Summing Up The Week

After last week’s exciting Friday, everyone came into this week expecting the market to sell off dramatically on Monday. Trump headed all the Bears off at the pass with a tweet Sunday evening, and things progressed from there.

All in all, this week was surprisingly flat with no dramatic volatility (at least, none like we saw in recent weeks).

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

Market News

Trump: “China wants to Negotiate” China: “Um.. No.”

Before trading on Monday, the market futures went from down -300 points in the Dow Jones to up +200 points when Trump announced that China called over the weekend and wants to “get back to the table,“ reported CNBC. However, shortly after Trump made his claims, CNBC also reported a Chinese newspaper editor claimed “China didn’t change its position” stating that the calls which took place did not indicate the impression Trump received. The White House denied the editor’s report, claiming the calls were between higher-levels in the government.

On Tuesday, Chinese officials insisted that no calls took place, reported CNBC. The same officials also referred to tariffs as being counter-productive to the trade talks.

When the market provides this kind of diametrically-opposed information, what’s a long-term investor to do?

Stick with the stocks of high-quality companies and develop a trading plan. Using a consistent approach developed with research in advance can help cut through all the noise provided by the myriad of news sources that influence the markets’ day-to-day volatile gyrations.

30-Year Treasury Bond Yield Falls to (Another) Record Low

The rate on the benchmark 30-year Treasury bond sank to a new all-time low on Wednesday, reported CNBC. The story goes on to say that the falling bond yield has led to many analysts believing the global economic slowdown is indicating a potential recession.

One of the key elements of financial news to keep in mind is that the media loves reporting on “new records” whether that’s a record high or a record low.

Since a market typically moves higher in a bull market, this gives the news media a new headline each day as the market makes “a new record high.” The same happens during a bear market when yields, prices, and indexes can hit “new record lows.”

Media-savvy investors will notice that the media will also use random time ranges to create headlines such as “lowest since 2007” or “highest in the past 19 months.”

While it’s always a good idea to keep an eye on financial news, remembering to take all headlines with a grain (or full shaker) of salt will help investors keep their heads on straight. Don’t overreact to news stories designed to bring in readers with sensational headlines. Instead, develop and stick to a trading plan.

You Know it’s Bad when the Rich stop Spending

Sometimes, the most logical indicators are the most obvious. CNBC reported on Wednesday that rich people aren’t spending with high-end real estate having its worst year since the financial crisis, luxury retailers are struggling, and high-end auction sales being down for the first time in years, such as the Pebble Beach car auctions where the most expensive cars saw no reasonable bids.

If the economy is dependent on a strong American consumer, it only makes sense that it would be a bad sign when the consumers with the most money to throw around decide it’s time to pull back.

China: “On Second Thought…”

Stocks jumped significantly on Thursday after Chinese officials stated they would like to approach the trade war with a “calm” attitude, reported CNBC. This statement seemingly contradicts comments made earlier in the week that initially indicated that China had no interest in softening its tone.

Is the see-saw, roller-coaster volatility making you seasick, yet? Give it time.

Next Week’s Gameplan

The markets continue to float in No Man’s Land for my trading plan – in-between going high enough where I’d like to take profits and low enough where I’d like to add to positions. 

I have a few limit buy orders outstanding in case we see a huge selloff thanks to geopolitical news, but, for the moment, the gameplan is still “stay the course.”

This Week in Play

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

Crytpo Corner

Bitcoin Price Action

Bitcoin lost its grip on $10,000 this week after trying and failing to break $11,000 last week. Its weekly high was $10,680 with its low made on Thursday (yesterday) at $9,321.73. 

While BTCUSD did become oversold on the 4H time-frame of the Relative Strength Indicator (RSI), it didn’t reach the levels of the its previous crack through the $10,000 mark.

As always, analysts are on both sides of Bitcoin’s price movement. Some say that BTC will have to drop to lower-lows – at leas lower than $8,000 – before making new highs while others claim that retesting a support line makes it stronger.

I’ve heard both schools of though on support line testing – retesting it makes it stronger, retesting it makes it weaker. Basically, I think the truth just comes down to sometimes it works and sometimes it doesn’t…

Bitcoin Gameplan

I did not enter a trade when Bitcoin entered oversold condition on the 4-hour time-frame. I keep looking back at Bitcoin’s Bull Market of 2017 where it regularly took a breather before heading higher by selling off the Daily RSI time-frame, not the 4-Hour.

I have price targets starting around the high $8600s where I’ll get interested, however, if Bitcoin sells off its 4-Hour RSI to the same extent as it did on August 14 without making it to my price target, I may enter a trade earlier than expected.

Once again, speculation should only be done with money that can be lost, and remember that I buy incredibly small quantities when I open a trade in crypto. I begin with a 1% position of my entire desired amount. In other words, if I was looking at picking up $10,000 worth of Bitcoin on the way down, my first buy would be $100 and I would increase quantities as the price levels drop.

For the moment, I’m just sitting on my hands and watching the price action as Bitcoin tries to figure out what it wants to do next.

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.