Market Report for next week and AI
endless possibilities.
Greetings,
you will find the market report further down. I want to express something more important today.
It is forming shape, my own model .
Of course I code with AI, and this is the point I want to discuss. We are in the middle of a revolution, and not many people recognize its true magnitude.
Knowledge and probability measurement have become so inexpensive. With just a few dollars, you can create systems and utilize data that provide such clear predictions that you always have an edge, because the barrier to benefiting from these predictions is also remarkably low.
In trading, you can get Futures accounts for $100. Now, you can obtain high-quality prediction capabilities for roughly the same amount.
I can do the math, you can, everyone can. 51% is enough, and these models are much better with minimal effort.
This needs to have an impact on the system, on us, and on how we value things.
Sure, this is currently just a phase, much like the old days when we could all break into systems and there were simply no laws governing us.
We will face regulation.
We will see technological innovation like quantum computing, etc.
This will not last forever, so use your edge and make some money.
Market Outlook
Report Title: Comprehensive Market Outlook for the Upcoming Week (May 26 - June 2, 2025)
Introduction:
This outlook synthesizes narratives, cycle stages, and trading opportunities from various sources, focusing on the next 5-7 trading days. It aims to provide a structured and insightful overview of the current market environment, incorporating upcoming economic data releases as potential catalysts. The US market will be closed on Monday, May 26th for Memorial Day, and the UK market will be closed for the Spring Bank Holiday, potentially leading to lower liquidity at the start of the week.
1. Detailed Narrative Comparison
This section compares key market narratives, evaluating their current relevance and potential shifts in the coming week.
2. Narrative Cycle Stage Cross-Reference and Timing
This section analyzes the cycle stages of each narrative, comparing general analysis with WSJ analysis, and predicting the expected movement in the cycle stage in the upcoming week.
Key to Narrative Alignment:
USPOL: US Economic Policy (Trade & Fiscal) & Market Impact
AIREV: The AI Revolution/Gold Rush
GEO: Geopolitical Instability & Shifting Global Order
CRYP: Crypto & Stablecoin Regulation and Adoption / Mainstreaming & Risks
CONSUM: Evolving Consumer Landscapes & Economic Pressures
CREDIT: Credit Cycle & Corporate Distress
EV: Electric Vehicle (EV) Transition & Policy
3. Prioritized Trading Opportunities
(Trading Opportunity 1) - US Dollar Bearishness
Trading Action: Short/Sell USD (particularly against EUR, potentially JPY)
Instrument(s): EUR/USD (Long), USD/JPY (Short), DXY (Short)
Rationale: Persistent USD selling pressure (NewsSquak, 1). DailyFX highlights rising US "term premium" due to fiscal concerns/inflation making USD unattractive. This aligns strongly with the USPOL narrative (General: Stage 4 - First Cracks; Fiscal: Stage 3 - Primary Trend), suggesting negative policy impacts. EURUSD uptrend in May supports this.
Time Sensitivity: Short-term (for the upcoming week)
Confidence Level: High (Increased from Medium to High due to USPOL stage advancement and newsfeed confirmation)
Narrative Alignment: USPOL (Very High Conviction), CREDIT
Upside Catalysts (invalidate trade idea - USD strengthens): Surprisingly low US Core PCE (May 30), dovish FOMC Minutes (May 28) signaling rate cuts sooner than expected, significant positive fiscal news (highly unlikely), safe-haven USD buying on a major geopolitical flare-up.
Downside Catalysts (trigger/strengthen trade idea - USD weakens): Higher than expected US Core PCE (May 30), hawkish FOMC Minutes (May 28) that markets interpret as policy error risk, weak US GDP (May 29), poor US Consumer Confidence/Spending data (May 27, May 30), further negative news on US fiscal situation or creditworthiness (e.g., 1). Continued rise in Treasury yields driven by term premium.
