Summing Up The Week

The markets remained relatively flat this week with inflation numbers capping the upside, but unexpectedly outstanding retail sales figures locking in the downside. So, it was kind of a still week as both Bulls and Bears wait to see where the markets will go from here.

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

Market News

$1T infrastructure bill passes into law

On Monday night, President Joe Biden signed the $1 trillion bipartisan infrastructure bill into law, reported CNBC. While the government has proven itself to be among the most incompetent when it comes to manage major building projects, infrastructure across the United States has been woefully lacking for decades, so the new bill was a welcome sight.

The plan will put $550 billion into projects nationwide including transportation, broadband internet, and other utilities. 

Before signing the legislation, Biden said “we’re finally getting this done” after years of failed attempts in Washington. He stressed the direct benefits Americans will feel from the law — part of a broader sales pitch he will carry out in the coming days and months ahead of the 2022 midterm elections.

“So my message to the American people is this: America is moving again, and your life is going to change for the better,” he said.

Rent for single-family homes surged 10% in September

While the Consumer Price Index (CPI) only showed an owners-equivalent rent increase of less than 4%, rents for single-family homes increased 10.2% nationally in September year-over-year according to a report from CoreLogic, reported CNBC.

Owners’ Equivalent Rent, the figure reported on the CPI, is calculated by asking property owners what they think their property would rent for – an arguably widely-inaccurate figure for inflation. CoreLogic used actual rental costs to determine its inflation figure – and a 10.2% increase in nearly historic, putting financial pressure on families with the potential to reduce GDP.

“Single-family rental vacancy rates remained near 25-year lows in the third quarter of 2021, pushing annual rent growth to double digits in September,” said Molly Boesel, principal economist at CoreLogic. “Rent growth should continue to be robust in the near term, especially as the labor market improves and the demand for larger homes continues.”

Retail sales rose more than expected in October

On Tuesday, the Census Bureau estimated retail sales – excluding autos – increased 1.7% in October versus Dow Jones estimates for 1.5%, reported CNBC.

The news seemed to contradict the CPI report released earlier which suggested that consumers would cut back on spending due to inflation concerns. “So much for soft consumer confidence signaling slower growth; what people do is much more important than what they say,” wrote Ian Shepherdson, Chief Economist at Pantheon Macroeconomics.

Electronics and appliances sales rose substantially – both up 3.8% for the month – while sales at restaurants and bars remained flat for October, still up 29.3% on a year-over-year comparison. Many economists believe that the U.S. consumer is key to economic health. As long as consumers keep spending, the economy should remain healthy.

Concerns COVID-19 is striking back worry markets

On Friday, reports that Austria would re-enter a full national lockdown due to a resurgence of COVID-19 combined with more restrictions on Germany to create unease in the markets over the virus’s return, reported CNBC.

Many epidemiologists have been predicting that COVID-19 would make a strong return in the winter due to the nature of coronaviruses to gain steam when the climate cools. Statistics and reports from European countries have been supporting this hypothesis as more countries have been seeing an increase in COVID cases as we proceed into the colder months.

The markets demonstrated weakness on this news as any potential of restrictions in the United States could put a strain on the American consumer, reduce spending, and thereby reducing the strength of the country’s economic reopening.

Next Week’s Gameplan

Inflation and supply-chain concerns have been hitting different sectors in different ways. Some companies, like Nvidia (NVDA), are overcoming the odds and rocketing to new highs while others, like Walmart (WMT) and Target (TGT), are absorbing inflation to protect the consumer but pissing off their investment base by decreasing profits.

This is all a relatively long way of saying that we’re in a stock-pickers markets. There are excellent bargains to be had but also incredibly expensive positions you should be wary of. As always, make a Buying Plan and 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

Crypto Meltdown…?

Bitcoin and the rest of the crypto space fell under extreme selling pressure over the past week. The selloff started in earnest on Monday and appeared to let up by Wednesday, however, that wasn’t to be when Bitcoin broke through last week’s low on Thursday, creating a bearish trend.

On Friday morning, Bitcoin appeared to find support with a new weekly low at $55,625.00. Currently, the crypto is at a key support level – if it drops below $53,379.00, the next point of real support may not be until the $41K mark.

The Bullish Case

Bulls acknowledge that the current trend is certainly bearish but argue that this sort of price consolidation following Bitcoin making a new all-time high is historically normal. Most Bulls believe Bitcoin will hold $50K as the absolute low, using that point as a trampoline to achieve new highs before year-end with Analyst Tom Lee of Fundstrat sticking by his $100K-by-end-of-2021 price target.

The Bearish Case

Bears breathed a sigh of relief this week when Bitcoin didn’t rub even more salt into their terrible-TA wounds by breaking to a new all-time high. Not taking a beat, the Bearish analysts are back on the scene predicting that all previous support levels will fail and that we’ll see $20K before year-end. November has been a historically bad time for crypto with the beginning of its last big crash kicking off in November 2018 where it dropped from the $6,000s down to a low around $3150 with a matter of weeks, so, as always, anything could happen from here.

Bitcoin Trade Update

Current Allocation: 0.837% (+0.565% from last update)
Current Per-Coin Price: $61,000.46 (-5.253% from last update)
Current Profit/Loss Status: -6.414% (-5.543% from last update)

When Bitcoin broke down below $60K Monday evening, it filled several very small orders that I had placed between $59,550 and $63,800 giving me an average buying price of $62,020.65. 

The combined orders lowered my per-coin cost -1.559% from $64,382.33 to $63,378.50 and increased my allocation +0.228% from 0.272% to 0.500%.

On Tuesday evening, I added even more when Bitcoin dropped below $59K with an order that filled at $58,788.00, lowering my per-coin cost -1.604% from $63,378.50 down to $62,361.70 and increased my allocation +0.139% from 0.500% to 0.639%.

On Thursday morning, I made another buy when Bitcoin tested its lows with an order that filled at $58,581.00. The relatively small buy lowered my per-coin cost -0.489% from $62,361.70 to $62,056.88 and increased my allocation +0.66% from 0.639% to 0.705%.

The action didn’t stop Thursday evening with another buy that filled at $56,055.60. This order lowered my per-coin cost -1.702% from $62,056.88 to $61,000.46 and increased my allocation +0.132% from 0.705% to 0.837%.

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:

0.279% @ $52,419
0.279% @ $48,735
0.279% @ $45,782
0.483% @ $42,732
0.295% @ $41,586
1.214% @ $37,557
1.961% @ $33,624
4.052% @ $28,883
6.200% @ $25,261
5.627% @ $23,508

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 November 2021, Bitcoin rallied +140% to a new all-time high of $69,000.00.

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.