Summing Up The Week

The biggest market-moving news this week may not have been news at all, rather a trading glitch at the New York Stock Exchange (NYSE) that caused stocks to open down or up anywhere from 10-20%! You can learn more about what the heck happened below.

Outside of the NYSE glitch, markets continued higher on the back of a virtual Goldilocks combo of news – GDP figures showing a strong economy but a PCE report showing inflation and consumer spending is easing.

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

Market News

NYSE trading glitch moves markets… a LOT!

On Tuesday, technical issues on the New York Stock Exchange (NYSE) caused dozens of stocks to open at prices well above and below their closing prices, reported CNBC.

When I say “well below,” I mean Waste Management (WM) opening down -12.10%; Nike (NKE) opening down -12.42%; and small stocks like Palantir Technologies (PLTR) opening down -20.87%!

The subsequent snapback was no picnic, either, with PLTR rallying +50% from its $5.84 low to a high of $8.76 before returning to reality to close the day at $7.02, down -$0.36 from its Monday close.

This is why you must always use limit orders.

To describe exactly how bad this could have been, if you had placed a market order to buy Palantir at the open, you could have gotten filled at $8.76 and ended up down -19.86% on the day even though the opening price you saw could have been below $6.

Personally, I had a limit order to buy Palantir at $6.20 which filled at $6.13. A limit order will only fill if the market can give you the price you want or better. Some of my other positions, like Waste Management, had limit orders which did not fill because the price action was so fast, I wouldn’t have gotten the price I wanted.

So, what happened?

In order to determine a stock’s opening price, the exchange takes all of the buy and sell orders placed prior to the market opening and uses them to calculate the initial printing bid.

The NYSE has stated that many of the stocks’ “books” (the collection of their buy and sell orders) were missing many, many orders. The result was that opening prices were calculated very incorrectly.

What now?

If you were affected by Tuesday’s price action (either positively or negatively), it sounds as though the NYSE may invalidate the orders that went through as they were “clearly erroneous.” I’ll keep my readers posted on whether I get to keep the shares of Palantir I bought at $6.13…

Canada saves the day?

On Wednesday, the markets had been selling off dramatically until news broke that the Central Bank of Canada announced it would be pausing its interest rate hikes after today’s, reported Barrons.

You might wonder why what effect Canada’s central bank could have on the U.S. stock market and it’s this – during this entire rate tightening cycle, Canada’s central bank has been the first to act. They were the first to start raising rates, they were first to start raising rates aggressively, and, now, they’re the first to take a pause.

The market turned around and erased nearly all of its losses as investors and traders hoped this pause from Canada’s central bank might translate to our own Federal Reserve Bank when they announce their next rate hike during next week’s meeting.

U.S. GDP rose 2.9% in Q4, more than expected

On Thursday, the Commerce Department reported the U.S. Gross Domestic Product (GDP) rose at an annualized 2.9% pace in 2022-Q4, more than the 2.8% expected by Dow Jones economists, reported CNBC. Stocks rose slightly following the report, potentially because a strong economy indicates that the Federal Reserve’s tightening process may lead to the soft landing everyone’s hoping for.

“The mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter went on,” wrote Andrew Hunter, senior U.S. economist for Capital Economics. “We still expect the lagged impact of the surge in interest rates to push the economy into a mild recession in the first half of this year.”

Core PCE shows signs of easing inflation

On Friday, the Commerce Department released its Personal Core Expenditures (PCE) figures showing an increase of 4.4% over a year ago in Deccember, down from 4.7% in November, in line with Dow Jones estimates, reported CNBC. While this result was expected, some analysts became concerned PCE could come in “hot” after Thursday’s strong GDP report.

With in-line expectations, the markets went back to believing that the Federal Reserve will “only” raise rates by +0.25% next week and then declare a “pause” as they review the outcomes, similar to what the Bank of Canada announced earlier this week. As a result, the markets rallied once more.

