Sonderberg Market Outlook

Markets enter the week at a critical inflection point, with Bitcoin compressing below major resistance while equities cool after a confirmed divergence and the post FOMC macro backdrop begins to shift.

Market Recap

Bitcoin continued to range on the weekly chart for a second week, rejecting from the 94K resistance area near the yearly open. The S&P 500 completed a 3 day bearish divergence following the FOMC decision and then turned lower, closing the week negative and signaling the start of a cooling phase. The US Dollar Index weakened after the Federal Reserve delivered a widely expected 25 basis point rate cut, declining from 99.210 to 98.393. Powell’s messaging leaned hawkish toward 2026, with the dot plot showing growing disagreement among policymakers and 3 officials now projecting possible rate hikes, leading markets to price in fewer future cuts while the Fed emphasized balanced risks to inflation and the labor market.

The Coming Week and What I Look For

Bitcoin Analysis

Looking at the weekly chart, Bitcoin has spent the past 2 weeks ranging while repeatedly rejecting from the 94K area. This consolidation phase can continue for some time until one of the 2 primary scenarios plays out.

The scenarios remain unchanged.

In scenario 1, Bitcoin rejects again from the 94K resistance. This area is significant because it aligns closely with the yearly open and has already proven to be a strong supply zone. From such a rejection, I expect Bitcoin to move below 84.5K, where it could begin forming a bullish divergence on the 1D to 3D time frames. To properly establish a higher time frame bullish divergence, Bitcoin could drop into the mid 70K range. Once that divergence is in place, Bitcoin would likely rally into a bearish retest of the 50WMA around 102K or even up to 107K, where the upper boundary of the green parallel channel that defined the entire bull market sits.

In scenario 2, the structure resolves faster. Instead of a deeper correction first, Bitcoin flips the 94K level and moves directly toward a bearish retest of the 50WMA. The end result would be similar, but the path would be more direct.

It is important to note that if scenario 1 plays out, the probability of a sustained rally afterward is higher than in scenario 2. A deeper correction followed by a clear bullish divergence generally creates stronger conditions for a meaningful countertrend move.

After a rejection at the 50WMA, regardless of which scenario unfolds, I expect Bitcoin to continue lower toward the 200WMA, though this will not happen overnight and likely take until Q2/Q3 of next year. This would place Bitcoin around 50-60K, which aligns closely with previous cycle behavior.

Given the somewhat hawkish stance of the Federal Reserve looking into 2026 and the presence of a 3D bearish divergence on the S&P 500, it is possible that the market begins to resolve this consolidation phase as early as next week.

S&P 500 Analysis

The S&P 500 initially reacted positively to the FOMC decision but in doing so completed a 3D bearish divergence that I have been warning about for the past 2 weeks. Once this divergence was confirmed, the index began correcting on Friday and closed the week negative.

Divergences tend to be less reliable in traditional markets than in crypto, but they remain important signals, especially when they appear on higher time frames. The last time the S&P 500 formed a 3D bearish divergence, it resulted in a correction of approximately 20%. This does not imply that a similar magnitude move is imminent, but it does increase the likelihood that the current cooling phase continues.

DXY Analysis

The US Dollar Index has weakened following the Federal Reserve rate cut, declining from 99.210 to 98.393. In the short term, a rate cut typically pressures the Dollar, particularly when investors begin to anticipate the end of the easing cycle or expect tighter policy from other central banks such as the BoC, ECB, or RBA. This relative shift strengthens other currencies against the Dollar while the Dollar itself softens.

I will continue to monitor the Dollar closely, as sustained weakness in the Dollar generally provides support for risk assets.

FOMC and Macro Outlook

The Federal Reserve delivered a widely expected 25 BPS rate cut. Chair Powell’s communication leaned relatively hawkish with respect to 2026, signaling a likely pause ahead. Markets are now pricing in only 1 additional rate cut next year. The Federal Reserve appears to view current policy as close to neutral, reducing the urgency for further easing and limiting downside pressure on the Dollar. All projections remain data dependent and subject to change.