(Trading Opportunity 2) - Gold Bullishness
Trading Action: Long/Buy Gold
Instrument(s): XAU/USD (GLD as proxy)
Rationale: Geopolitical tensions (GEO - Stage 3) and weaker USD (NewsSquak). DailyFX sees Gold as a hedge against rising US term premium (fiscal/inflation concerns), aligning with intensified USPOL (Stage 4/3) and CREDIT (Stage 2) narratives. Chinese demand also cited. GLD data shows recent strength and new highs in May.
Time Sensitivity: Short-term (for the upcoming week)
Confidence Level: High
Narrative Alignment: USPOL (Very High Conviction), GEO (High Conviction), CREDIT
Upside Catalysts (invalidate trade idea - Gold falls): Stronger USD, resolution of key geopolitical tensions, surprisingly strong US economic data leading to "good news is good news" for risk assets, falling Treasury yields due to lower inflation fears.
Downside Catalysts (trigger/strengthen trade idea - Gold rises): Weaker USD, escalating geopolitical events, higher US Core PCE (May 30) fueling inflation fears, hawkish FOMC Minutes (May 28) increasing policy uncertainty, rising Treasury yields due to term premium.
(Trading Opportunity 3) - Bitcoin Bullishness
Trading Action: Long/Buy Bitcoin
Instrument(s): BTC/USD
Rationale: Positive adoption news and momentum (NewsSquak - Texas bill, ATHs). DailyFX views Bitcoin as "outright bullish," a hedge against fiscal issues (term premium), similar to gold, and having a strong technical setup. Aligns with CRYP (Stage 2 - Momentum Builds) and indirectly with the intensified USPOL (Stage 4/3) / CREDIT (Stage 2) concerns. BTCUSD has shown a strong rally in May.
Time Sensitivity: Short-term (for the upcoming week)
Confidence Level: High
Narrative Alignment: CRYP (Growing Conviction), USPOL (as a hedge), CREDIT (as a hedge)
Upside Catalysts (invalidate trade idea - Bitcoin falls): Negative regulatory news for crypto, sharp rise in real yields, major risk-off event leading to liquidation of speculative assets, a strong rally in the USD.
Downside Catalysts (trigger/strengthen trade idea - Bitcoin rises): Further positive adoption news, continued rise in US term premium, weaker USD, favorable regulatory developments. US Core PCE (May 30) or FOMC Minutes (May 28) stoking inflation/debasement fears.
(Trading Opportunity 4) - S&P 500 Cautious/Bearish (Conditional)
Trading Action: Short/Sell S&P 500 (Conditional on technical breakdown)
Instrument(s): S&P 500 futures or cash (e.g., SPY)
Rationale: DailyFX highlights technical weakness (trend break, support at 5835). NewsSquak shows general caution. The USPOL narrative (Trade: Stage 4 - First Cracks; Fiscal: Stage 3 - Primary Trend) and CREDIT (Stage 2 - Momentum Builds) suggest significant headwinds. Newsfeed analysis (IDs 197, 199, 201, e.g., 1) consistently links S&P 500 declines and volatility to tariff and fiscal concerns. SPY data shows a recent stall and pullback from mid-May highs.
Time Sensitivity: Short-term (for the upcoming week)
Confidence Level: Medium to High (Increased from Medium due to USPOL severity and newsfeed corroboration)
Narrative Alignment: USPOL (Very High Conviction), CREDIT
Upside Catalysts (invalidate trade idea - S&P 500 rallies): Surprisingly strong US economic data (GDP May 29, Consumer data May 27/30) interpreted positively, very dovish FOMC minutes (May 28) or Fed speak, lower than expected Core PCE (May 30), a fall in Treasury yields.
Downside Catalysts (trigger/strengthen trade idea - S&P 500 falls): Break of key support (5835 per DailyFX), higher than expected US Core PCE (May 30), hawkish FOMC Minutes (May 28), weak US GDP or consumer data, continued rise in Treasury yields/term premium, negative corporate profit revisions (from GDP data May 29). Escalation of trade tensions as per newsfeed (e.g., 1).