Next Week’s Gameplan

The market continues to rally ever higher and the higher it goes, the more I am reminded of last year’s rally from June to August which saw stocks increase +20% off June’s lows only to roll over and crash to lower lows in October.

Could the same events be in play right now? Possibly. As a result, I remain cautious, taking profits when I can. I’m in no hurry to reduce my positions, but as some reach loftier and loftier heights, I have no choice but to stick to my bearish convictions.

As for next week, with the Federal Reserve announcing its interest rate plans on Wednesday, February 1, it could get exciting, sports fans.

I’ll see you back here next Friday!

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 Wild Ride continues…

On Wednesday, Bitcoin made yet another high, setting new weekly resistance at $23,824.66. You may notice that, throughout the week, Bitcoin has tested the newly-adjusted Downtrend (?) several times line and, wait for it, used it as support, a potentially bullish sign. Bitcoin’s new weekly support was set on Sunday at $22,298.15.

If Bitcoin breaks through this week’s high, I will use the same parallel channel techniques I’ve utilized to this point to adjust our new trendline higher.

The Bullish Case

Bulls believe this run is the real deal, pointing out that Bitcoin continues to crack through every level thought to be significant resistance with very little difficulty.

The Bearish Case

Bears are back at it, developing a new narrative for why Bitcoin’s rallied so far. This time, bearish analysts are claiming the entire bull rally is a gigantic pump-and-dump created by whales in the space who need to sell large quantities of Bitcoin but want to do it at higher prices.

According to this theory, the whales have bought up the price of Bitcoin to bring unwitting retail investors back into the space only to flip and push the price of Bitcoin to new lows… with some analysts predicting lows of $5,000. 

Naturally, this is an unnerving thesis, to be sure, however, at this point, the Bears are out of the driver’s seat and now need to prove their case.

Bitcoin Trade Update

Current Allocation: 10.256% (-8.257% since last update)
Current Per-Coin Price: $22,414.03 (-0.747% since last update)
Current Profit/Loss Status: +2.934% (+9.084% since last update)

When the parabolic rally showed little sign of stopping mid-week, I transferred some Bitcoin back on the exchange to prepare for profit-taking; nothing goes up in a straight-line like this without pulling back dramatically. 

I made a number of sales with an average price of $22,802.24*. The sales lowered my per-share cost -0.747% from $22,582.74 down to $22,414.03 and reduced my allocation -8.257% from 18.513% down to 10.256%.

From here, I’ve once again raised my buying targets. And, again, I’m limiting the quantities I add back to my position to small (but increasing) quantities in case the bears are right and this whole thing is a massive pump-and-dump bull trap.

* All gains and prices are after trading fees… these are net prices and gains 

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:

0.027% @ $19,651
0.054% @ $18,754
0.081% @ $18,202
0.108% @ $17,243
0.135% @ $16,622
0.162% @ $16,036
0.244% @ $15,622
0.271% @ $14,904
0.352% @ $14,242
0.433% @ $13,669

Not Your Keys, Not Your Crypto…

In light of everything happening with brokerages, I no longer keep any of my crypto on an exchange and I only keep enough USD on the exchange to execute my next few buys. I use multiple cold wallets from the brands Ledger and Trezor to hold my crypto (click the links to access the direct sites, and I receive no affiliate benefits from these links).

Additionally, I have now divided my allocated USD between two different exchanges – Gemini and Coinbase – in case one (or both) becomes insolvent. Disclaimer: We both receive a bonus if you use either my Gemini or Coinbase referral links to open accounts.

Given everything that happened with FTX and Sam Bankman-Fried claiming customer funds were safe only to have it go completely bankrupt, I do not trust anyone in the space, even with Coinbase (COIN) being publicly traded (and one of my own Investments in Play positions).

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 (possible moves include drops of -90% or more and gains of +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.
• In December 2019, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
• In February 2020, Bitcoin rallied +64% to $10,522.51.
• 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 November 2022, Bitcoin crashed -78% to a low of $15,460.00.

Where will Bitcoin go from here? Truly, anything is possible…

What if Bitcoin’s headed to zero?

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.