Summing Up The Week

With the COVID-19 omicron variant hitting American shores, the markets have regained the volatility we haven’t seen in quite some time. However, overreacting does no one any benefit and it’s important to remember the day-to-day moves really aren’t anything too out-of-the-ordinary; we’re leaps and bounds away from the crazy selloffs we saw in March 2020.

While economic news was good, the Fed has awoken and decided that the inflation we’ve been seeing might not be “transitory” after all.

The result? It’s been a crazy week.

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

Market News

Cyber Monday sales drop for first time ever

On Tuesday, Adobe Analytics released figures showing Cyber Monday sales dropped -1.4% year-over-year to $10.7 billion, the first decrease in its history, reported CNBC.

However, from the beginning of November through Cyber Monday (November 29), American consumers spent $109.8 billion online, up 11.9%. On 22 of the days, U.S. consumers purchased more than $3 billion worth of goods, a record figure according to  Adobe’s data.

The mixed figures support the ongoing supply-chain narrative, suggesting that many U.S. consumers did their holiday buying prior to Cyber Monday rather than risking desired items becoming out-of-stock.

Fed to discuss speeding up bond-buying taper in December 

On Tuesday, Federal Reserve Chair Jerome Powell mentioned that the the central bank would discuss accelerating the taper – its reduction bond-buying – during the December Fed meeting, reported CNBC.

Many analysts were surprised by the announcement given the new Omicron variant of COVID-19, however, Powell believes continuing the taper in earnest may be necessary to stem the tide of inflation.

“At this point, the economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner,” he said. “I expect that we will discuss that at our upcoming meeting.”

Powell’s comments accelerated the market selloff that had already started earlier during Tuesday market trading.

November private payroll hits 534K vs 506K expected

On Wednesday, private payroll operator ADP reported an increase of 534,000 new jobs in November, better than the Dow Jones estimate of 506,000, reported CNBC. The hospitality and leisure sector led the hiring for the month, an industry that saw a gain of 136,000 new jobs.

“The labor market recovery continued to power through its challenges last month,” said Nela Richardson, ADP’s Chief Economist. “Service providers, which are more vulnerable to the pandemic, have dominated job gains this year. It’s too early to tell if the Omicron variant could potentially slow the jobs recovery in coming months.”

COVID Omicron arrives in the U.S.

The markets rolled over on Wednesday after U.S. health officials confirmed the country’s first case of the COVID-19 Omicron variant in California, reported CNBC. To make matters worse, the individual who is the first case in the U.S. was fully vaccinated against COVID-19.

“The individual is self-quarantining and all close contacts have been contacted and all close contacts, thus far, have tested negative,” announced Dr. Anthony Fauci, the White House’s Chief Medical Advisor, at a press briefing. “We feel good that this patient not only had mild symptoms, but actually the symptoms appear to be improving.”

Authorities made efforts to prevent citizens from panicking. “But we should remain vigilant,” California Governor Gavin Newsom said over Twitter. “That means get vaccinated. Get boosted. Wear a mask indoors.” 

President Joe Biden said Monday he is directing the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) to use the “fastest process available without cutting any corners” to approve potential vaccines that target omicron and get them on the market.

The current Covid vaccines are believed to provide at least some protection from the heavily mutated omicron strain, and booster shots “strengthen that protection significantly,” Biden said in a speech at the White House.

Congress kicks the funding can down the road

On Thursday, the House passed a deal to provide short-term government funding through February 18 to avoid a shutdown on Friday, reported CNBC.

The market bounced Thursday, however, I believe the bounce was a result of the oversold nature from Wednesday’s massive rout, not from any positive reaction to the bill since the funding issue will still be a problem in two months.

Later Thursday evening, the Senate passed the bill and sent it on to President Biden for his official signature.

November job growth disappoints

On Friday, the Labor Department’s November nonfarm payroll report showed an increase of only 210,000 jobs versus the 573,000 expected by Wall Street analysts, reported CNBC. 

Despite ADP’s report earlier in the week, the Labor Department report showed hiring in the leisure and hospitality sector to be sluggish, and the retail sector even lost jobs despite the seasonality of the winter holidays.

Next Week’s Gameplan

The market selloff has started in earnest this week, however, some stocks are getting hit much harder than always so it remains a stock-picker’s market.

As always, I make a plan for what to do on up-days or down-days for all of my stocks. I buy often but use small quantities to protect myself against deeper downside moves than I might not have initially expected.

Rest up over the weekend. Something tells me we might not be done with the crazy market moves, yet…

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

Where to next, Bitcoin?

Despite the crazy moves in the stock market and Bitcoin’s big drop last Friday, the crypto market has remained relatively flat week-over-week. The big bad Bitcoin did break through last week’s lows before finding new support at $53,227.00, however it bounced hard off that bottom.

The Bullish Case

Bulls see the continued support around $53K as a sign that we can still make a break for new highs before the end of 2021. I kid you not; there are some extremely bullish crypto analysts out there who believe we’ll see six figures, nearly a double from here, sometime in the next four weeks!

The Bearish Case

Bears see Bitcoin’s inability to break through $60K as a reason to expect further downside moves. While timelines for the Bears are far more vague than Bulls expecting a big move before the end of the year, the general consensus from Bearish analysts is that we should expect to see Bitcoin test its $28,800.00 low once more before we see it make a new all-time high.

Bitcoin Trade Update

Current Allocation: 1.012% (Unchanged from last update)
Current Per-Coin Price: $60,010.15 (Unchanged from last update)
Current Profit/Loss Status: -9.086% (+3.312% from last update)

With Bitcoin staying pretty solidly between the weekly high and weekly low, there really wasn’t much going on when it came to my trade. This is simply one of those periods in crypto where I sit on my hands and wait for the next big move.

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:

0.028% @ $53,868
0.028% @ $53,144
0.085% @ $49,390
0.315% @ $46,278
0.430% @ $43,587
0.287% @ $42,283
0.581% @ $40,061
0.683% @ $38,109
1.905% @ $33,962
3.812% @ $29,208

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.
• Later in November, Bitcoin dropped -23% to a low of $53,227.00.

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.