Summing Up The Week
The week shaped up to be incredibly volatile with a sharp selloff Tuesday through Wednesday after a quick Monday pop to start the week. As the potential of a stimulus package before the presidential election weakens with each passing day, bizarre positive news catalysts like a surprisingly strong American consumer buoyed the markets from sharper selloffs.
These are strange days, indeed. Let’s look at the news that moved the markets…
Fauci: Trump’s recovery amplifying public misunderstanding
While not necessarily a “market-moving event,” Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, said Trump’s rapid recovery from COVID-19 has led to an amplification of public misunderstanding of the disease, reported CNBC on Tuesday.
“We’re glad that the president of the United States did not suffer any signifcant consequences of [COVID-19],” Facui said. “But, because he is such a visible figure, it amplifies some of that misunderstanding that people have that it’s a benign disease and nobody has anything to worry about.”
Many Americans don’t understand that the intense treatment Trump received combined with access to drugs not yet available to sufferers of COVID likely led to his speedy recovery. The misunderstanding of the pandemic may continue to be further confused with Trump’s tweets telling Americans not to fear the disease.
Mnuchin dampens stimulus hopes
The markets fell on Wednesday after Treasury Secretary Steven Mnuchin threw cold water on the expectations of a stimulus deal being reached before the election, reported CNBC.
Mnuchin said that getting a deal done prior to the election would be difficult with both Democrats and Republicans still far apart on certain issues, although he did note that the two sides were making progress in certain areas.
His comments followed House Speak Nancy Pelosi who said the White House’s most recent $1.8 trillion aid package “falls significantly short” of what is actually needed.
Jobless claims higher at 898K vs. 830K estimate
Weekly new jobless claims came in at 898,000, much higher than the 830,000 estimated by Dow Jones economists, reported CNBC on Thursday. Accelerating layoffs combined with the inability for the federal government to decide on a stimulus package fueled concerns that the economic recovery is not as robust as the stock market has been making it appear.
Retail sales rose more than expected in September
The U.S. consumer showed no signs of acknowledging economic distress once again as retail sales rose 1.9% in September, significantly more than the 0.7% consensus of Dow Jones economists, reported CNBC.
The most popular category, Clothing and Accessories, led overall gains, rising by 11% while Sporting Goods, Music, and Books jumped 5.7%. Electronics and Appliances showed the only weakness, dropping 1.6% from August.
However, economists expect the number to turn around when third-quarter growth is reported at the end of the month. Additionally, concerns over fourth quarter slowdowns due to increased coronavirus cases have risen with economists pointing to the holiday shopping season as key to what kind of momentum the U.S. will see going into 2021.
Next Week’s Gameplan
The remarkable resilience of the market has led me to raise the buying price targets on positions in my portfolios across the board including Investments in Play, Speculation in Play, and the Pandemic Portfolio.
However, I’m still wary of the potential of a significant correction, so the quantities I’m willing to buy remain conservative as we wait to see what brings us on the road to the presidential election.
Get Irked contributors are not professional advisers. Discussions of positions should not be taken as recommendations to buy or sell. All investments carry risk and all readers must accept their own risks. Get Irked recommends anyone interested in investing or trading any asset class consult with a professional investment adviser to determine if an investment idea is suitable to them and their investment goals.
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Bitcoin Price (in USD)
Bitcoin Price Action
Bitcoin broke bullish over the past week with the rally beginning last Friday and cracking through the previous weekly high of $11,179.90 which acted as support earlier this Friday as Bitcoin pulled back to around $11,200 before finding support.
The crypto’s new weekly high locked in at $11,736.02 with its new weekly low made last Friday at $10,532.11.
The Bullish Case
Bulls stand behind the thesis that Bitcoin’s about to repeat the fractal patterns of 2017 which brought the crypto to its current all-time high near $20,000. In addition to the technical analysis, Bulls believe the current global economic uncertainty provides the fundamental backing to the bull market rally as investors will look for a safe haven out of national fiat currencies.
The Bearish Case
Bears argue that the safe-haven thesis for Bitcoin remains unproven as the crypto continues to hold a positive correlation with the stock market, rising when the market rises and selling off when the market drops. Bears argue that Bitcoin’s inability to make a new high in 2020 beyond $12,486.61 means the crypto will once again test $10,000, breaking through the currently weekly low of $10,532.11, $9813.00 set in September and head for $8815.01 from June.
Current Allocation: 1.582% (-0.200% from last week)
Current Per-Coin Price: $10,537.14 (-0.67% from last week)
Current Status: +7.473%
When Bitcoin started to consolidate around the $11,300-$11,400 mark with my position up around 7.5%, I decided to use stop-loss orders to lock in profits on a small part of my position in case Bitcoin lost support, which it did on Monday morning.
I sold a small part of my allocation up a little over 5% which reduced my allocation by -0.200% of my maximum allotment and lowered my per-coin price -0.67% from $10,608.48 to $10.537.14.
From here, it’s a waiting game – if Bitcoin continues its bull rally, I’ll use stop-losses to take out more profits following the next price consolidation. If Bitcoin breaks bearish, I’ll add more capital back in around the $10,000 mark with additional orders and quantities following at lower levels.
Bitcoin Buying Targets
Using Moving Averages and supporting trend-lines as guides, here’s my plan of buying quantities and prices:
0.645% @ $9959
0.891% @ $9647
1.114% @ $9211
1.559% @ $8558
1.782% @ $7895
2.227% @ $7526
2.673% @ $7121
3.118% @ $6622
3.563% @ $6196
6.610% @ $5522
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 rallied +343% to $13,868.44.
- From June 2019, Bitcoin dropped -54% to a low of $6430.00 in December 2019.
- From December 2019’s low, Bitcoin rallied +64% to $10,522.51 in February 2020.
- In March 2020, Bitcoin dropped -63% to a low of $3858.00, mostly in 24 hours.
- From March 2020, Bitcoin rallied +224% to $12,486.61 in August 2020.
- 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 fully 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. If a speculator isn’t confident in the space, the moves will cause mistakes to be made.
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.
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Suicide Hotline – You Are Not Alone
Studies show that economic recessions cause an increase in suicide, especially when combined with thoughts of loneliness and anxiety.
If you or someone you know are having thoughts of suicide or self-harm, please contact the National Suicide Prevention Lifeline by visiting www.suicidepreventionlifeline.org or calling 1-800-273-TALK.
The hotline is open 24 hours a day, 7 days a week.