Summing Up The Week
There was a lot of market-moving news this week, but the markets actually worked out a slight gain. China announced talks will resume in October. The UK voted to avoid a no-deal Brexit. However, the manufacturing index decreased for the first time in years and nonfarm jobs didn’t increase as much as expected.
Is this the silver lining showing the economy is stronger than expected, or are we just in the quiet period before the next bout of volatility?
What’s Another 15% Between Frenemies?
Despite the shortened 4-day trading week thanks to the Labor Day holiday, the week kicked off early when Trump’s latest round of tariffs – 15% on $112B of Chinese imports – took effect on Sunday, reported CNBC.
The new taxes target clothes, shoes, sporting goods and other consumer products, and may cause the prices of retail goods to rise into the holiday shopping season this fall. Many American companies have warned they will have to pass on the costs to customers, costs that could weaken what up until now has been the strongest element of the U.S. economy – its robust consumers.
Brexit: Deal or No Deal?
The markets may have been closed on Monday for the Labor Day Holiday, but that didn’t stop British Prime Minister Boris Johnson says Brexit deal chances are rising, reported CNBC.
Boris (can you believe someone named their kid that in the last 60 years?!) released a statement following an emergency cabinet meeting wherein Johnson urged members not to vote this week for legislation to block a no-deal Brexit.
A no-deal Brexit would result in extremely unfavorable conditions for both Britain and the European Union (EU), potentially weakening the global economy. Johnson stated further delays would be pointless. “We’re leaving on the 31st of October, no ifs or buts. We will not accept any attempts to go back on our promises.” he said.
On Monday, the UK Parliament voted to take control of parliamentary business, preferring to vote to delay Britain’s separation from the EU until a deal could be reached, reported CNBC. Lawmakers hope to pressure Johnson into requesting another extension for Britain’s exit, this time until January 2020.
Manufacturing Contracts for First Time in Three Years
The Institute for Supply Manufacturing (ISM)’s August report demonstrated the sector is currently contracting, its first decline since 2016, reported CNBC on Monday.
While the American economy has been relying on the strength of the U.S. consumer, the weakening of its manufacturing sector indicates yet another sign of potential recession, and, combined with the increased tariffs on China over the Labor Day weekend, caused the markets to sell off on Monday.
U.S. and China Agree to Trade Talks in October
The markets rocketed higher on Thursday after news that the U.S. and China have agreed to meet for trade talks in October, reported CNBC. Even as insiders claim these talks have the potential for a “breakthrough,” it’s worth noting that nothing of significance has been agreed on at this time.
The markets are pricing in positive news, and while the talks are positive, we could just as easily see no results as we have in the past. Proceed carefully.
U.S. Jobs Report Disappoints Slightly
The U.S. Jobs Report showed 130,000 new nonfarm jobs created in August when Wall Street expected 150,000 while unemployment stayed level at 3.7% as expected, reported CNBC on Friday. Robust job creation is an indicator of a healthy economy as companies spend more to encourage growth. Slowing job creation is the opposite – an indication of companies holding back over uncertainty over economic conditions.
Next Week’s Gameplan
The 4th Quarter of the year is notoriously volatile over a historical perspective with September being the worst month of the entire year for volatility. Basically, that means the coming weeks could be quite exciting.
Given that we have a lot more potential for bad news events as opposed to good news, I’m keeping my funds on the sidelines ready to go to use if we see a significant sell-off. In the meantime, more sitting on my hands and waiting for the right opportunity.
Get Irked contributors are not professional advisers. Discussions of positions should not be taken as recommendations to buy or sell. All investments carry risk and all readers must accept their own risks. Get Irked recommends anyone interested in investing or trading any asset class consult with a professional investment adviser to determine if an investment idea is suitable to them and their investment goals.
Bitcoin Price (in USD)
Bitcoin Price Action
All the analysts who believed Bitcoin would crack through the fateful $9,000 mark and crash to the low $7000s were once again proved wrong as Bitcoin, the King of Unpredictability, bounced off $9,321.73 and broke back through $10,000 over the Labor Day weekend.
Regular readers of Get Irked will know that Bitcoin’s only consistency is inconsistency.
The majority of Technical Analysts are baffled by Bitcoin’s paradoxical moves. Bitcoin almost always moves in a direction that the overwhelming majority do not expect, and its most recent hop continued to prove the rule.
As the past week progressed, Bitcoin continued to grind higher toward $11,000. It headed higher, that is, until right before this week’s Week in Review when Bitcoin suddenly lost its footing and dropped to $10,248.00.
Now, only time will tell whether Bitcoin regains its strength and heads higher from here or if the sudden sell-off signifies the end of this little Bull Run.
Because of a case of incurable boredom, I was sitting and staring at Bitcoin’s price action on Sunday, September 1 when I noticed the crypto exhibiting a significant amount of bullish support above its recent $9,321 low. I opened a position at $9,591.42 with 0.5% of my desired allocation (half of my usual starting size) and continued to watch the price action. When Bitcoin bounced over $9,900.00 on Labor Day, I waited for a slight pullback on the 30M time-frame to add another 0.5% for a final 1% starting position at $9,766.45.
Some traders like to add in stages at pullbacks on the way up, however, I’ve had poor experience with this technique in the past with the crypto taking a sudden reversal and blowing back down through my original cost basis, so once I obtained my full starting position, I decided to sit back to see where the bounce might take Bitcoin.
On Friday, I used a stop-limit sell order to protect profits on part of my position, selling during the drop-off at $10,788.00. Currently, I’m using a stop loss limit order under Bitcoin’s new low of $10,248.00 to protect the remainder of my position and prepare for Bitcoin’s next level (whichever direction that happens to be).
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.
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