Summing Up The Week
With inflation fears relatively on the back-burner until the Fed makes its next move, the market largely ignored geopolitical tensions with the possibility of Russia invading Ukraine to focus on earnings, instead.
Earnings were mixed, to say the least, with some companies reporting excellent earnings up until Wednesday night when Facebook (FB) reported a disastrous quarter (see more below).
Let’s look at the news that moved the markets…
Market News
Companies unexpectedly cut 301K jobs in January
On Wednesday, private payroll processor ADP reported that companies cut 301,000 jobs in January, likely a result of surging omicron cases hitting hiring, reported CNBC.
Dow Jones economists had predicted a growth of 200,000 jobs in the month which meant the unexpected cut was a half-million fewer jobs than what was originally estimated. “The labor market recovery took a step back at the start of 2022 due to the effect of the omicron variant and its significant, though likely temporary, impact to job growth,” ADP’s chief economist, Nela Richardson, said.
Given that ADP’s figures often different from the Labor Department’s own report which typically comes out two days later, many analysts hoped for an increase from the Bureau of Labor Statistics on Friday.
Facebook singlehandedly kills the tech rally
I don’t typically (if ever) refer to individual stock earnings in the Week in Review, especially not a stock that I don’t even hold. However, on Wednesday after the bell, Facebook (FB) reported a quarter so bad that its shares dropped more than 25% and the company stopped the tech rally dead in its tracks, reported CNBC.
Not only did Facebook lose billions on its metaverse division, it didn’t make as much money as was expected in its standard income-generating products and services. To make matters worse, the company issued painfully weak guidance and blamed privacy changes in Apple’s iOS software and macroeconomic woes for all of its disappointing performance.
JPMorgan analysts downgraded the stock from overweight to neutral on Thursday and lowered their price target from $385 to $284. The analysts said Meta “is seeing a significant slowdown in advertising growth while embarking on an expensive, uncertain, multi-year transition to the Metaverse.”
Being such a significant part of the NASDAQ and any tech-tracking ETF, it’s no wonder that Facebook’s blunder brought down the entire sector, leading to a pretty down day for all of tech on Thursday.
U.S. adds 467K jobs in January despite Omicron surge
On Friday, the Labor Department’s jobs report showed the U.S. added 467,000 jobs in January, ahead of the 150,000 estimate and blowing away ADP’s earlier report of lost jobs, reported CNBC.
Additionally, revisions to past reports showed 510,000 jobs gained in December from the initially reported 199,000, and 647,000 in November versus the previously reported 249,000.
“The benchmark revisions helped the numbers a bit just because it moved out some of the seasonal factors that have been at work. But overall the job market is strong, particularly in the face of omicron,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “It’s hard to find a weak spot in this report.”
While the jobs report is good news for the U.S. economy, the stock market didn’t take it as well. Bond yields started to rise as it became readily apparent that the Fed will likely continue with their plans of Quantitative Tightening (the combined process of tapering and interest rate hikes).
Next Week’s Gameplan
While all investors remain focused on earnings reports and the Fed, I am paying close attention to anything that might happen on the geopolitical stage. Naturally, no news event really affects my plans since they are all short-term, and you should never make a long-term investment decision based on short-term news.
Accordingly, I continue to update my Buying Plans for all of my positions and wait patiently for the next big move – up or down – before I take action.
Have a great week, everyone!
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
Important Disclaimer
Get Irked contributors are not professional advisers. Discussions of positions should not be taken as recommendations to buy or sell. All investments carry risk and all readers must accept their own risks. Get Irked recommends anyone interested in investing or trading any asset class consult with a professional investment adviser to determine if an investment idea is suitable to them and their investment goals.
Bitcoin Price (in USD)
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Weekly Change
Bitcoin Price Action
Is Bitcoin’s bounce for real?
Bitcoin continued to rally throughout the beginning of the week, hitting a new weekly high of $39,300.00 on Tuesday before pulling back on Wednesday. Then, on Thursday, Bitcoin found a low at $36,259.01 and bounced higher, breaking through the Downtrend (?) line of previous weeks which I have since adjusted.
On Friday, Bitcoin set a new weekly high at $39,895.00. Now, the question both Bulls and Bears have in the space is – is this bounce for real or is Bitcoin going to break back down?
The Bullish Case
This week, notorious Bitcoin bulls Michael Saylor and Jack Dorsey – the CEOs of MicroStrategy (MSTR) and Block (SQ), respectively – held a conference to teach other companies how to purchase and hold Bitcoin and other cryptocurrencies on their balance sheets. Bullish analysts believe that this new rise of Bitcoin supporters on the corporate level will further strengthen the recent bottom and send Bitcoin higher.
The Bearish Case
Bears point out that the continued denial at key downward trendlines indicates that the macro move of crypto is still very much to the downside. For the moment, this is definitely the narrative, and with no key catalyst to jumpstart a bull rally, the Bears remain in control of where Bitcoin might move next.
Bitcoin Trade Update
Current Allocation: 6.060% (Unchanged from last update)
Current Per-Coin Price: $42,138.82 (Unchanged from last update)
Current Profit/Loss Status: -6.215% (+6.583% from last update)
Since Bitcoin never tested its $32,933.33 low set last week, I wasn’t able to add to my position this week. In fact, since Bitcoin is now trading between its weekly low and my per-coin cost basis, I’m back to sitting on my hands, eating popcorn, and watching as Bitcoin makes its 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:
0.145% @ $33,948
0.184% @ $33,417
4.076% @ $30,381
2.648% @ $28,883
1.688% @ $26,855
7.178% @ $23,667
7.792% @ $21,611
12.56% @ $19,375
3.067% @ $15,767
3.067% @ $12,365
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 April 2021, Bitcoin rallied +51% 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.
- In January 2022, Bitcoin crashed -52% to a low of $32,933.33.
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.