The dot plot revealed growing disagreement among policymakers regarding the rate path from 2025 into 2026. 3 officials now see rate hikes as a potential outcome, up from 2 previously. While still a low probability scenario, it represents the most hawkish outcome currently being considered. The Federal Reserve also emphasized risks to both inflation and the labor market, increasing the probability of stagflation, a risk I have been highlighting since 2022.

Overall projections point toward a soft landing rather than a sharp recession or renewed expansion. Economic growth is expected to improve into 2026 before moderating. Inflation is projected to continue trending toward the long term target near 2% while remaining elevated in the near term. The labor market is expected to cool modestly, with slightly higher unemployment but overall stability. Policy rates are projected to decline gradually over the coming years rather than through aggressive cuts, reinforcing the idea that current rates are near long term equilibrium, with the neutral rate estimated around 3%.

Upcoming inflation and labor data will be crucial in shaping expectations.

Looking Ahead

Next week presents several potential market moving catalysts. These include the Nonfarm Payrolls report, Retail Sales, CPI data, and a Bank of Japan meeting late in the week. A more hawkish than expected outcome from the BOJ could push Japanese yields higher and, by extension, lift US Treasury yields. This would likely increase volatility across global markets.

Tech stocks may continue to underperform in the near term. Persistent selling driven by AI valuation concerns or negative surprises from the upcoming data releases could weigh further on investor sentiment and lead to additional weekly losses.

Calendar

Monday (Dec. 15)

Economic: Empire State Manufacturing, NAHB Housing Market Index
Earnings: MindWalk Holdings Corp. (HYFT), Navan Inc. (NAVN), US Gold Corp. (USAU)

Tuesday (Dec. 16)

Economic: Average Workweek, Average Hourly Earnings, Building Permits, Business Inventories, Capacity Utilization, Housing Starts, Industrial Production, Nonfarm Payrolls, Retail Sales, Unemployment Rate
Earnings: Duluth Holdings Inc. (DLTH), Lennar Corp. (LEN), Waldencast PLC (WALD), Worthington Enterprises Inc. (WOR)

Wednesday (Dec. 17)

Economic: Business Inventories, EIA Crude Oil Inventories, MBA Mortgage Applications Index, Retail Sales
Earnings: ABM Industries Inc. (ABM), Enerpac Tool Group Corp. (EPAC), General Mills Inc. (GIS), Jabil Inc. (JBL), Micron Technology Inc. (MU), Toro Co. (TTC)

Thursday (Dec. 18)

Economic: Continuing Claims, Consumer Price Index CPI, EIA Natural Gas Inventories, Initial Claims, Leading Inventories, Net Long-Term TIC Flows, Philadelphia Fed Index
Bank of Japan Monetary Policy Meeting December 18 to 19
Earnings: Accenture PLC (ACN), Birkenstock Holding PLC (BIRK), CarMax Inc. (KMX), Cintas Corp. (CTAS), Darden Restaurants Inc. (DRI), FactSet Research Systems Inc. (FDS), FedEx Corp. (FDX), HEICO Corp. (HEI), KB Homes (KBH), Nike Inc. (NKE)

Friday (Dec. 19)

Economic: Existing Home Sales, Q3 GDP Third Estimate, PCE Prices, Personal Income, Personal Spending, University of Michigan Consumer Sentiment Final
Earnings: Carnival Corp. (CCL), Conagra Brands Inc. (CAG), Lamb Weston Holdings Inc. (LW), Paychex Inc. (PAYX), Winnebago Industries Inc. (WGO)

Invitation

If you manage a 6-figures or more portfolio, missed the top and want clarity with a structured timing system, make sure to book a 1:1 diagnosis call with me. I will go through your portfolio and situation and see how I can help you.

Book 1:1 call with me here: Diagnosis Call

Kind regards,
Diego Sonderberg

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