Summing Up The Week

This week, it was all about historical trends as generally positive inflation news did little to prevent the September slide. With all traders and investors buzzing about how stocks typically sell off in September, the prophecy has started to become self-fulfilling.

Let’s look at the news that (didn’t) move the markets this week…

Market News

CPI posts smaller-than-expected August increase

On Tuesday, the Labor Department’s Consumer Price Index (CPI) showed a smaller-than-expected increase in consumer prices in August: 5.3% from a year ago and 0.3% from July vs expectations of 5.4% and 0.4%, respectively, reported CNBC.

However, at this point, any in-line news (the CPI certainly didn’t beat expectations by much) has not offered much solace to the markets, shaky because of inflation fears, China concerns, and a general mistrust of September’s historic volatility.

The markets sold off on Tuesday after a brief respite on Monday following last week’s multiday rout.

August retail sales rise +0.7% vs expected -0.8% decline

On Thursday, the Census Bureau reported retail sales posted a surprise +0.7% gain in August vs a Dow Jones estimate for a -0.8% decline, reported CNBC. Economists had previously believed a rise in the delta variant of Covid-19 would cause a reduction in consumer spending; this didn’t happen.

Although an increase in consumer spending does indicate a growing economy, if only slowly, the markets shrugged off the positive news and sold off during the day.

Next Week’s Gameplan

If the selloff continues, more and more positions will go on sale and could offer buying opportunities. While there are a few sectors that still see gains right now, I’m looking to add to positions far more than I’m looking to take profits. As always, plan in advance and then stick to it.

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

Volatility getting more volatile?

Bitcoin’s moves became even more dramatic in the past week with pops in excess of +6% followed by drops of more than -7% happening in 30 minutes or less at times.

The crypto space is dramatic at the best of times, but even these moves are unprecedented. Some analysts attributed the moves to an announcement that Walmart would accept Litecoin for transactions only to be followed by Walmart denouncing the announcement as false on Monday morning.

Despite the news events, Bitcoin traded in a very distinct range between last week’s high of $52,944.96 and last week’s low of $42,830.77.

The Bullish Case

Bulls point to the consistent support around $42K-$43K as institutional buying and argue that the current price consolidation is just the calm before the next bull rally.

The Bearish Case

Bears say that the hard denial from the Line That Shall Not Be Crossed (2021), actually, the resistance at the $50K-$53K zone, as proof that Bitcoin is not ready to make new highs, yet. Many bearish analysts predict that the $40K level will be tested again, at the least, with some still holding on to the potential of a drop to $20K.

Bitcoin Trade Update

Current Allocation: 0.212% (-0.002% since last update)
Current Per-Coin Price: $46,108.91 (-1.183% since last update)
Current Profit/Loss Status: +2.554% (+5.869% since last update)

After nearly a week since my last buy order, Bitcoin started moving on Sunday leading into its dramatic volatile swings the rest of the week. My first buy order filled Sunday at $44,983.26, lowering my per-coin cost -0.768% from $46,660.83 to $46,302.73 and increasing my allocation +0.051% from 0.214% to 0.265%.

On Tuesday and Wednesday, I used Bitcoin’s pop to trim my position with small stop-limit sell orders that filled at $46,562.36 and $48,007.96. The combined orders reduced my per-coin cost -0.419% from $46,302.73 to $46,108.91 and reduced my allocation -0.053% from 0.265% to 0.212%.

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:

0.053% @ $45,725
0.053% @ $43,665
0.079% @ $43,295
0.132% @ $42,302
0.132% @ $41,160
0.132% @ $39,946
0.132% @ $38,460
0.132% @ $36,376
0.209% @ $33,268
0.604% @ $30,166

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 2021, 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.