Summing Up The Week

The stock market always looks for a reason to sell in September and it didn’t have to wait long with disappointing manufacturing news on Tuesday. The labor market didn’t have anything good to say, either, with job openings falling more than expected in July and ADP reporting fewer new private payrolls in August than expected.

Market News

ISM Manufacturing still in contraction

On Tuesday, Institute for Supply Management’s (ISM) manufacturing index increased to 47.2%, however that was far from what investors were hoping for as anything lower than 50.0 indicates an economic contraction, reported MarketWatch.

Companies lack of spending on developing their manufacturing indicates a lack of faith in forward economic demand. “Demand remains subdued,” said Timothy Fiore, chairman of the ISM survey, “as companies show an unwillingness to invest in capital and inventory due to [high interest rates] and election uncertainty.”

With market participants already expecting September – historically the worst month of the year in the stock market – to offer a selloff, investors and traders wasted no time pushing stocks down on the first trading day of the month.

July job openings fell more than expected

On Wednesday, the Job Openings and Labor Turnover Survey (JOLTS) showed open positions dropped to 7.67 million in July, down 237,000 from June and the lowest level since January 2021, reported CNBC. The JOLTS shows the labor market is softer than expected.

Pundits had been calling for bad news to become bad news, and while stocks saw a bit of a relief rally early in the day Wednesday, the indexes rolled over by the end of the day and closed down for two days in a row.

Signs of job market slowing, ADP reports

On Thursday, we received even more news of a slowing labor market as payroll processor, ADP, reported private sector jobs great at the weakest pace in 3-1/2 years in August, reported CNBC. Companies hired 99,000 workers for the month, much lower than the consensus estimate for 140,000.

“The job market’s downward drift brought us to slower-than-normal hiring after two years of outsized growth,” ADP chief economist Nela Richardson said.

While this news wasn’t good, the markets tend to overlook ADP’s data as it can often contradict the much more relevant nonfarm payrolls report which releases Friday.

August jobs grew less-than-expected but unemployment down

On Friday, the main event, the August nonfarm payrolls report showed payrolls grew by 142,000 versus 161,000 expected, but unemployment ticked down to 4.2% from 4.3%, reported CNBC. The mixed report had the exact effect you might have expected in pre-market trading: the indexes were flat as traders couldn’t figure out whether to buy or sell the news.

Economists point to the higher-than-recent labor force participation rate which held at 62.7% as part of the reason for the higher unemployment; more Americans looking for a job means more are out-of-work until they find one.

As for the market reaction, I’m not entirely surprised. In any other month, this mixed report showing a weakening labor market would likely have been bullish for stocks as participants expected the Federal Reserve to cut rates. However, given the report was indeed mixed and we’re in the middle of September, many market participants continue to look for any reason to sell, so a mixed report means “HOLD” not “BUY.”

Next Week’s Gameplan

The potential for even more volatility in September continues next week with several key datapoints. On Monday, we have consumer credit followed by the Consumer Price Index (CPI) on Wednesday and Producer Price Index (PPI) on Thursday. The week is capped off with the Consumer Sentiment survey, but I don’t expect the survey to be as pivotal as CPI and PPI.

Additionally, there are some Bears out there predicting that the Japan Yen Carry Trade will rear its ugly head once more and really send stocks spiraling. 

As always, I don’t “bet” on any events; I just have a plan for what I’ll do if stocks go up and what I’ll do if stocks go down. I’ll see you back here to talk about it next Friday, friends!

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Crytpo Corner

Bitcoin Price Action

Bitcoin Falls Deeper Down the Whirlpool

The past week has been rough for Bitcoin bulls. Bitcoin broke through last week’s low at $56,120.00 on Wednesday, not finding support until $55,555.00. It didn’t take long for things to go from bad to worse, when that support failed Thursday and Bitcoin dropped to $55,262.51.

If current support fails to hold, we’re looking at potential support levels around $54,565-$54,750; $53,500, psychological support at $50,000-$50,300 (which corresponds with the Next Support of Last Resort trendline on my chart); followed by, finally, the cycle low down at $49.050.01.

The Bulls made an anemic attempt at a rally on Tuesday which puttered out making a significantly lower-high than last week’s $65,050.08 with the new weekly high set way down at $59,825.70 where the Bulls lost out to the Bears.

The Bullish Case

Some of the Bulls I follow seem to have their heads firmly buried in the sand and refuse to acknowledge that this is a bearish downtrend. One even claims that we remain in a Bull Flag pattern, and that Bitcoin is about to make a break for new all-time highs.

Seeing as how I have the largest-allocation trade on in nearly three years, I’d be fine if Bitcoin has bottomed, but, when taking an objective, quantitative approach, I have to side with the Bear, currently.

The Bearish Case

The Bears remain in control and their assessment is that as long as the stock market sees weakness, so will Bitcoin, and I have no need to disagree. While I still contend that Bitcoin’s low at $49,050.01 may be the low for the cycle, I have no reason to think we won’t continue to have buying opportunities in the mid-$50Ks and perhaps lower.

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.