Summing Up The Week

With markets at all-time highs, investors around the world are certainly feeling jumpy. We saw some weak market action on Monday and Tuesday with a respite on Wednesday. Then, Biden introduced a “known unknown” – potential doubling of capital gains taxes for Americans making $1M+ – and the market was shaken up on Thursday.

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

Market News

Is the market “exhausted?”

Analysts believe the markets are exhausted with a growing chorus warning are at “peak everything,” peak earnings growth, peak economic data, and peak reopening, according to CNBC.

In review of the S&P 500’s 76% gain in the past 12 months, Michael Batnick, Director of Research at Ritholtz Wealth Management, noted in a post, “we’ve had bear markets before, but we’ve never had this type of rally in such a short period of time; now is probably a good time to do some spring cleaning in your portfolio.”

Giving the counter-argument, strategists at JPMorgan and Franklin Templeton believe vaccinations and reopening will lead to either higher gains from here.

While the bull case sure sounds nice, the extremely negative price action early in the week seemed to support the bears for the moment, at least.

New weekly jobless claims at 547K vs 603K estimate

New jobless claims in the past week totaled 547,000 versus the 603,000 Dow Jones estimate, reported CNBC on Thursday. Despite more than a half-million more Americans finding themselves out of work, the number does represent a new low for the post-pandemic era.

“The dip in jobless claims looks good in isolation but what really matters is that it confirms that last week’s unexpected plunge was no fluke,” wrote Ian Shepherdson, Chief Economist at Pantheon Macroeconomics. “We expect further declines over the next few months as reopening continues, while payroll growth will accelerate markedly.”

Existing home sales fall for second straight month

Closed sales of existing homes fell 3.7% in March according to the National Association of Realtors (NAR), reported CNBC on Thursday. The median price of an existing home sold in March was $329,100, a 17.2% increase from March 2020.

Real estate experts pointed to the dwindling supply of existing homes combined by still-low mortgage rates as reasons for the decrease in sales. “If the demand was retreating, then we would see fewer multiple offers, but we know that multiple offers are widely prevalent in today’s market,” said Lawrence Yun, Chief Economist for NAR.

The supply of homes for sale has dropped 28.2% over the past year, with only 1.07 million homes for sale at the end of March, a 2.1-month supply at the current pace versus the typical 6-month supply seen in healthy real estate markets traditionally.

Biden to propose 39.6% capital gains tax to fund programs

After having a strong rebound on Wednesday, the markets dove Thursday when reports said President Joe Biden will seek to raise taxes on millionaire investors by increasing capital gains to 39.6% on Americans earning more than $1 million to fund education and child care, reported CNBC. The current capital gains tax is 20%.

As a quick refresher: the capital gains tax is what investors pay on the gain over their initial investment and applies to stocks, bonds, cryptocurrencies, and many other investments.

The additional funds would pay for the president’s upcoming $1 trillion American Families Plan which is expected to include measures to help U.S. workers learn new skills, expand subsidies for child care, and to potentially make community college tuition free for all Americans.

Regardless of how investors feel about the plan, the markets naturally sold off as investors making $1 million or more may start taking profits now to avoid potentially paying nearly twice as much in capital gains tax as they initially expected.

What is a “known unknown” and an “unknown unknown?”

There are a few news events that can shake up a market negatively. A “known unknown is one similar to President Biden’s tax proposal. Investors new that a Democrat regime would introduce taxes, but they didn’t know what kind of taxes those would be. When a tax plan is announced, the market sells off, but since it was known that some news would be coming, the selloff typically isn’t severe.

An “unknown unknown” is an unexpected event that no one saw coming – think the 2020 Pandemic or September 11th, 2001. These events can have catastrophic effects on the stock market as no one saw them coming and no one knows how widespread the effects could be so the general public will panic-sell the markets dramatically.

Next Week’s Gameplan

My gameplan remains relatively unchanged from it where it was in prior weeks – carefully adding to positions when they reach key support or valuation levels, but remaining conservative as a market at or near all-time highs can be incredibly jumpy, to say the least.

