Summing Up The Week

With the G20 summit behind us, the markets remain focused on the Federal Reserve Bank, and this week had no shortage of that sort of news as Jerome Powell testified before Congress on Wednesday.

The market indexes almost seemed to hold their breath entering mid-week with Powell’s comments taken to suggest that a rate cut is still possible in July. Thanks to Powell’s dovish testimony and indications a rate cut is very much in the works, the markets raced higher to finish the week at all-time highs.

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

Market News

Fed Chief Hints Interest Rate Cut Possible

The markets traded mainly sideways early in the week, waiting for Fed Chief Jerome Powell’s testimony in front of Congress on Wednesday. When Powell hinted at a rate cut by stating that business investment has slowed down “notably” in his testimony, market futures started rising as a rate cut might still be in the works, reported CNBC.

On Thursday, Powell provided similar insights when testifying in front of the Senate, emphasizing that last month’s positive job report doesn’t necessarily indicate a strong economy; an interest rate cut is likely coming.

S&P 500 and Dow Jones Average Make All-New Highs

The S&P 500 (SPX) briefly broke 3,000 a few times this week and the Dow Jones Industrial Average (DJIA) crossed 27,000, both all-new highs for the indexes.

The new highs were achieved mainly on the back of the technology and consumer products sectors, strange bedfellows as the two are typically inversely correlated. Consumer products are often considered a defensive play during weak economic conditions while technology companies are usually used as a growth play during economic growth.

Earnings Season Looks Grim

Fastenal (FAST), distributors of, well, fasteners, reported a worse-than-expected quarter due to tariff costs from the U.S.-China Trade War, reported CNBC on Thursday. 

Pundits suggest that the market has already priced in a poor earnings season, but seeing the actual results caused FAST to drop nearly -7.5% in trading. Companies whose business may be affected by the Chinese tariffs could likely expect similar drops to their stock prices following their earnings reports.

Next Week’s Gameplan

With the markets continuing to higher highs and plenty of potential bad news on the horizon, we’re using these new levels to target profit-taking opportunities.

For the moment, we’re keeping our cash in interest-bearing funds as we wait for buying opportunities to present themselves.

This Week in Play

Stay tuned for this week’s episodes of our Investments in Play and Trades in Play coming online later this weekend! 

Crytpo Corner

Bitcoin Price Action

If you only check the price of Bitcoin once a week, no one would fault you for thinking there was a whole lotta nothing this week since we’re basically where we were a week ago, but it was actually crazy eventful with your friendly neighborhood crypto trying to regain previous highs, only making it to $13,202.63 (Bitcoin’s standing 2019 high is $13,868.44) and then crashing back down to Earth.

For the past 24 hours, Bitcoin’s been trying to find a floor of support before it decides which way it wants to go from here.

Bitcoin Gameplan

Many long-term cryptocurrency analysts are using historical patterns to predict that Bitcoin is headed back down to its lows after its failed attempt to break its 2019 high.

At Get Irked, we feel these pundits aren’t accurately reviewing Bitcoin’s price history. During its 2017 Bull Market, Bitcoin was notorious for pulling back up to 50% before rocketing to higher highs. That being said, during last year’s Bear Market, Bitcoin’s price action felt a lot like it has over the past week.

Right now, we’re back to The Road to Nowhere as we have no real prediction for where Bitcoin may head from here. Of course, there are only two directions – higher or lower – so we have a trading plan in place for what happens in either outcome.

Once again, keep in mind the possibility that Bitcoin could break through its ~$3130 low from 2017 and try to head even lower. We’re using a potential loss of 80% from its $13,868.44 high – a painful price target of $2773.69 – as a worst-case scenario target.