Summing Up The Week

After last week’s selling rout into the weekend, investors didn’t quite know what to expect when this week kicked off. Fortunately, investors came in and bought the dip on Monday, and, while Wednesday looked particularly treacherous following the release of a Consumer Price Index that wasn’t the greatest, the markets reversed midday and finished Wednesday higher.

The Producer Price Index released in-line so stocks rallied once more, naturally. In fact, the entire week ended up being relatively uneventful. 

Still, let’s look at the news that moved markets this week…

Market News

Consumer prices rose 0.2% in August, lowest since 2021

On Wednesday, the Consumer Price Index (CPI) showed the prices of goods and services increased 0.2% in August, in line with expectations and year-over-year inflation rate of 2.5%, down 0.4% from July and the lowest since February 2021, reported CNBC. It’s worth noting that core CPI, a figure excluding food and energy prices, increased 0.3% in August, higher than the 0.2% estimates.

Initially, the market pulled back significantly as the core inflation figure was not what market participants were hoping for as it came in hotter than expected. “This isn’t the CPI report the market wanted to see. With core inflation coming in higher than expected, the Fed’s path to a 50 basis point cut has become more complicated,” said Seema Shah, chief global strategist at Principal Asset Management.

However, investors bought the dip and what looked like what could be a red day for stocks turned into a very positive one with the S&P 500 finishing up more than 1% and the NASDAQ breaking out with a greater-than-2% gain on the day.

Wholesale prices rose 0.2% in august, in-line

On Thursday, the Producer Price Index (PPI) showed wholesale prices rose 0.2% in August, in line with the estimates by economists, reported CNBC. While core PPI – a figure which excludes food and energy – came in slightly hotter than expected at 0.3% versus the 0.2% estimate.

PPI inflation is now at its lowest level since February 2024, which isn’t saying all that much, I guess, but the PPI release more or less confirmed that the Federal Reserve will not cut more than 0.25% when they meet next week.

Next Week’s Gameplan

It’s that time of the month again – time for the Federal Reserve meeting and the historic interest rate-cut decision everyone has been waiting for!

While we will be getting a lot of other useful data next week including the Empire State manufacturing survey on Monday, retail sales on Tuesday, and initial jobless claims along with the Philadelphia Fed manufacturing survey on Thursday, all of those fall to the side when we’re talking about the long-awaited reversal from rate hikes to rate cuts.

On Wednesday, the Fed will announce their rate cut with the consensus expecting a 0.25% rate cut in light of the inflation data we received this week. In fact, many pundits suggest that if the Fed goes with a 0.50% rate cut, the markets may panic, believing the Fed sees something the market’s missing.

Regardless, next week certainly promises to be exciting, especially since, finally, the biggest event of the week isn’t happening on a Friday! At least this way we’ll have a more of a feeling of where the market will go after Wednesday instead of having to wait until the very last trading day to get any information at all!

So, keep your buying plans updated, and I’ll meet you back here for the coverage next Friday, friends!

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Crytpo Corner

Bitcoin Price Action

The Bitcoin Breakdown… and Bounce?

Bitcoin had a heck of a weekend after my Crypto Corner went out Friday morning. Bitcoin positively collapsed with the rest of the market during last Friday’s trading, not finding support until $52,530.00 and confounding all the Bulls.

Since then, Big Orange was making a respectable recovery until the bottom dropped out briefly on Wednesday with a substantial pullback violating lows from the week prior, and setting our new weekly-low tentatively at $55,534.41. Big Orange made a respectably quick recovery and set a lower weekly-high at $58,487.06 on Thursday.

The Bullish Case

Bulls are running victory laps already, claiming the higher low set at $52,530.00 over the prior low at $49,050.01 on August 5th is a sign that happy days are here again. Bulls continue to claim that the series of lower-highs and lower-lows is actually a Bull Flag and that Bitcoin is about to break out to new all-time highs before the end of the year. All over X, permabulls were posting price targets with some as ambitious as arguing Bitcoin will see $250,000 by the end of 2024.

The Bearish Case

Bears rightfully point out that Bull Flags are only Bull Flags until they aren’t. I go more into detail about my problem with using pattern recognition in technical analysis in this week’s Speculation in Play, but, in short, a Bull Flag is a series of lower-lows and lower-highs (typically very BEARISH price action) that resolves itself in a breakout to the upside. 

Bears will point out that Bull Flags are notorious for also resolving themselves to significantly lower lows, and many Bears believe that’s what’s happening to Bitcoin now, with some predicting a retest of $40K and lower between now and even the Presidential Election.

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.