Applied Mathematical Finance, 5(3), 155–168. https://doi.org/10.1080/135048698334050

• CNBC. (2024). Nvidia’s Q2 earnings beat expectations as AI demand soars. https://www.cnbc.com

• Elder, A. (2014). The New Trading for a Living. John Wiley & Sons.

• IC Insights. (2024). Top-performing semiconductor companies in 2024. https://www.icinsights.com

• Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–292. https://doi.org/10.2307/1914185

• Lo, A. W., Mamaysky, H., & Wang, J. (2000). Foundations of technical analysis: Computational algorithms, statistical inference, and empirical implementation. The Journal of Finance, 55(4), 1705–1765. https://doi.org/10.1111/0022-1082.00265

• Murphy, J. J. (1999). Technical Analysis of the Financial Markets. New York Institute of Finance.

• Nvidia. (2024). Q2 2024 Earnings Release. https://www.nvidia.com/en-us/about-nvidia/investor-relations/

• Pring, M. J. (2014). Technical Analysis Explained (5th ed.). McGraw-Hill.

• Reuters. (2024). U.S. stocks hit record highs amid economic optimism. https://www.reuters.com