Summing Up The Week

I started Get Irked six years ago on August 6, 2018 with the intention of helping investors with their investing journey by discussing my successes and failures. Since then, it’s been an exciting ride with more than a thousand blog entries, thousands of Twitter/X posts, and 260 YouTube videos totaling nearly 31.5 hours of runtime!

… and I have no intention of stopping (the blog and Twitter/X, at least… YouTube is a giant pain).

I just want to take a moment to thank you for your support. Without my loyal readers, there would be no point in me doing this at all, and I greatly appreciate all the kind words I receive from you.

Now, let’s get to this week’s market news!

The markets were positively roiled on Monday when the Bank of Japan’s interest rate hikes caused a global market selloff. Some pundits believed the markets were recovering on Tuesday, but it turned out to just be a relief rally leading to a Dead Cat Bounce on Wednesday when stocks finished near their Monday close.

Thursday brought good news in the form of a better-than-expected jobless claims number, causing the whipsaw price action to return as the markets rallied nearly 2% on the news. 

Market News

Japan’s Stock Market Crashed -12.4% on Monday

On Sunday evening, Japan’s stock market opened and began to crash spectacularly on a combination of factors, closing Monday trading down -12.4% which caused global markets to sell off dramatically. CNBC pointed to a variety of factors including reports that Nvidia’s (NVDA) upcoming GPU launch would be delayed, the unwind of the Japanese Yen-Carry Trade, and Friday’s nonfarm payrolls report potentially signaling a potential recession.

At the market open, the S&P 500 was down more than -4% the Nasdaq was down more than -6%, however both recovered to finish the day down -3.00% and -3.43%, respectively. 

Bank of Japan Walks Back Interest Rate Hike Talk

On Tuesday evening, the Bank of Japan’s deputy governor said in an interview that the BoJ would not hike interest rates if the market remained unstable which caused stocks to return to rallying, reported Reuters.

“As we’re seeing sharp volatility in domestic and overseas financial markets, it’s necessary to maintain current levels of monetary easing for the time being,” Uchida said in a speech to business leaders in the northern Japanese city of Hakodate.
“Personally, I see more factors popping up that require us being cautious about raising interest rates.”

Many investors had anticipated that the BoJ would raise interest rates to strengthen the yen against the dollar. Doing this would unravel the Yen Carry Trade where traders borrowed yen to invest in higher-yielding assets and potentially cause a global credit event. Some pundits attributed Monday’s crash in the Japanese Nikkei index and global stock markets to the beginning of the carry trade unraveling.

Initially, stocks rallied on Wednesday before rolling over and closing dangerously near where they had on Monday. 

Jobless claims come in at 233K, less than expected

I don’t typically talk about the weekly jobless claims reports as they tend to carry very little to no impact on markets, but, wow, did they ever bring home the rally on Thursday! Initial jobless claims totaled 233,000 for the week, a 17,000 week-over-week decline and less than the Dow Jones estimate for 240,000, reported CNBC.

The report indicates the labor market is stronger than many had thought after last Friday’s negative nonfarm payrolls report. Given how dour the week’s news had been up until Thursday combined with decidedly bearish price action on Monday and Wednesday, markets took this jobless claims report and ran with it with both the S&P 500 and Nasdaq rallying nearly 2% in midday trading.

Next Week’s Gameplan

There are no signs this market volatility is going to go anywhere for the foreseeable future. Historically, this type of volatility is on par for election years with stocks rallying and selling off significantly all the way up to Election Day. However, the good news is that the market always finishes up during a Presidential Election year. No, that does not mean this year’s returns are guaranteed, but the odds are in investors’ favor!

Next week has a pile of market-moving news catalysts to dump onto the volatility fire. On Tuesday, we get the Producer Price Index (PPI) for July with Wednesday bringing July’s Consumer Price Index (CPI). Retail sales and a number of economic datapoints come out on Thursday with Consumer Sentiment for August releasing on Friday.

Later this weekend, I will release a blog post introduction with the Investments in Play (the introductions are always free to all readers) discussing a key strategy I use to get great prices during selloffs and, more importantly, remove any possible emotion from my investing during market-wide crashes.

In the meantime, I hope everyone has a relaxing week. Try to ignore the markets if you feel yourself getting… irked… and I’ll see you all back here next Friday, friends! 

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Crytpo Corner

Bitcoin Price Action

Bitcoin Crashed Lower than the Shallowest Pullback!

During the global market selloff on Monday, Bitcoin found a bottom at $49,259.00, a -33.25% pullback from its all-time high. You’ll also notice the price stopped almost to-the-penny on the Next Support of Last Resort, an upward trendline that I’ve had in place on my charts since I started covering Bitcoin’s price action here back in January 2018… yes, that trendline is significant!

The good news about this -33.25% pullback is that Bitcoin has now exceeded the shallowest pullback from an all-time high and might have bottomed. Granted, there are no guarantees that Bitcoin can’t pull back lower, but my bearishness for the past 5+ months has been due, in part, to the unlikely nature that Bitcoin would pull back so much less than it had in prior cycles. Statistically, that would have been an extreme-case outlier and hard for me to swallow as a trained statistician. However, with this pullback, the potential Bitcoin has bottomed is much more likely.

Accordingly, I am now looking for potential bottoms rather than expecting support to fail. That being said, I’ve reviewed Bitcoin’s past pullbacks from all-time highs to create potential support targets where the crypto might pull back to if our new low fails to hold:

-37.63%: $46,003.00
-53.06%: $34,622.00
-62.91%: $27,357.00
-75.71%: $17,916.00
-86.00%: $10,327.00

To be clear, given the interest and growth in Bitcoin, I don’t believe it will pull back remotely as far as it did in the past, but that doesn’t mean it can’t happen, so I have to plan for those scenarios.

All this being said, I am now incredibly bullish thanks to Bitcoin exceeding the shallowest pullback! I have my largest allocation trade on since 2022! Sure, Bitcoin can (and might) sell off lower, but I am now spotting for bottoms rather than expecting deeper selloffs!

On Thursday, Bitcoin bounced significantly and rallied nearly +28% off Saturday’s low before finding resistance at $62,755.24 and pulling back to create what’s likely weak support at $60,171.62.

The Bullish Case

Bulls were taken completely off-guard by last weekend’s price action. So many had been arguing that $53,500.00 was going to be the cycle low that when the support was broken, stop-losses were triggered causing a capitulation flush. Despite the fact I am now bullish, many of the Bulls I follow are still hesitant despite the bounce we saw on Thursday.

The Bearish Case

The Bears are running victory laps and claiming Bitcoin is dead. The usual mockery of anyone who’s invested in Bitcoin can be heard on all of the financial channels with many making fun of Bitcoin’s inability to be a store of value akin to gold.

What so many Bears don’t understand is that we shouldn’t want Bitcoin to be a store of value.

A store of value is an asset, commodity, or currency that maintains its value without depreciating. (Investopedia)

By definition, “stores of value” can only increase or decrease in value at the same rate as inflation. I don’t know about you, but I want Bitcoin to increase in value at a rate significantly greater than the rate of inflation, please.

Anyway, with so many market participants now on the Bear side of the boat, my contrarian nature has caused me to flip sides. I am now incredibly bullish on Bitcoin.

The Bears might get their way and the low might not be in for Bitcoin, but I firmly believe we’re very near the end of the pullback cycle and Bitcoin may be set to make new all-time highs very, very soon.

Bitcoin Trade Update

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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 August, Bitcoin dropped -33% to a low of $49,050.01.

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.