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Summing Up The Week

Between the lack of significant news catalysts and some darn decent earnings reports, stocks continued to float higher for the majority of the week as Bulls believe the most recent pullback of around -5% was the only correction the market needed before heading for higher highs.

This thesis was reinforced when, on Thursday, jobless claims came in at their highest level since August 2023, and the market took that as good news. 

However, on Friday, the consumer sentiment data came in… and it was not good. Consumers are worried, and while the initial report didn’t cause stocks to sell off, the upward momentum more or less flatlined.

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

Market News

Jobless claims at 231K, highest since August

You know it’s a slow week for market news when I talk about jobless claims, however this week’s 231,000 jobless claims was actually the highest number since August 2023, reported CNBC. Combined with last week’s weakening nonfarm payroll report, increasing jobless claims could be another clue that the Federal Reserve’s interest rate hikes are finally affecting the job market.

“Weekly jobless claims are one of the timeliest indicators of when the economy is starting to undergo serious deterioration, and the magnitude of new layoffs this week looks worrisome,” wrote Christopher Rupkey, chief economist at FWDBONDS. “One week does not a trend make, but we can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”

Once again, as bizarre as it sounds, the market rallied on the back of the weak number as it could signify the rate cuts might be coming sooner than expected. However, many pundits, myself included (not that I’m a pundit), don’t think the Fed will cut before December, if then.

Consumer Sentiment has Soured…

On Friday, the University of Michigan Survey of Consumers sentiment index showed a reading of 67.4 for May, down from 77.2 in April and well below the Dow Jones estimate of 76, a one-month decline of 12.7%, reported CNBC. Consumers see inflation expectations rising despite strong signals in the economy, and this is causing great concern.

“While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions,” said Joanne Hsu, the survey’s director. “They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead.”

In addition to actual gauges on inflation, the Federal Reserve keeps a close eye on “perceived inflation expectations.” In many cases, consumers feeling inflation is getting worse is actually worse than real inflation rising.

How?

Instead of saving money, consumers concerned about increasing prices may buy even more now for fear that it will increase in price in the future, thereby causing a supply shock and creating the very inflation they were fearing.

Will this vicious cycle continue? No one knows for certain, but this was not good news for the long term. On the whole, the markets more or less ignored the data, choosing instead to chop sideways and process the week’s gains.

Next Week’s Gameplan

Important economic reports return next week in the form of the Producer Price Index (PPI) on Tuesday and the Consumer Price Index (CPI) on Wednesday. We’re also going to get a variety of other economic datapoints including retail sales, the Empire State manufacturing survey, the homebuilder confidence index, housing starts, and a whole lot more!

In other words, there are a lot of potential market-moving catalysts as we get more and more insight into the health of the U.S. economy and the health of the global economy. If we keep weakening, investors who seem to be itching for a reason to sell might jump on any excuse and push stocks lower.

Alternatively, if the reports come in like last week’s nonfarm payroll report – i.e. “Goldilocks” – we might see a rally. As for me, it’s been a mixed bag this week – I’ve been taking profits in some positions while adding to others. I think we may remain in this “mixed-bag” season for some time so it’s important, as always, to have a plan for what to do if stocks head higher and what to do if stocks head lower.

In the meantime, I’ll see you all back here next Friday, friends!

Crytpo Corner

Bitcoin Price Action

Bitcoin was Looking So Good, too…

Bitcoin saw a pretty significant rally after the release of last week’s Crypto Corner, rallying to create a new weekly high at $65,523.44 on Monday, before rolling over and pulling back. The Big Orange Crypto found support at its new weekly low down at $60,601.60 on Thursday.

After chopping around a bit, Bitcoin completely lost support on Friday, giving back all the gains it saw Thursday and crashing back down to last week’s low. With its rangebound trading, it’s hard to know where Bitcoin wants to go from here, particularly with that monthly low down at $56,500.00 looking ominous.

The Bullish Case

Bulls believe the higher-high and higher-low are signs of good things to come, indicating that buyers are creating levels of support before institutions begin buying the ETFs. If Bulls get their way, the institutional buying that’s supposedly on the horizon will almost certainly send Bitcoin to new all-time highs.

The Bearish Case

Bears argue that institutions aren’t as interested in Bitcoin as the Bulls believe. Many Bears point out that one week’s worth of recovery won’t change the downward trend Bitcoin has been in since the beginning of April, and not only will Bitcoin test its low, Bears believe much lower-lows are in store as there are no positive catalysts on the horizon for crypto, for the moment.

*Trade Reset* 2.55% gains, 93% annualized

When Bitcoin rocketed to $65,500 on Monday, I had dramatically sold down my position with a total of 23 sales which left me with an average selling price of  $63,687.26. These sales reduced my per-coin cost -0.56% from $63,151.46 to $62,799.25, but also substantially cut my allocation -40.00% from 1.833% to 1.100%.

Since Bitcoin had shown tremendous bullish price action and I had reduced my allocation substantially, I decided to reset my trade, locking in +2.551% in gains with a trade that I had only opened on April 25, ten (10) days earlier, effectively locking in an annualized gain of +93.12% and freeing me up to start buying again.

What is a “Trade Reset?”

Whenever Bitcoin is in a bull rally and I start to feel that I don’t have enough allocated, instead of adding more to the position, I simply reset the trade by raising my cost basis and removing the difference in Bitcoin from the exchange.

Over the years, I’ve discovered that I absolutely hate raising my cost basis. This is entirely psychological, but I’ve found that by raising my cost basis, I’m able to add to my allocation more easily since it lowers my new cost basis rather than raising it.

Additionally, whenever I reset the trade, I don’t sell the difference in Bitcoin (or whatever crypto I may be trading), I pocket the profits in the coin I was trading. This way, I increase my stack and increase my future exposure.

Bitcoin Trade Update

Current Allocation: 2.167% (+97.00% since Trade Reset)
Current Per-Coin Price: $64,873.28 (-2.48% since Trade Reset)
Current Profit/Loss Status: -4.78% (*New Trade*)

After I reset my trade on Monday at $65,500, I basically called the top (surprise, surprise). Bitcoin rolled over and started filling my buy orders. By the time of this update, I made ten (10) buys at an average buy price of $62,144.74 (after fees). The buys lowered my per-coin cost -2.48% from $65,500.00 to $63,873.28, and increased my allocation +97.00% from 1.100% to 2.167%.

Bitcoin continues to live up to its reputation as the world’s most volatile asset, regardless of how many new buyers – retail or institutional – enter the space. It always has been a wild ride, and I hope it always stays this way; as crazy as it sounds – this is more fun!

Stay frosty, my friends. 😀👍

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:

0.167% @ $59,776
0.167% @ $58,359
0.333% @ $56,618
0.333% @ $55,754
0.333% @ $54,470
0.333% @ $53,156
0.333% @ $51,931
0.333% @ $50,655
0.333% @ $49,481
0.333% @ $48,256

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 my Gemini referral link to open an account.

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 January 2024, Bitcoin rallied +97% to a high of $49,102.29.
• Later in January, Bitcoin dropped -22% to a low of $38,501.00.
• In March, Bitcoin rallied +92% to a new all-time high of $73,835.57.
• In May, Bitcoin dropped -23% to a low of $56,500.00.

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.