Summing Up The Week
The summer doldrums seem to be in full-swing as the S&P 500 continued inching new all-time highs nearly every day this week. Economic news revealing additional signs of inflation continued to roll in, however, nothing unexpected hit the markets this week.
Let’s look at the news that moved (or didn’t move) the markets this week…
Home prices surge 14.6% year-over-year in April
On Tuesday, the S&P CoreLogic Case-Shiller National Home Price Index revealed home prices in April saw an annual gain of 14.6%, up from a 13.3% increase in March, reported CNBC.
Phoenix, San Diego, and Seattle reported the highest year-over-year gains with all three up more than 20% from the year prior. Whereas in 2008, the last time housing prices rose so quickly, many economists point to the stability of mortgage applications and regulated practices as reasons for why “this time will be different.”
Unfortunately, the gains are happening so dramatically that lower-income folks are rapidly being priced out of the housing market entirely. “So much for the Fed’s all-inclusive monetary policy,” wrote Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group. “Lower income people now can’t afford housing.”
Weekly mortgage demand falls nearly 7%
On Wednesday, the Mortgage Bankers Association’s index tracking demand for mortgages showed a weekly decrease of 6.9%, reported CNBC.
Many economists suggest the decline in demand may now be inversely correlated with housing prices. “The average loan size for total purchase applications increased indicating that first-time homebuyers, who typically get smaller loans, are likely getting squeezed out of the market due to the lack of entry-leve homes for sale,” said Michael Fratantoni, Chief Economist at the Mortgage Bankers Association.
Fratantoni also pointed to unease over potential inflation risks as a reason for decreased demand, “Mortgage rates were volatile last week as investors tried to gauge upcoming moves by the Federal Reserve amidst several divergent signals including rising inflation, mixed job market data, strong consumer spending, and a supply-constrained housing market that has led to rapid home-price growth.”
Weekly jobless claims hits new pandemic low of 364K
On Thursday, the Labor Department reported 364,000 new initial jobless claims in the past week versus the 390,000 Dow Jones estimate, reported CNBC. There are still in excess of 11 million Americans who receive benefits from pandemic-related programs.
A decreasing number of initial jobless claims likely indicates a strengthening jobs market, pointed out many economists.
U.S. adds 850K jobs in June, beats expectations
On Friday, the Labor Department report revealed that the U.S. added 850,000 nonfarm payrolls in June, beating the Dow Jones estimate of 706,000, reported CNBC. The increased number of jobs comes on the heels of an unchanged labor force participation rate of 61.6%.
“From a market perspective, this was an all-out positive jobs report,” said Seema Shah, Chief Strategist at Principal Global Investors. “The improvement today likely reflects a slight easing of the labor supply constraints that have been holding back the job market in recent months as well as continued momentum from the economic reopening.”
Economists believe that the labor outlook should continue to improve throughout the summer as the deadline for extended unemployment benefits expires on September 1, meaning more Americans will return to work.
Next Week’s Gameplan
There’s a stock market adage – never short a dull market – which means if the market feels sluggish or boring, do not short it as an upside surprise could take you out and you have no real reason to be bearish.
Since I never go short in my long-term portfolios, I extend the adage to say – when you don’t know what to do, do nothing at all. While I do have my 401k “dumb money” account which I auto-invest in on a weekly basis regardless of market moves, I do not put money to work when the market is lazily making new all-time highs.
Just like there’s no objective reason to short the market, there is also no objective reason to go long. No one knows which way the next breakout will take the market, so it’s time to just sit on our hands and wait…
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.
Click chart for enlarged version
Bitcoin Price (in USD)
Bitcoin Price Action
Bullish news, but still bearish macro pattern…
Bitcoin saw some good news this week when Cathie Wood’s Ark Invest announced it planned to create a Bitcoin ETF, reported CNBC on Monday. While the news is certainly bullish, maybe my time being beaten down by the cryptocurrency space throughout 2018 has left me jaded: Bitcoin and the rest of crypto rarely respond to news events or fundamentals, they trade almost entirely on technicals.
And, for the moment, the technicals are atrocious. If you’ve been a reader for awhile, you’ll remember the notorious Line That Shall Not Be Crossed on my Bitcoin chart, a vicious trendline in 2018 that kept denying Bitcoin repeatedly until it dropped from $6000 to $3130 in November.
Well, there’s a new one, and I’ve added it to the chart as the Line That Shall Not Be Crossed (2021) (and I changed the name of the other – adding 2018). Until Bitcoin breaks through and the line converts to solid support, I remain bearish on the space. As you can see from the chart, Bitcoin rejected hard from the trendline this week.
The Bullish Case
Bulls point to reports of the continue buying of Michael Saylor of MicroStrategy (MSTAT) and Cathie Wood as being signs that $30,000 is the bottom and that we won’t see further downside.
For me, when I’m speculating on an asset that has consistently followed similar patterns for its entire lifespan, I must look at the pattern, not the news, to provide potential price action, and potential price action is stupendously bearish.
The Bearish Case
Bears seem to be dwindling lately with more and more bullish voices rising throughout YouTube and the media. As for me, I would rather be bearish and wrong than bullish and wrong. I still think we’ll see Bitcoin pull back below $30,000, and, unlike even most bears, I don’t think $20K will hold. If we don’t find support above $20K and it breaks, I believe Bitcoin won’t find support until $15,500-$16,000.
As always, I am a long-term HODLer of all of my crypto winnings – I keep the profits from my trades in the crypto I was trading – however, I just don’t feel like the bears are done with us, yet.
Current Allocation: 1.976% (-1.087% from last update)
Current Per-Coin Price: $31,060.66 (-4.115% from last update)
Current Profit/Loss Status: +8.284% (+6.291% from last update)
Peeling off profits…
Bitcoin saw great the rebound early in the week, leading me to gradually reduce my position on the way up using stop-loss limit orders each time Bitcoin consolidated. I ended up processing five different sale orders with an average price of $34,261.61, lowering my per-coin cost -4.115% from $32,393.73 to $31,060.66 an reducing my allocation -1.087% from 3.063% to 1.976%.
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:
0.282% @ $30,717
0.563% @ $29,906
1.126% @ $28,868
1.689% @ $26,577
16.894% @ $22,384
5.631% @ $19,217
5.631% @ $15,680
5.631% @ $11,306
5.631% @ $8,671
12.391% @ $5,977
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 June, Bitcoin crashed -56% to a low of $28,800.00.
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.
Why is GetIrked Free?
Click here to learn more about Get Irked
Ways to give back to GetIrked:
If you use Brave, you can also use the Tip function to tip me.
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.