Summing Up The Week

With rising global economic recovery concerns due to new outbreaks of COVID along with new mutations, the markets got nervous this week, seeing volatility later in the week with the Dow and S&P selling off on Thursday.

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

Market News

Oil price jumps to highest level in six years

On Tuesday, the price of oil jumped to its highest level in six years as talks between the OPEC+ nations failed to yield a new agreement on production policy for August and beyond, reported CNBC.

The OPEC+ nations decide the production of oil which directly impacts the price of gasoline and all oil-related products. For American consumers, gas prices can directly affect the amount of consumption, so many economists and stock analysts are closely watching the discussions of OPEC+ to determine whether or not the U.S. economy might come under pressure.

With no deal reached, production will likely remain low so prices will remain high, leading to more profits for the UAE and Saudi Arabia, two of OPEC+’s largest oil-producing nations.

CDC data shows delta variant as dominant COVID strain

On Wednesday, the CDC released data showing that the highly-transmissible delta variant of COVID-19 represents 51.7% of new Covid cases in the U.S. in the two weeks ending July 3, reported CNBC. Health experts are expressing concern that the variant will create a resurgence of COVID this fall as millions of Americans remain unvaccinated.

“I think there are two Americas,” said Dr. Paul Offit, a pediatrician and vaccine advocate who has served in an advisory capacity for both the CDC and FDA. “There is the vaccinated America and the unvaccinated America, and I think the unvaccinated America is about to pay a price for that.”

Fears of the spread of this new variant are impacting the just-recovering travel and hospitality space as both domestic and international tourism will likely drop should the new COVID variant become even more prominent.

Nearly 2.9M Americans out-of-work for at least a year

On Thursday, the Labor Department released a report showing the number of Americans out of work for at least a year jumped by 248,000 in June, reported CNBC. The new report shows there are now nearly 2.9 million people who have been jobless for 52 weeks or more.

Once again, that figure is likely underreported given the somewhat controversial methodology the Labor Department uses to report unemployment such as not including those who are no longer looking for work.

“There are many people who lost their jobs early on in the recession who have been unemployed ever since,” said Heidi Shierholz, Director of Policy at the Economic Policy Institute.

Indoor mask policies likely to return in the fall

On Thursday, the CDC and other health experts warned that Americans should expect indoor mask mandates and other public health measures to return in the U.S. this fall, reported CNBC.

While the delta variant of COVID remains at the forefront of concerns, many experts point to the fact that new mutations are discovered everey few weeks, with many scientists predicting COVID to continue moving around the world for years to come.

“I could foresee that in certain parts of the country, there could be a reintroduction of indoor mask mandates, distancing and occupancy limits,” said Lawrence Gostin, Director of the World Health Organization’s Collaborating Center on National and Global Health Law. “We are heading for a very dangerous fall with large swaths of the country still unvaccinated, a surging delta variant, and people taking off their masks.”

Additionally, countries like Japan are suffering new outbreaks, leading the country to ban spectators from the upcoming Olympic games.

Next Week’s Gameplan

The summer’s starting to get exciting, sports fans! With the market near all-time highs and many traders and investors away on vacation, news events can cause significant volatility and lots of price action due to the lack of trading volume from all those vacationers.

What does that mean for next week?

My lean – as it has been for some time – is to the bear side as it’s hard to find catalysts to push us higher. As always, I am a long-term investor, so my being bearish doesn’t mean selling, it means adjusting price targets for when I want to start adding to my positions.

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

The Line That Shall Not Be Crossed (2021)…

As much as I’m not a fan of the Lord of the Rings, Bitcoin just can’t challenge The Line That Shall Not Be Crossed (2021). The line once again rejected the crypto as it tried to cross on July 4 and was rejected, sending Bitcoin down toward the $30,000 mark once more.

Bitcoin was rejected a total of four times since last week, dropping to a weekly low of $32,111.00 before finding support.

The Bullish Case

Bulls continue to hold on to the thesis that, since Bitcoin has held $28,800 as support, we’ve seen the bottom. Bulls point to the current price action as simply consolidation as Bitcoin builds up the energy for the next bull market.

The Bearish Case

Bears (I’m in this camp currently) continue pointing out that Bitcoin remains in an extremely bearish downward trend on the bigger timeframes (the macro outlook), and there is absolutely no sign it will turn around. I still agree with the thesis that $28,800 is not the bottom and that Bitcoin will test lower-lows before we see a bull market again. 

From what I’ve heard and seen, I believe I am more bearish than most as many bears still believe the bottom will be in the low $20Ks while I think a bottom near $14-$16K is far more likely. I believe Bitcoin will either find support around $21K-$22K where buyers are waiting or it will crash far below its past high in the upper-$19K area as weak hands sell (or are margin-called) should the crypto go lower than the bulls anticipate.

Bitcoin Gameplan

Lock in those profits… +7.563% gains in 16 days

On July 4, Bitcoin made another attempt at The Line That Shall Not Be Crossed (2021) which was my sign to use stop-loss limit orders and close out the trade. My trade had an average buying price of $32,277.37 (after fees), and an average selling price of $34,718.52, which gave me a net profit of 7.563% (after fees) in 16 days (an annualized return of more than +170%).

As always, I am a long-term bull in the space so those profits are kept as Bitcoin and transferred off-network, adding +2.81% to my long-term holdings (HODLings?).

Why did I pick this time to sell?

Bitcoin has been unable to break through this trendline and I’m still bearish on the short- to mid-term on the space. I do believe we’ll see a drop into the $20K-$25K range so it made no sense to lose the gains I had if I held conviction about the drop.

It turns out my timing was right “on-the-money” as Bitcoin sold off later on the 4th, dropping more than -10% over the course of the week.

Want to learn more about my technique?

Check out my YouTube video below where I explain how my “Trading to Invest” technique works when it comes to Bitcoin (and any crypto, really):

… and I’m back in with a new trade!

Current Allocation: 1.660% (+0.817% from first buy order)
Current Per-Coin Price: $33,558.86 (-1.14% from first buy order)
Current Profit/Loss Status: +1.145% (*New Trade*)

After walking away with profits on the holiday, I decided to start a new position after Bitcoin sold off more than -7% from its recent high with a very small 0.843% buy which filled on Monday, July 5 at $33,558.86 (after fees).

Over the week, I made additional small buys at $33,306.68 and $32,430,53, increasing my allocation +0.817% to 1.660% and lowering my per-coin cost -1.14% from $33,558.86 to $33,175.19.

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:

0.569% @ $30,367
0.569% @ $28,777
2.843% @ $26,972
5.686% @ $22,910
5.686% @ $20,658
5.686% @ $19,308
5.737% @ $15,868
5.986% @ $11,468
5.974% @ $8,671
9.704% @ $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.