Former Goldman Sachs executive Raoul Pal is predicting that the stock market will soon form a bottom after witnessing corrective moves for three consecutive weeks.
In a new blog post, the macro expert says that the S&P 500 (SPX) will likely enter oversold territory as soon as this week.
He predicts institutional buyers will move in to buy the dip, establishing a market bottom.
“Additionally, at this pace of sell-off, we’ll be back to oversold conditions for S&P 500 either this week or next…
Remember, retail money has been long this year but the pros (i.e. big banks) have not, and they will very likely use this correction in equities to cover their deeply underwater shorts and get long. This should provide a floor as to how far equities can fall, and we think we can already get there in the next week or two as the September seasonality starts to improve. Let’s see.”
Next, Pal weighs in on Bitcoin (BTC) after the crypto king plummeted last week along with equities.
He says that the DeMark sequential indicator and the relative strength index (RSI) suggest Bitcoin will soon see a bullish reversal.
“Bitcoin also came down over the week to retest key support levels at around $25,200. We just triggered a new DeMark daily 9 setup today. These have worked well in the past in signaling a reversal in price. Additionally, with a current RSI of 20 (yes, 20!), Bitcoin is the most oversold since June of last year.”
The RSI is a widely-used momentum indicator that aims to determine if an asset is overbought or oversold. The DeMark sequential indicator aims to identify turning points in a market with a value of nine signaling a possible trend reversal.
Bitcoin is trading for $26,125 at time of writing, down 0.3% in the last 24 hours.
Pal also says the smart contract platform Ethereum (ETH) is showing bullishness on the RSI indicator.
“ETH is also the most oversold in RSI terms since June of last year and – if anything – looks to have formed a large bull flag pattern (bullish).”
A bull flag is a technical pattern indicating that an asset is in the midst of consolidation prior to the continuation of an uptrend.
Ethereum is trading for $1,674 at time of writing, up 0.1% in the last 24 hours.
Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Check Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
 
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Generated Image: Midjourney