Summing Up The Week

Covid-19 movements gave way to economic indicators and global news events in the markets this week.

While companies continue to announce vaccine progress and Trump’s turnaround regarding masks may stem the spread of the novel coronavirus, international and domestic economic growth have started to shown signs of significant long-term damage as a result of the nationwide and global shutdowns.

Let’s take a closer look at the news that moved the markets this week…

Market News

Coronavirus Vaccines Show Promise – AstraZeneca, Pfizer

Monday was a day of medical news as AstraZeneca (AZN) and Pfizer (PFE) both released results showing positive responses from separate vaccines the two companies are developing again Covid-19, reported CNBC.

The positive news caused the markets to rally with a near-1% pop in the S&P 500 and a more than 2% gain in the NASDAQ as traders once again rolled into growth and technology names to capitalize on the presumed eventual return to normal.

Maybe Masks are O.K. After All…

After months of railing against masks and their use, President Donald Trump on Tuesday urged Americans to wear masks to help contain the coronavirus, reported CNBC.

Someone in the Trump administration must have finally gotten through to the President as he pulled a 180, switching his opinion from mask requirements as infringing on civil liberty to saying wearing a mask is patriotic on Tuesday.

The news sent the markets higher with the hopes that nationwide acceptance of wearing masks could lead to a flattening of the Covid-19 curve as well as a return to economic normalcy.

Jobless Claims at 1.416M vs. 1.3M Expected

The Labor Department reported 1.416 million new jobless claims in the past week versus the 1.3 million expected on Thursday, reported CNBC. The markets sold off as a result of the disappointing news. With the economy showing signs of contracting rather than bouncing back, could this be the beginning of a much more ferocious selloff?

Unemployment Benefits – To Extend or Not To Extend?

The Democrats and Republicans bickered throughout the week as the deadline approached for extension of the unemployment benefits keeping many Americans afloat throughout the pandemic. Up until the end of July, unemployment benefits had been bumped by an additional $600/week.

Democrats wanted to continue the same benefits through the end of 2020 whereas Republicans feared the substantial bonus was preventing many unemployed from even attempting to find new jobs. On Thursday, Treasury Secretary Steven Mnuchin said the Republicans’ plan would be based on 70% replacement of unemployed wages, but failed to provide any idea of how that would possibly be calculated nationwide, reported CNBC.

U.S. vs. China Slap-Fight – Begin!

China ordered the United States to close its consulate in Chengdu, reported CNBC. The news came after the U.S. ordered China to close its consulate in Houston, citing efforts to protect private information of American citizens and intellectual property.

The news sent the Chinese stock market down nearly -4% as the slap fight of closing consulates in retaliation to one another extends the Trade War between the two countries. Given the other market conditions thanks to the ongoing fight against the Covid-19 novel coronavirus, there continue to be several factors facing off against the potential growth of the stock market from these levels.

Next Week’s Gameplan

The market started rolling over this week. If the downward movement continues, we may once again be entering Buying Season. I have already started putting money to work in my boring ETF retirement accounts, but we’re miles away from any of the price targets I hold for Investments in Play.

Only time will tell where we head next week…

This Week in Play

Stay tuned for this week’s episodes of my two portfolios Investments in Play and Speculation in Play coming online later this weekend! 

Crytpo Corner

Bitcoin Price Action

Bitcoin saw a sudden pop to the upside on Tuesday, rising to a new weekly high of $9686.00 before resting. The result is a new range on the weekly charts with a low of $9005.00 and a high of $9686.00.

The current monthly range remains $8815.01 to $10,428.00.

The Bullish Case

Bulls believe this rally could represent the start of a new bull market with more potential upside from here. If Bitcoin can once again break through and stay above the Support of Last Resort, the crypto could make an attempt to make new highs above those of 2019 in the high $13,000s.

