Summing Up The Week

The markets kept chugging along for the majority of the week until a sudden, inexplicable reversal on Wednesday, where a day that saw a gain of +0.20% on the S&P 500 (SPX) intraday suddenly reversed about 90 minutes before the market close and sold off -1.68% by the end of day.

While moves like that aren’t incredibly rare, the lack of any news catalyst or logical explanation left many pundits bewildered. The rally seemed to return on Thursday.

As far as news catalysts, FedEx (FDX) gave a poor forward outlook, which is not usually indicative of good things for the economy. However, the big news came on Friday with the release of the Personal Consumption Expenditure (PCE) index, the Federal Reserve’s preferred gauge of inflation came in cooler than expected which caused the indexes to grind higher into the holiday weekend.

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

Market News

FedEx disappoints, sees weak demand going forward

The Dow transports, including UPS (UPS) and FedEx (FDX), are considered bellwethers in that their forecasts often indicate where the economy is headed. However, when FedEx disappointed on its earnings call and lowered its full-year sales outlook on Tuesday after the close, this information did not portend good things for the economy, reported CNBC.

“In the remainder of [fiscal] 2024, we expect revenue will continue to be pressured by volatile macroeconomic conditions, negatively affecting customer demand for our services across our transportation companies,” FedEx said in a filing. Its fiscal year ends May 31.

FedEx CEO Raj Subraamaniam went on to say that while FedEx had delivered excellent growth in the past two quarters, the company is having to “navigate an uncertain demand environment.” Typically, if the shippers are seeing less demand, this can often be an indication of weakening producer and consumer demand, and, therefore, a weakening of the entire economy.

Mortgage demand slips, Mild recession next year?

On Tuesday, the Mortgage Bankers Association (MBA) reported that mortgage demand fell last week compared with the previous week despite a continued drop in interest rates, reported CNBC. The MBA attributed the drop in demand as increasing expectations from homebuyers that the U.S. economy might enter a “mild recession” in the first half of next year.

“We expect that this path for monetary policy should support further declines in mortgage rates, just in time for the spring housing market,” the group said, referring to the Federal Reserve’s recent signal that it is looking to cut its benchmark rate multiple times next year. “We are forecasting modest growth in new and existing home sales in 2024, supporting growth in purchase originations.”

However, despite that recession in the first half of the year, the association did expect the second half to be quite positive. MBA expects mortgage origination volume to increase 22% in 2024 to $2 trillion with a 14% pop in the volume of purchasing and a significant 56% leap in demand for mortgage refinancing.

PCE rose 3.2% in November, less than expected

Friday saw the release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s favorite gauge of inflation. The PCE showed that inflation did continue to drop in November, rising at an annual rate of 3.2% versus 3.3% expected by economists, reported CNBC. Since the figure wasn’t exactly a huge beat, the markets didn’t roar to life, however they did continue to rally as disinflation of any kind is certainly good news.

Many pundits expressed optimism, particularly over the decline in rate inflation. “Adding in the further sharp slowdown in rent inflation still in the pipeline, it’s hard to see any credible reason why the annual inflation rate won’t also return to the 2% target over the coming months,” wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics.

Next Week’s Gameplan

With just one last holiday-shortened week before we’ve wrapped up 2023, I anticipate next week to bring us a relatively sedate melt-up into the end-of-the-year. In fact, even looking at historical trends, I’m not certain if we’ve ever seen a significant move in either direction during the 4-day trading week between Christmas and New Year’s.

Thanks to the incredible rally we’ve seen, I spent the vast majority of December trimming profits all over my portfolios. I did get the opportunity to open a new position in the Sprott Junior Uranium Miners ETF (URNJ) this week when the overheated uranium sector finally pulled back for a breather. Outside of that, my moves have almost all been profit-taking.

Again, I don’t anticipate much action next week, but, in case there is, I will stand ready.

Until then, let me wish you and yours a very Happy Holidays, and I’ll see you all here next Friday, friends!

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

Turbulent Times Tweak Bitcoin!

Bitcoin saw more of a pullback after last Friday’s update, but the leading crypto did make a higher weekly low at $40,508.01 on Monday, a potentially bullish sign as buyers stepped in to buy the dip. However, Bitcoin made a lower weekly high on Friday, just touching $44,424.36 before reversing and selling off.

The Bullish Case

Bulls believe Bitcoin is settling into a price consolidation pattern as we head into the new year where the SEC is expected to approve seven or more Bitcoin ETFs mid-month. There’s no question ETF approvals would be hugely bullish for the sector, and while Bulls believe there will be a significant rally on the news, I can’t help but question if ETF approval might already be priced in?

The Bearish Case

Bears continue to pound the drum that ETF approval will be a “Sell-the-News” event, but there every argument against the bull rally in Bitcoin all year has been dashed. The Bears have little to no credibility right now. Even the recent volatility we’ve seen in Bitcoin only saw a -10.78% pullback from its recent high to the low it saw earlier in December, far from an unusual move during a Bitcoin bull market. (Bitcoin has actually been known to pull back as much as –40% during a bull market cycle in the past!)

Bitcoin Trade Update

Current Allocation: 2.000% (-0.033% since Last Update)
Current Per-Coin Price: $43,580.58 (-0.23% since Last Update)
Current Profit/Loss Status: +0.09% (+2.52% since Last Update)

I made several buys during Sunday’s pullback, but when Bitcoin rallied later in the week above my cost basis, I took profits on all the quantity I had purchased, leaving me with a reduction of my allocation by -0.033% to from 2.033% to 2.000% and reducing my cost basis -0.23% from $43,681.76 to $43,580.58

If Bitcoin maintains this volatility, I will continue capitalizing by buying small quantities as it sells off and trimming small quantities above my cost basis until the crypto can determine which direction it wants to make 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:

0.014% @ $42,704
0.014% @ $42,228
0.014% @ $41,828
0.014% @ $41,303
0.027% @ $40,676
0.027% @ $40,427
0.027% @ $40,027
0.027% @ $39,351
0.027% @ $38,461
0.027% @ $37,522

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 +29% to a high of $31,862.21.
• In September, Bitcoin dropped -22% to a low of $24,900.00.
• In December, Bitcoin rallied +81% to a high of $45,000.00.

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.