Summing Up The Week

Good employment numbers combined with a Federal Reserve announcement that they intend to do exactly what the markets expected them to resulted in a surprisingly sharp rise to the markets.

Sure, this is all good news and there wasn’t any truly negative news on the horizon, but there was a heck of a pop this week.

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

Market News

Companies add 571K jobs in October – ADP

On Wednesday, payroll processor ADP reported companies added 571,000 jobs in October versus the Dow Jones estimates of 395,000, reported CNBC. 

Larger businesses with staff in excess of 500 employees were the biggest employers with 342,000 new hires added. Businesses with fewer than 50 added 115,000 and medium-sized companies increased by 114,000.

“The job market is revving back up as the delta wave of the pandemic winds down,” said Mark Zandi, Chief Economist at Moody’s Analytics, which aids ADP in compiling the report. “Job gains are accelerating across all industries, and especially among large companies. As long as the pandemic remains contained, more big job gains are likely in coming months.”

Fed to start tapering in late November

On Wednesday, the Federal Reserve Bank announced plans to begin cutting back on its emergency stimulus efforts later in November, reported CNBC. Higher-than-anticipated inflation figures have made tapering a reality for the Fed, who also said that interest rates will remain near zero for the time being as bond purchase tapering begins.

Borrowing rates will begin to rise as a result of the Fed slowing the rate of its bond purchases, as seen already with long-term fixed mortgage rates edging higher, already rising 3.24%.

“If they haven’t already, now could still be a good time for some borrowers to consider refinancing,” said Jacob Channel, senior economic analyst at LendingTree. “Even though rates are rising, they’re still relatively low from a historical perspective; nonetheless, the window for refinancers to get a sub-3% rate is rapidly closing.”

Weekly jobless claims lowest in the pandemic-era

I know I said I wouldn’t report new weekly jobless claims since I find them to not be market-moving events, however, on Thursday, the Labor Department reported 269,000 new jobless claims over last week, better than the 275,000 estimate and the lowest in the pandemic, reported CNBC.

“The fifth straight weekly drop in jobless claims, to a new pandemic low, is consistent with all the other evidence pointing to labor market tightness,” wrote Ian Shepherdson, Chief Economist at Pantheon Macroeconomics. “With demand reviving post-Delta, the bar for layoffs is high and rising. Claims appear to be on course to reach the pre-Covid level early next year.”

This news – combined with the ADP numbers – led many analysts to believe that the economy may finally be healing with employment on the rise, and may have been the catalysts behind the market’s mid-week rally.

Nonfarm payrolls grow 531K vs 450K estimate

On Friday, the Labor Department announced nonfarm payrolls increased by 531,000 vs the Dow Jones estimate of 450,000 and unemployment dropped to a new pandemic low of 4.6%, also beating expectations, reported CNBC.

“This is the kind of recovery we can get when we are not sidelined by a surge in Covid cases,” said Nick Bunker, Economic Research Director at employment website Indeed. “If this is the sort of job growth we will see in the next several months, we are on a solid path.”

Despite the positive figures, some economists were still concerned about perceived weakness in employment. “While the strength of employment was an encouraging sign that labor demand remains strong, labor supply remains very weak,” said Michael Pearce, Senior U.S. Economist at Capital Economics. “The labor force rose by a muted 104,000, which is not even enough to even keep pace with population growth.”

The markets reacted very positively to the employment news, once again rising to new highs for nearly the 7th trading day in a row.

Next Week’s Gameplan

Historically, we’re in the strongest time period for the markets, and it seems like institutional investors are taking advantage in gusto with many stocks seeing serious increases in value.

While the markets may rise into the end of 2021, there are a lot of unknowns about 2022 and many pundits currently theorize that a lot of buying from early-2022 will be brought into 2021 as consumers spend to have a Christmas unlike any other to make up for the pandemic depression.

For me, unless we see a significant selloff, we have now shifted out of Buying Season and into Selling Season. If I see a particularly tempting price on my positions, I will add to it, however, I’m more likely eyeing profit-taking opportunities. 

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

Tightening trading range…

After throwing Bulls and Bears off-scent for weeks, Bitcoin continues to confound as it spent the past week in a tightening trading range, consolidating before its next big move.

Bitcoin did pull back to make a weekly low of $59,500, however, unless it breaks below $57,653.88 from the previous week, it’s still very much in this trading range.

Along those lines,  Bitcoin must make a new all-time high above $66,999.00 in order to break this consolidation bullish, so, very the moment, it’s anyone’s guess where the crypto will head from here.

The Bullish Case

Bulls have the upper hand right now, successfully arguing that $28,800 was the low for this cycle (at least for now) as Bitcoin maintains strength above $60K. Bullish analysts point to this strength as to why we can expect to see a 6-figure Bitcoin before the 2021 with some continuing to predict highs around $250K.

The Bearish Case

Some Bears erroneously point to the new all-time high of $66,999.00 as “not enough of a break to signal a change in pattern.” This perspective is wrong. Traditional Technical Analysis (TA) rules state that a break of the previous all-time high indicates a trend change, and given that Bitcoin’s new high is +3.24% higher than its previous high of $64,899.00, that break is more than significant. However, a bearish break certainly isn’t off the table, it just isn’t predicted by all-time high theory.

Bitcoin Trade Update

Current Allocation: 0.549% (Unchanged from last update)
Current Per-Coin Price: $60,816.89 (Unchanged from last update)
Current Profit/Loss Status: +1.787% (-0.686% from last update)

Not a whole lot has changed since last week thanks to Bitcoin trading in its ever-tightening range. Accordingly, I’ve raised my next buy price target from last week, however, I continue to buy in very small quantities. Despite the bulls being correct up until this point, with Bitcoin just -7.60% off its all-time highs, the risk now is most definitely to the downside.

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:

0.138% @ $58,125
0.138% @ $54,279
0.138% @ $48,484
0.208% @ $43,426
0.250% @ $41,115
0.496% @ $37,537
0.384% @ $35,661
0.816% @ $32,506
2.408% @ $29,009
1.848% @ $26,905

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.