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

Important Disclaimer

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.

Bitcoin's Road to Nowhere - Get Irked

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Bitcoin Price (in USD)


Weekly Change

Bitcoin Price Action

Bitcoin pulls back, but how low will it go?

Over the weekend, Bitcoin pulled back pretty significantly with the largest drop happening early Sunday morning where Bitcoin pulled all the way back to The Moneymaker trendline before finding support… which eventually fell through when tested later in the week.

Currently, Bitcoin has found new support at $47,500.00, -26.81% off its new all-time high of $64,896.75. If that doesn’t hold, we’re looking at the line-in-the-sand drawn on February 28 at $43,016.00 with no significant support after that point until around the psychological support of $30K.

The Bullish Case

Bulls adhere to their “this time is different” argument thanks to institutional buying. Bulls continue to defend Bitcoin’s price action, claiming the larger company buying will prevent the severe -50-80% pullbacks seen in the crypto’s past.

The Bearish Case

Bears have finally started coming out of the woodwork, claiming Bitcoin could pull back -50% or more from these levels. While I am more inclined to agree with the Bears than the Bulls since, historically, Bitcoin repeats a specific pattern of reaching new nosebleed highs before plummeting precipitously, I am still keeping a trade on since institutional buyers may affect how much of a drop the crypto sees this time.

Bitcoin Gameplan

Current Allocation: 4.979% (*NEW TRADE*)
Current Per-Coin Price: $55,677.08 (-1.244% from opening price)
Current Profit/Loss Status: -11.803% (*NEW TRADE*)

*New Trade Opened* The Trade’s On!

My first buy filled at $56,378.63 on Saturday when Bitcoin pulled back to the 50-Day Moving Average (MA) which had been providing support these past few months… and failed.

After crashing through its moving average, Bitcoin dropped through my next buy order which filled at $52.127.68, giving me an average per-coin price of $55,677.08, a discount of -1.244% from my opening price. I also decided to size up my initial allocation in order to capture more upside should Bitcoin bounce from here, so my current allocation is 4.979% of the maximum target position size.

Given that Bitcoin hasn’t seen a significant pullback since March 2020, I’m approaching this current pullback with a plan that can account for a pullback in excess of 80% (in 2017, following Bitcoin’s last all-time high, the crypto pulled back more than -84% before finding support for the next run giving us a price target in the low $10,000s from its current all-time high).

Also, I’ve been to this rodeo three times now (although I do hate that cliché), so I’m taking this one VERY slowly with wide buy orders and smaller quantities.

Bitcoin Buying Targets

Using Moving Averages and supporting trend-lines as guides, here is my plan for my next ten (10) buying quantities and prices:

0.996% @ $44,210
0.996% @ $40,037
0.299% @ $35,507
0.299% @ $34,559
0.398% @ $33,664
0.996% @ $28,225
3.342% @ $21,735
3.314% @ $18,256
6.361% @ $13,837
7.215% @ $11,137

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 some of Bitcoin’s price movements over the past couple of years:

  • In 2017, Bitcoin rose +2,707% from its January low of $734.64 to make an all-time high of $19,891.99 in December.
  • 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 crashed -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 crashed nearly -63% to a low of $3858.00, mostly in 24 hours.
  • Then, Bitcoin rallied +988% to a new all-time high of $41,986.37 in January 2021.
  • Later in January, Bitcoin dropped -32% to a low of $28,732.00.
  • In February 2021, Bitcoin rallied +103% to a new all-time high of $58,367.00.
  • Later in February, Bitcoin dropped -26% to a low of $43,016.00.
  • In March 2021, Bitcoin rallied +44% to a new all-time high of $61,788.45.
  • Later in March, Bitcoin dropped -19% to a low of $50,305.00.
  • In April 2021, Bitcoin rallied +29% to a new all-time high of $64,896.75.
  • Later in April, Bitcoin dropped -27% to a low of $47,500.00.

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 that 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.

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 or calling 1-800-273-TALK.

The hotline is open 24 hours a day, 7 days a week.