Market insight & crypto airdrops, October 27, 2022

The relief was felt yesterday because the market had been becoming increasingly overbought in the past few weeks.

The rise in the S&P futures despite the rise in US 10yr rates suggests that the market is becoming overbought. That is because rising rates typically indicate a tightening of financial conditions, which is typically negative for equity prices. However, the fact that the S&P has continued to rise despite this suggests that investors are becoming complacent and are underestimating the potential downside.

Additionally, the catalysts previously thought to be positive (the November 2nd Fed meeting and the November 8th US election) now look like potential points of exhaustion for the rally.

It may be a good opportunity to be somewhat skeptical about this rally. Can the market rally further? Yes, but some healthy skepticism might be a good idea.

This rally needs to show that it is stronger than the average bear market rally to continue.

The average bear market rally lasts 10-14 days and increases prices by 8-9%. Right now, this rally is a ~10% move up

, but we need some more proof that this isn't just another bear market rally.

I wrote an article about bear markets which you can find here: https://romanornr.medium.com/bear-market-types-and-characteristics-3ffcc41ebbfa

SPX500 & skew trends for options

The options market suggests market players expect some Fed "intervention."

Since stock buybacks are ending and the Fed is approaching its blackout period, which prevents policy adjustments.

Investors are jittery about the midterm elections.

Earnings recession

I wrote about the upcoming incoming earnings recession on October third

Fed pivot is likely, but it may not happen soon enough to change the trajectory of earnings estimates, which is the primary concern for stocks. In other words, stock prices will likely continue falling unless the Fed intervenes.

However, if the Fed does take action, it could lead to a sharp rally in stock prices. It's important to remember, though, even if there is a short-term rally.

The underlying problem of an earnings recession is still there, and the Fed cannot do anything to stop it.

So, you may be able to glimpse the "light" at the end of the tunnel. *If* that happens

That "light" might come from the train of the oncoming earnings recession that the Fed can't stop!

For anyone who doesn't know what a Fed pivot is, A Fed pivot refers to the central bank changing its course of action, and in this case, it would mean the Fed starting to lower interest rates.

Short-term rallies may happen because people try to anticipate and time a Fed pivot Which may take longer than expected, so there's a good chance of some rallies which are prone to failure.

My original tweet thread: https://twitter.com/RNR_0/status/1576721374802251777

The results

The earnings recession and stocks are taking a beating.

HYG & LQD

The high-yield bond market (HYG) and the investment-grade bond market (LQD) have rebounded from recent lows.

However, HYG has outperformed LQD, which is noteworthy given the recent performance of these two markets. HYG is the market for high-yield bonds, which are typically considered to be riskier than investment-grade bonds.

LQD is the market for investment-grade bonds. The fact that HYG has outperformed LQD is significant because it suggests that investors are becoming more willing to take on riskier investments.

We should monitor this closely, as it could have implications for the overall market.

10-year Treasury note

The yield on the 10-year Treasury note is a key variable in markets, as it helps to determine interest rates and borrowing costs.

A falling yield can signal further declines ahead as investors seek safety in government bonds.

The yield is currently at 3.9%; if it falls below 3.6%, it could signal a move to even lower levels. This is a key development to watch, as it could have far-reaching implications for markets.

Bitcoin

Bitcoin has lagged behind other assets recently, but a decline in equities might change that Bitcoin may benefit if investors become concerned about equity prices and seek alternate investments Volatility may rise if people buy more BTC Bitcoin call spreads are attractive.

I tweeted this yesterday

I actually decided to buy the 28 Oct call option ($19.5k strike) and sell 22 Nov call option ($23k strike)

However, this is the updated version. Decided to sell some more calls.

If you want to trade options I recommend Deribit & Bybit

Deribit ref link for discount: https://www.deribit.com/reg-572.9826

Bybit ref link for discount: https://www.bybit.com/register?affiliate_id=6776&group_id=0&group_type=1

If you're interested in only futures trading, you can also signup for FTX, my link gives you a 10% discount on fees instead of 5% from others: https://ftx.com/referrals#a=1847531

Do you want to learn more about options trading? I wrote a series of articles for options trading

LayerZero airdrop

The LayerZero Aptos Bridge is a new way to move assets into the Aptos ecosystem. With the launch of the LayerZero protocol, the Aptos Bridge will allow users to move USDC, USDT, and ETH into Aptos from Ethereum, Arbitrum, Optimism, Avalanche, Polygon, and BNB Chain.

The bridge is live now and can be found at

theaptosbridge.com

Once you arrive in the Aptos ecosystem, the bridge will airdrop you APT!

For more info:

If you need an Aptos wallet, I recommend Petra wallet (for now)

The zkSync 2.0 mainnet (airdrop)

The zkSync 2.0 mainnet launch

If you didn't get a chance for zkSync airdrop, you could still do so.

Configure your Metamask like this

Then go to https://portal.zksync.io/faucet

You will be sent to Twitter to tweet a promoted message. After you tweet the message, you will receive ~$700 worth of testnet tokens.

You don't need ETH to pay on zkSync. On zkSync, users pay transaction fees for the tokens being transferred. ZkSync is convenient because it doesn't require ETH, making the airdrop somewhat risk-free.

Overline Metaverse

The Free Metaverse Land project is intriguing since it aims to create a decentralized worldwide network that does not need internet connectivity. The project has a lot of promise, but we're more interested in the project's land pieces, known as Lands.

Each Land represents 1.67 acres of land somewhere on the planet. Landowners may earn the project's native OL tokens and compete for one of 10,000 Friends NFTs, which should be valuable owing to their scarcity compared to the quantity of lands generated.

Given the scarcity of Friends, it wouldn't make sense to give them away to owners of non-rare property parcels. As a result, the approach is to monitor and finish project emails to see and accomplish chores that will make your lands unique. You should have a better chance of grabbing a Friend this way. So far, you can perform the following.

Claim your free land. This may need the use of a referral link. To get one, visit the project's Discord server. Daily Cash may be claimed by visiting the project's website. Convert your cash into treats and utilize the treats to improve your farm.

Click here for the aidrop

This is how the dashboard looks.