4. Risk Assessment
The core assumptions underlying this analysis include:
Dominant & Worsening USPOL Impact: The USPOL narrative (Trade at Stage 4, Fiscal at Stage 3) remains a primary driver of negative sentiment for USD and US equities, and supports Gold/BTC as hedges. Newsfeed analysis strongly confirms this. A sudden positive resolution on trade or fiscal fronts (highly improbable) or a market desensitization would challenge this.
Inflation Stickiness & Fed Response: Expectations are for inflation data (PCE May 30) to remain a key concern, potentially exacerbated by tariff impacts (Newsfeed ID 200). FOMC minutes (May 28) will be critical. A sharp drop in PCE could alter dynamics.
Geopolitical Tensions Persist: Geopolitical instability (GEO - Stage 3) continues to support haven assets. A significant de-escalation could reduce this support.
Narrative Progression as Assessed: The analysis assumes narratives, having evolved from last week, will continue on their current trajectory or predicted movements. Unexpected news could rapidly alter these.
Economic Data Impact: Key data this week (PCE, GDP, Consumer Confidence) are expected to be highly impactful, potentially validating or contradicting current narrative stages and trade ideas.
Market Data Trends Continue: Recent trends observed in EURUSD (up), GLD (up), BTCUSD (up, then slight consolidation), and SPY/QQQ (peaking/slight pullback) are assumed to be indicative of underlying sentiment related to the narratives.
5. Conclusion and Weekly Outlook
Overall market risk sentiment heading into the week of May 26 - June 2 is decidedly cautious to bearish, dominated by the intensified negative impacts of the US Economic Policy (USPOL) narrative, now firmly in "First Cracks" (Trade) and "Primary Trend" (Fiscal) stages. This is a significant deterioration from last week and is strongly corroborated by recent newsflow and market data (weakening USD, stressed bonds, volatile equities). The US Dollar is seen as vulnerable, while Gold and Bitcoin are favored. US equities face considerable headwinds.
Key Drivers for the Upcoming Week:
US Inflation Data (Core PCE - May 30): Paramount for Fed policy and market reaction to the advanced USPOL concerns.
FOMC Minutes (May 28) & Fed Speak: Crucial for gauging Fed's view on persistent inflation amidst fiscal strains.
US Growth & Consumer Data (GDP May 29, Consumer Confidence/Spending May 27/30): Will test the resilience of the US economy against policy headwinds.
Evolution of US Fiscal Narrative & Treasury Yields: Ongoing scrutiny of term premium and its cross-asset impact, now a Stage 3 concern.
Global PMIs (June 2): Snapshot of global manufacturing health.
Potential Roadmap for Market Developments:
Best Case Scenario (Risk-On Tilt, Less Likely): US Core PCE (May 30) is significantly softer, FOMC Minutes (May 28) are surprisingly dovish. This could offer temporary relief for equities and USD, but the underlying USPOL issues (Stage 4/3) would likely cap sustainable optimism.
Worst Case Scenario (Risk-Off Intensifies, Higher Probability): US Core PCE (May 30) is hot, FOMC Minutes (May 28) are hawkish, and US growth/consumer data disappoints, amplifying stagflation fears. This would likely accelerate USD weakness, boost Gold/BTC, and lead to significant S&P 500 downside as USPOL (Stage 4/3) and CREDIT (Stage 2-3) narratives worsen.
Most Likely Scenario: US Core PCE (May 30) remains stubbornly elevated, FOMC Minutes (May 28) reiterate data dependency and caution. US data shows mixed signals of slowdown. This environment supports continued USD weakness, further gains for Gold and Bitcoin, and choppy/downward-biased US equities. The USPOL narrative (Trade: Stage 4; Fiscal: Stage 3) will deepen its negative impact. CONSUM and CREDIT narratives will likely progress further towards Stage 3.
Final Note: Holiday-thinned liquidity early in the week may exaggerate moves. The data-heavy latter half, especially with the USPOL narrative now at critical stages (confirmed by newsfeed and market reactions like 1 and 2), promises significant volatility.