Summing Up The Week

Until the debt ceiling agreement is passed, the stock market continues to hang on the every word of Congress. With progress being made and the deadline of June 5, however, this could be the last week the debt ceiling holds so much sway on the stock market.

Over in the economy, the job market remains incredibly strong, and, as I’ve been saying for what feels like years now, good news for the job market is bad news for stocks as the likelihood that the Federal Reserve Bank will raise rates again in June is inching higher with each data point and each passing day.

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

Market News

Job openings show surprise increase in April

As markets awaited the Congressional vote on the debt ceiling agreement, Wednesday’s Job Openings and Labor Turnover (JOLTs) report showed that jobs increased to 10.1 million in April from 9.8 million, a 0.7 million overshoot of estimates from economists surveyed by Bloomberg, reported Yahoo! Finance.

Once again, the labor market demonstrates its ongoing resilience in the face of a higher interest rate environment. And, once again, good news could potentially be bad news as the Federal Reserve has repeatedly said it wants to see the labor market slowing, and these figures may spur yet another interest rate hike in June.

Private Payrolls rose more than expected in May

On Thursday, evening the private payroll processor ADP released figures showing private payrolls rose by 278,000 in May, well ahead of the 180,000 estimate, reported CNBC. Yet another data point showing that the labor market remains strong and resilient in the face of economic headwinds from the Fed.

Debt Ceiling Bill passes, U.S. avoids default

After settling on a debt ceiling agreement over the weekend, President Joseph Biden and Speaker Kevin McCarthy passed the bill on to Congress. The House of Representatives passed the bill Wednesday and the Senate passed the bill Thursday evening, marking the most bipartisan political action the country has seen in quite some time, reported CNBC. Typically, politicans push this kind of deal-making off to the last minute, but, this time, they finished the deal with… *checks watch*… four days to spare!

Go figure!

“No one gets everything they want in a negotiation, but make no mistake: This bipartisan agreement is a big win for our economy and the American people,” Biden said in a statement after the vote.

With the known-unknown of debt default off the table, a significant headwind against a further bull rally in stocks has been removed. Will the current rally continue? Hard to say, but the debt ceiling fiasco certainly didn’t carry the same weight this time around that it did back in 2011 when the S&P 500 sold off nearly 20% in a matter of weeks.

Nonfarm payrolls rose 339K in May, much more than expected

On Friday, the Labor Department released nonfarm payroll numbers that showed an increase of 339,000 in May, significantly higher than the 190,000 estimated by Dow Jones, reported CNBC. As I’ve said so many times before, while a strong job market is an excellent sign of a healthy economy, it could also indicate the Fed’s not done fighting inflation, yet.

“The U.S. labor market continues to demonstrate grit amid chaos – from inflation to high-profile layoffs and rising gas prices,” said Becky Frankiewicz, president and chief commercial officer of Manpower Group. “With 339,000 job openings, we’re still rewriting the rule book and the U.S. labor market continues to defy historical definitions.”

Next Week’s Gameplan

With the debt ceiling behind us, what’s next? The Federal Reserve, of course!

While there aren’t any overly stimulating data points coming out next week, the Fed meets on June 13-14 and we will hear whether or not they’ll hike rates on the 14th, so that’s the next big catalyst. In the meantime, have your gameplan ready and be prepared to buy the drops and sell the pops.

See you all back here next week! 

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 showed some Bullish price action this week…

Bitcoin finally made a break of its trading range on Sunday – a bullish move – breaking through the previous weekly high at $27,678.73 before setting a new high at $28,473.93 on Monday at which point the crypto rolled over.

Bitcoin set a higher/lower weekly low at $26,508.00 on Friday morning. After the new weekly low, the next point of support is $25,810.00. If Bitcoin can crack through $28,473.93 on the high side, expect a test of $30K. If Bitcoin breaks through $25,810.00 on the low side, the next point of support is $23,931.01.

In the meantime, it’s more rangebound trading for Bitcoin…

The Bullish Case

Bulls believe this week’s new weekly high combined with a variety of other technical and fundamental factors continue to support the start of a new bull market in Bitcoin. Despite the next “halvening” nearly a year away in April 2024, some Bulls have even started to point to this event as being bullish for the current price as they say investors will start buying now to front-run the event.

The Bearish Case

Bears remain bearish (shocking, I know) with some arguing the halvening will be insignificant since Bitcoin’s current inflation rate is around 1.80%/yr and the halvening will only reduce it to 0.85%/yr as opposed to the initial halvening event which cut the inflation rate from 12% to 6%, much more significant. Additionally, the Bears point to the current macroeconomic conditions and the Federal Reserve’s likelihood to raise interest rates in June as being headwinds toward Bitcoin having any further upside from here.

Bitcoin Trade Update

Current Allocation: 0.200% (-0.067% since last update)
Current Per-Coin Price: $22,742.95 (-4.34% since last update)
Current Profit/Loss Status: +19.08% (+7.33% since last update)

After Bitcoin finally did something new by breaking through its weekly high, the flip-flop was on and it was time for me to start taking profits. I made a few sales starting on Sunday and going through Wednesday which gave me an average selling price of $27,522.43 (after fees).

The sales reduced my per-coin cost -4.34% from $23,775.13 to $22,742.95 and reduced my allocation -0.067% from 0.267% to 0.200%. From this point, I will resume selling if Bitcoin makes a stab at its new recent high around $28,500 and I will start adding if Bitcoin dives to its low around $25,900.

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% @ $25,944
0.027% @ $25,206
0.054% @ $24,060
0.109% @ $23,108
0.163% @ $21,983
0.545% @ $20,955
0.817% @ $20,038
0.817% @ $19,327
1.362% @ $18,506
1.362% @ $17,809

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.
• In April 2023, Bitcoin rallied +101% to a high of $31,050.00.

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.