The Bearish Case

Bears have been quick to point out that this week’s bullish rally does not indicate a break in the ongoing price consolidation of the past weeks.  While the action was indeed optimistic, the price consolidation range still remains relatively tight when viewed on the monthly timeframe, and the crypto remains closer to the low end of the range rather than the high end.

Bitcoin Gameplan

Current Allocation: 1.515%
Current Per-Coin Price: $9,383.50 (unchanged since last week)
Current Status: +1.465%

The gameplan actually changes a bit this week – if Bitcoin breaks down to the previous level of support, I’ll start adding just like in previous weeks. However, now that we’ve got a little bit of a slow bull rally on our hands, I am eyeing taking a little profit off the table should we try for June’s $10,428.00 high near the high for 2020.

Bitcoin Buying Targets

Using Moving Averages and supporting trend-lines as guides, here’s my plan of buying quantities and prices:

0.216% @ $9098
0.433% @ $8827
0.649% @ $8539
0.866% @ $8268
0.866% @ $8056
0.866% @ $7863
1.082% @ $7371
1.298% @ $6916
1.731% @ $6246
2.597% @ $5807

Bitcoin Selling Targets

Bulls make money, bears make money, and hogs get slaughtered. While $10,428 only represents slightly more than a 10% gain, when it comes to Bitcoin, you take what you can get when you can get it.

My actual sell target is slightly lower than June’s high at $10,369 which represents a 10% gain including Coinbase’s ridiculous trading fees (seriously… all of the equity brokers dump trading fees and Coinbase raises theirs?!)

Why the differing quantities at each level instead of a flat percentage?
Rather than buying an equal percentage, I change my buying quantity at each stage as a reflection of how likely Bitcoin could bottom and rebound from that stage. Rather than increasing my quantity on the way down, I’m used a fixed amount of money, so I’m basing how much I buy by how likely I think Bitcoin will drop to a certain level. In this case, I don’t think it’s likely Bitcoin will be able to break its $3128 low, so my quantities under that price point are less to account for the chances it will get to them.

No price target is unrealistic in the cryptocurrency space – Bullish or Bearish.
While traditional stock market investors and traders may think the price targets in the cryptocurrency space are outlandish due to the incredible spread (sometimes a drop of near -90% or a gain of up to +1000% or more), Bitcoin has demonstrated that, more than any speculative asset, its price is capable of doing anything.

Here are just a few recent price movements over the past couple of years:

• Bitcoin rose +2,707% from its January 2017 low of $734.64 to make an all-time high of $19,891.99 in December of the same year.
• Then, Bitcoin crashed nearly -85% from its high to a December 2018 low of $3128.89.
• In the first half of 2019, Bitcoin rebounded +343% from $3128.89 to $13,868.44.
• From June 2019, Bitcoin dropped -53.64% to a low of $6430.00 in December 2019.
• From December 2019’s low, Bitcoin rebounded +64% from $6430.00 to $10,522.51.
  
• In March 2020, Bitcoin dropped -63.33% to a low of $3858.00, mostly in 24 hours.
• From March 2020, Bitcoin rebounded +170.30% to $10,428.00 in June.
• Where will Bitcoin go from here? Truly, anything is possible…

What if Bitcoin’s headed to zero?
The only reason I speculate in the cryptocurrency space is I truly believe Bitcoin isn’t headed to zero.

I am prepared for that possibility, however, by knowing I could potentially lose all of the capital I’ve allocated to this speculative investment. Professional advisers recommend speculating with no more than 5% of an investor’s overall assets. Personally, I’ve allocated less than 2% of my assets to speculating in crypto.

I feel that anyone who doesn’t believe in the long-term viability of cryptocurrency would be better served not speculating in the space.

On a good day, this asset class isn’t suitable for those with weak stomachs. On volatile days, the sector can induce nausea in the most iron-willed speculator.

DISCLAIMER: Anyone considering speculating in the crypto sector should only do so with funds they are prepared to lose completely. All interested individuals should consult a professional financial adviser to see if speculation is right for them. No Get Irked contributor is a financial professional of any kind.