Summing Up The Week

Despite inflation concerns and supply-chain issues still impacting much of the U.S. economy, outstanding earnings from many companies continue to drive the markets higher.

Additionally, the Buy-The-Dip investors are still out in there in droves, picking at pretty much any selloff as demonstrated on Wednesday when the markets’ slight dip of less than -1% was snatched up in Thursday morning trading.

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

Market News

Positive earnings drive the markets higher

Despite supply-chain issues drawing down Get Irked positions like Logitech (LOGI) and organizational snafus slapping new-tech darlings like Twilio (TWLO), old-world companies reported blowout quarterly reports ranging from automakers Ford (F) and General Motors (GM) to even credit-card processors like MasterCard (MA). 

The positive earnings reports drove stocks higher amid concerns of higher inflation costs and ongoing supply-chain worries.

U.S. economy grew by 2% in Q3, below 2.8% estimate

On Thursday, the U.S. Commerce Department reported that the U.S. economy only great at 2% during the third quarter – its slowest gain of the pandemic-era recovery – below the 2.8% expected by economists, reported CNBC.

The slow economic growth was attributed to dramatically reduced consumer spending, likely a result of supply chain issues. Surprisingly, this report marks the slowest GDP gain since the -31.2% drop during Q2-2020 which was when COVID-19 really got a foothold on the global economy.

“Overall, this is a big disappointment given that the consensus expectation at the start of the quarter in July was for a 7.0% gain and even our own bearish 3.5% forecast proved to be too optimistic,” wrote Paul Ashworth, Chief U.S. Economist at Capital Economics. “We expect something of a rebound in the final quarter of this year — if only because motor vehicles won’t be such a drag and any negative impact from Delta should be reversed.”

Pending home sales fell unexpectedly in September

On Thursday, the National Association of Realtors (NAR) released its home sales data for September showing an unexpected drop of -2.3% in pending home sales compared to August, reported CNBC.

Analysts were expecting a monthly gain, however home sales were 8% lower when compared to September 2020. Pending home sales are considered a forward-looking indicator of actual closed sales occurring one to two months following. Economists pointed to the rising mortgage interest rates as the likely culprit behind the decrease in sales figures.

“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity,” said Lawrence Yun, NAR’s Chief Economist. “It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.”

Inflation hits 30-year high… again!

On Friday, the Commerce Department reported annual inflation rose at its fastest pace in 30 years in September, reported CNBC. The Federal Reserve prefers the Personal Consumption Expenditures Price Index (better known as the “CPI”) to review inflation progress, and it increased 0.3% in September, pushing the year-over-year gain to +4.4%.

According to CNBC, that’s the fastest pace since January 1991. “Year-over-year inflation remains high and will for some time simply because of what’s already happened in the first months of the year,” Treasury Secretary Janet Yellen told CNBC from Rome and the G-20 summit. “But monthly rates – I believe – will come down in the second half of the year. I think we’ll see a return to levels close to 2%.”

Here’s hoping, Janet, because my wallet just screamed in pain, jumped from my pocket, and made a run for the door…

Next Week’s Gameplan

It’s definitely a stock-pickers market out there with some sectors getting hit hard while others accelerate due to their own success. As a result, I added to quite a few of my positions this week – all of which came under pressure due to economic concerns, inflation, or supply-chain tightening affecting supply.

Analysts seem mixed about what we can expect going into the last few months of the year. Some predict we’ll see continued strength – historically the norm for the time of the year – while others believe we should see a pretty significant selloff before 2021 finally comes to a close.

Personally, I plan to do what I always do – have a plan for either direction. I look at my positions and ask myself, “What will I do if the stock pops? What will I do if the stock drops?” Then, I plan accordingly.

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

Bitcoin’s keeping things spicy!

Bitcoin pulled back nearly -14% from last week’s $66,999 high before finding support at $57,653.88 on Thursday where traders bought the dip in earnest.

While many analysts continue to use the crypto’s historical patterns to try to predict what will happen next, Bitcoin’s new all-time high before pulling back in excess of -80% has confounded everyone – bulls and bears, alike.

The Bullish Case

Bulls continue to predict that Bitcoin’s heading to $100K and even $250K by the end of 2021. While these pie-in-the-sky optimistic projections may seem outrageous, given how Bitcoin’s completely upset the historical apple cart by making a new all-time high before pulling back -80%… who knows?!

The Bearish Case

Bears desperately cling to the theory that Bitcoin has to pull back to $20K. Should Bitcoin pull back to those levels, that would present an amazing buying opportunity, so, truthfully, I am hopeful the bears are right. However, the bears have been so wrong about Bitcoin’s most recent move that I’ll need them to prove themselves before I remotely trust their predictions for awhile.

Bitcoin Trade Update

Current Allocation: 0.549% (+0.273% from last update)
Current Per-Coin Price: $60,816.89 (-3.197% from last update)
Current Profit/Loss Status: +2.473% (+4.047% from last update)

I started adding to my Bitcoin position early Wednesday morning when the crypto lost support and dropped through $60K with a buy order that filled at $59,658.80. Since the market’s at such nose-bleed levels, I continue to use incredibly small quantities so the buy lowered my per-coin cost -1.748% to $61,727.38 from $62,825.59 while increasing my allocation just +0.129% from 0.276% to 0.405%.

On Thursday, another buy order was triggered when Bitcoin sold off in a mini-Flash-Crash, dropping a significant distance within a few minutes. The order filled at $58,238.52, lowering my per-coin cost -1.475% to $60,816.89 from $61,727.38 and increasing my allocation +0.144% from 0.405% to 0.549%.

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:

0.137% @ $57,555
0.137% @ $55,016
0.137% @ $52,906
0.137% @ $50,789
0.137% @ $48,464
0.157% @ $43,426
0.292% @ $41,148
0.586% @ $37,571
0.463% @ $35,655
0.966% @ $32,506

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.
• In October 2021, Bitcoin rallied +133% to a new all-time high of $66,999.00.

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.