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Bitcoin hammering out a bottom; Tesla breaking out

On today’s ‘Getting Technical’ Yahoo Finance’s Jared Blikre is joined by JC Parets, Founder & Chief Strategist at allstartcharts.com.

Video transcript

ZACK GUZMAN: In today's Getting Technical segment, I want to bring on Yahoo Finance's Jared Blikre with a special guest to look at some new breakouts in the space. Jared.

JARED BLIKRE: Yeah, nice intro, Zack. Thank you for that. Guess who else is here? JC Parets of All-Star Charts. And JC, you noticed something that happened in Bitcoin the other day that a lot of other traders noticed as well. It's that hammer candle. I'm going to post this on the YFi Interactive. We got a two-month chart of Bitcoin. And we dipped below 30,000 support very quickly, and then we got a rebound. And what does that mean to you, especially considering what has to happen next?

JC PARETS: Right, and that's the key, right? You know, we talk about a hammer. It's always a potential hammer. You know, they're not that until in hindsight. But they're very characteristics of pivot lows. And 30,000 has been a level that we've been watching for a long time. Remember last year, when Bitcoin broke out above 20,000. For a variety of reasons, 30,000 was our level. So just because we exceeded that and then we went on to change our targets and prices went on throughout the first quarter, as we all know, that doesn't change the fact that 30,000 is still a really important level.

So-- and the market proved that in May last month when that was the low on that initial sell-off. And now we've retested that low, my favorite double bottoms are the ones that we slightly break below the previous lows and then reverse, in this case, in a hammer format, which is just a Japanese candlestick. Because the Japanese used to say that a hammer is because the market is hammering in a bottom, right? That's like the old saying. And that's what the candlestick looks like. But it's not that unless you get follow-through to the upside.

And that's what we're waiting to see now. Are we going to get that follow-through? I think we might. And if we do, 46,000, 47,000 is next. But the beauty of the hammer and I think what goes unnoticed as usual, everyone's always worried about how much money we're going to make. It's not about that. The beauty of the hammer is that you know when you're wrong. Because if it's not a hammer, this thing's going to get destroyed. So we're going to know if it holds 30,000, then it's a hammer. If it doesn't, then it's not. That's the part that people conveniently like to leave out.

JARED BLIKRE: Yeah, and it's beautiful because if you want to punt along here, you still have a really nice stop, considering that it is Bitcoin and still very volatile. I want to move on to some of the breakouts we're seeing. We got Microsoft hitting record highs. We got Tesla. I want to focus on Tesla because it's now almost at 700. And it didn't take that long to get there. Here's a two-month candlestick chart. You can see we got that breakout yesterday. How are you viewing Tesla?

JC PARETS: Yeah, I mean, listen, it's nice. It's breaking out of, like, horizontal trendlines, which, to me, I like my-- it's breaking below diagonal trendlines, I should say. For me, I'm looking at that 750 level. There's trouble there. So for me, I'm feeding the ducks into that level. Like, I'm not long. For me, that's a little too cute. I'd rather see a bigger base over time. I think there's trouble at 750. So I don't need that sort of headache in my life. Now if you're shorter term than I am and that works for your time horizon, go for it. Be my guest. Good trade.

JARED BLIKRE: Yeah, also, ARK is breaking to the upside as well. Of course, that's very levered the same way Tesla is. I want to move on to some tickers that you brought my attention to-- really weren't on my radar. The first one is the First Trust NASDAQ 100 Equal Weight. And so this is going to look a little bit different than the NASDAQ 100 market cap weighted. Can you explain what's going on here and how you're viewing this?

JC PARETS: Right, so, you know, I think it's been well documented that the NASDAQ 100 and some of these other index ETFs are very skewed. They're cap weighted. So the biggest names have the biggest weighting in those indexes. When you equally weight it, you get a broader measure of that particular index. And listen, if the QQ EW, which is that index, that's equally weighted NASDAQ 100, we're above 110. You can't be short, right? You can't make a bearish argument on the NASDAQ, no matter what, if that index is above 110. I think it's that binary for me.

Taking a look at those ARK funds, you mentioned briefly ARKK. I would keep an eye on 130. A lot of trouble there at 130. And I will be very thoroughly impressed if the market is able to exceed those levels and hold above 130. If that's the case, I think that's bullish for that entire growth space. I think it speaks to what we're seeing in the equally weighted NASDAQ if we break out there.

And remember, like, we've been bearish in NASDAW. We're like, get out, stay away. It's not for us. And not being long NASDAQ stocks has worked out in our favor. Now the market is potentially proving that that thesis is no longer valid. And we can go back to buying those names. Now we're watching very closely. I don't think that the stamp of approval has been put on yet. But those are the things we need to see-- ARKK above 130, the NASDAQ Equally Weighted Index above 110. Those are the big levels. If we're above that, then you've got to be long that space.

JARED BLIKRE: And also another one, you know, we talked about European banks-- actually, I never talk about them because they've been dead money for almost a decade. But you're following the iShares MSCI Europe Financials, ticker EUFN. What are you seeing in this ticker?

JC PARETS: Yeah, well, listen, I mean, you make a good point about how European banks are, like, the butt of every joke, right? So one of the reasons we have been so bullish over the last year and change is because European banks kept breaking out. And the argument is, how bad could things be if European banks are breaking out, right? Like, that was the argument.

But if you flip back to your earlier point, if we start losing European banks, then it's like OK, why aren't European banks doing well like they were before? So if EUFN is below 20, then European banks are guilty until proven innocent. We have to err on the side of the bears now, not on the side of the bulls. So 20 is a big level. So if you have your checklist of things that would either be skewed towards the bulls or the bears in the overall equities market, that would be one that if we lose European banks, that's one for the bears.

JARED BLIKRE: Got it. And we know the financials in the US have been doing very well as well for the year to date. JC Parets, All-Star Charts, thank you for joining us.