Summing Up The Week

Even though there were only 3-1/2 trading days this week thanks to the Independence Day holiday, significant news releases really moved the markets, particularly later in the week. A hotter-than-expected jobs report indicates that the economy is still running strong, which is bad news for those hoping the Federal Reserve was done hiking rates.

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

Market News

Fed sees more rate hikes, but at slower pace

This happens every meeting of the Federal Reserve – the Fed announces their plan, and then the stock market anxiously awaits the release of the meeting minutes nearly a month later to see if anything will change.

On Wednesday, the minutes from June’s Fed meeting showed that the FOMC believes further tightening is likely, although it may be at a slower pace than what happened in 2022, reported CNBC.

Despite concerns expressed over economic growth, the committee decided to pause, citing the impact of the lag between when hikes are first implemented and when effects start to show in the economy. “The economy was facing headwinds from tighter credit conditions, including higher interest rates, for households and businesses, which would likely weigh on economic activity, hiring, and inflation, although the extent of these effect remained uncertain,” the minutes said.

Officials felt that “leaving the target range unchanged at this meeting would allow them more time to assess the economy’s progress toward the Committee’s goals of maximum employment and price stability.”

Private sector adds 497K jobs in June vs 220K expected

On Thursday, payroll processor ADP showed the private sector added 497,000 jobs in June, well ahead of the 267,000 added in May, and significantly beyond the 220,000 estimated, reported CNBC. In another “good news is bad news” catalyst, the stock market sold off substantially.

Despite the fact the Federal Reserve is much closer to the end of the tightening cycle, the market continued to hold on to hopes that the Fed was completely done. With the labor market coming in red hot, the need for additional rate hikes is becoming more apparent, so the market sold off anticipating that the Fed will almost certainly hike when they meet later in July.

Nonfarm payrolls adds 209K in June, below 240K estimate

On Friday, the Labor Department’s nonfarm payroll report for June once again contradicted ADP’s report from the day before, showing an increase of 209,000 jobs in June, well below the consensus estimate for 240,000. Additionally, while the unemployment rate dropped 0.1% to 3.6%, the jobless level rose to 6.9%, reported CNBC.

“A 209,000 increase in payrolls can hardly be described as weak,” said Seema Shah, chief global strategist at Principal Asset Management. “But after yesterday’s ADP wrongfooted investors into expecting another bumper jobs number, the market may be disappointed.”

Despite the slowing nonfarm jobs numbers, analysts believe the Federal Reserve will not slow its rate hikes, in kind. The June report “suggests labor market conditions are finally beginning to ease more markedly,” wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics. “That said, it is unlikely to stop the Fed from hiking rates again later this month, particularly when the downward trend in wage growth appears to be stalling.”

Next Week’s Gameplan

Summer is notorious for having lower trading volumes as professionals take vacations between May and September. As a result, news catalysts can have a more dramatic effect on market movements than they would the rest of the year.

In other words, this is not to say that “Sell in May and Go Away” is true. Far from it, in fact. Rather, investors should be prepared for more extreme rallies and corrections than would happen when trading volume is at a more typical level.

Accordingly, planning in advance remains instrumental to any good long-term investing strategy. Make your buying and selling price targets for each position well in advance of significant moves. That way, the emotion of the move is taken out of the equation as you made your plan when you were calm and rational.

And, with that, keep calm and keep investing on until 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 erratic price action continues!!

Nothing like an extreme swing on Thursday to remind everyone exactly how volatile Bitcoin and the rest of the crypto sector can be.

Within a matter of just a few hours, Bitcoin broke through last week’s high at $31,443.67, setting a new weekly and year-to-date high at $31,525.10 before immediately reversing course and selling off more than 5% to create a new higher weekly low at $29,715.87 on Friday.

From here, Bitcoin needs to hold that new low, otherwise the monthly low at $29,417.14 will serve as the line in the sand before Bitcoin could head significantly lower, eyeing $26,965.14 as the next likely target for support.

On the upside, it appears there is significant resistance at the $31.5K level so Bitcoin will need substantial buying to be able to break through. Should that happen, there could be dramatic upside with $34K-36K providing the next real area of resistance for the crypto.

The Bullish Case

With even more Bitcoin ETF filings and re-filings hitting the news seemingly everyday, the Bulls believe institutional adoption of Bitcoin is right around the corner. With the ability for average retail investors to buy Bitcoin without the complication of doing it through dedicated crypto exchanges, the Bulls believe the next Bull Market is nearly here.

The Bearish Case

Bears continue to point to the macroeconomic headwinds and geopolitical uncertainties facing every risk asset and claim Bitcoin will not be able to resist the coming pullback. Bears point to Bitcoin’s week’s inability to hold $30K as support this week as the reason for a bigger crash coming soon.

Bitcoin Trade Update

Current Allocation: 0.500% (+0.133% since last week’s update)
Current Per-Coin Price: $30,499.46 (-0.38% since last week’s update)
Current Profit/Loss Status: -0.84% (-4.75% since last week’s update)

My more aggressive approach to building my position continued this week when I started making buys with an order that went through on Sunday at $30,353.10 followed by several others with my lowest going through on Thursday at $29,925.30.

The combined buys gave me an average buying price of $30,185.95 (after fees) and lowered my per-coin price -0.38% from $30,615.08 to $30,499.46. The buys also increased my allocation +0.133% from 0.367% to 0.500%.

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% @ $29,567
0.027% @ $29,339
0.027% @ $28,932
0.027% @ $28,366
0.027% @ $27,807
0.081% @ $26,958
0.277% @ $25,827
0.298% @ $25,013
0.516% @ $23,978
0.787% @ $22,929

Not Your Keys, Not Your Crypto…

In light of brokerage failures in 2022, I no longer keep any of my crypto on an exchange and I only keep enough USD on the exchanges I use 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.

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, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
• In February 2020, Bitcoin rallied +64% to $10,522.51.
• In March , 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 2021, Bitcoin dropped -32% to a low of $28,732.00.
• In February, 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 , Bitcoin rallied +51% to a new all-time high of $64,896.75.
• In June , Bitcoin crashed -56% to a low of $28,800.00.
• In November, 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.
• In June, Bitcoin dropped -20% to a low of $24,750.00
• In July, Bitcoin rallied +27% to a high of $31,525.10.

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.