Summing Up The Week

Markets remained relatively flat for this holiday-shortened four-day trading week despite rumors that the Federal Reserve Bank would wind down bond holdings and a mediocre new-jobs report.

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

Market News

Federal Reserve to wind down bond holdings

After the market closed on Wednesday, the U.S. Federal Reserve bank announced it would begin the process of unwinding its $13.8 billion corporate bond portfolio, reported Yahoo! Finance.

“Portfolio sales will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange traded funds and corporate bonds,” said the Fed in a prepared statement.

A Fed official says the central bank hopes to unload all of its corporate bond ETF and corporate bond holdings by the end of 2021.

Obviously, the timing of the release following market trading was key as the information could potentially have had an adverse effect on the markets.

Jobless claims fall below 400K for first time since COVID

On Thursday, the Labor Department reported 385,000 new jobless claims in the last week, the first time since March 2020 for the number to come in below 400,000 and also below Wall Street estimates for 393,000, reported CNBC. Despite the decline in weekly claims, ongoing claims rose by 169,000 to 3.77 million.

Earlier in Thursday, a report from the payroll company, ADP, showed growth of 978,000 new jobs in May. Despite what many pundits described as positive economic news, the markets sold off slightly on Thursday.

559K jobs added in May vs 671K expected

On Friday, the Labor Department reported that hiring improve in May with 559,000 new jobs, however that number is quite a bit short of the 671,000 expected by economists, reported CNBC.

However, stocks moved higher based on the perception that the Federal Reserve Bank will not yet taper bond purchases due to a weaker economy than desired. John Briggs, NatWest Markets’ global head of desk strategy, described the report as “Goldilocks” for stocks and “not too hot to bring in the Fed and not to cold to worry about the economy.”

Next Week’s Gameplan

We’ve made it through the first week of June without a scratch, but even the experts have no idea where the markets will head from here. “Sell in May and Go Away” certainly didn’t happen, however, summertime typically brings volatility to the markets due to lower trading volume.

Maybe we’ll see that next week? Until then, have a great 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

A wild week but pretty much flat??

Bitcoin decided not to take a holiday, selling off into the Memorial Day weekend almost immediately after the last Week in Review posted, showing weakness throughout the weekend.

The Bulls regained control after Bitcoin tested its lows on Sunday with a weekly low of $33,333.00 and the crypto made a slow rally until early Friday morning when it once again sold off, punctuating the volatility that has now re-entered the space.

The Bullish Case

Bulls still believe that $30,000 is the line in the sand, arguing that institutional buyers will return to the space and buy up Bitcoin in the current range.

The Bearish Case

Bears point to a report from JP Morgan which shows institutional buyers are not currently buying crypto. Additionally, expert chartists point to significant overall weakness in Bitcoin, arguing that a low in the $20,000 range is far more likely than any upside from here.

Bitcoin Gameplan

Current Allocation: 3.568% (-0.636% since last week)
Current Per-Coin Price: $38,172.89 (-1.732% since last week)
Current Profit/Loss Status: -2.732% (+2.045% since last week)

Let’s do the time warp again…

Bitcoin’s Memorial Day weekend selloff triggered buy orders I had in place at $36,740; $35,689; $34,858; and $33,832. The various orders lowered my per-coin cost -1.628% from $38,845.70 to $38,213.37 and increased my position allocation by +0.288% from 4.204% to 4.492%.

On Wednesday, Bitcoin worked its way over my per-coin cost, so I used stop-loss limit orders to reduce my position when it gave way slightly on Thursday morning, reducing my per-coin cost -0.106% from $38,213.37 to $38,172.89 and reducing my allocation -0.924% from $4.492% to $3.568%.

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:

0.430% @ $34,111
0.444% @ $31,658
0.666% @ $29,108
0.888% @ $27,738
1.110% @ $25,240
1.333% @ $22,910
2.941% @ 20,268
3.472% @ $18,237
4.406% @ $16,459
4.455% @ $13,856

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.
• In May, Bitcoin crashed -54% to a low of $30,000.00.

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.