Summing Up The Week

Another positive for the week for the markets with the indexes seeing more than 7 straight trading days of upside. However, with even permabulls like Jim Cramer taking profits and preparing for the market to reverse course, is it time to put more money on the table or hold back for the next selloff?

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

Market News

Delayed Tariffs & ECB Bond Buying Led Markets Higher

The markets saw a small boost mid-week when Trump announced he would delay Chinese tariffs on Wednesday night followed by the European Central Bank (ECB) lowering interest rates and announcing a plan to buy bonds in order to spur the economy, reported CNBC.

The result led both the Dow Jones Industrial Average and S&P 500 to start trading on Thursday just below all-time highs last set in July. 

Presidential Vocab Lesson: The Fed are “Boneheads”

Trump continued to attack the Fed on Wednesday, this time calling Fed officials “boneheads” in his tweet, reported CNBC. Trump continues to believe the Federal Reserve bank should reduce interest rates, as far as zero or even less, to compete with the interest rates of foreign currencies. 

Currently, many countries are in uncharted waters with their interest rates as Germany and other countries have negative interest rates. In short, a negative interest rate means a buyer of treasuries pays more now than they will get back at the end of the term.

In other words, a 10-year treasury bond with a -1.00% interest rate would yield $99 for every $100 invested at the end of 10 years.

A 0%  or negative interest rate on American treasury bonds could permit the Treasury Department to refinance the country’s ballooning debt balance.

Brexit on Pause: UK Parliament on Break

UK Parliament is on break – called prorogation – until October 14, just slightly more than two weeks before the No-Deal Brexit Deadline hits on October 31. Prime Minister Boris Johnson is still pushing for UK’s exit from the European Union (EU) deal or no-deal while Parliament remains divided, twice denying the PM’s requests for a snap election to allow the general public to decide, reported CNBC.

While much of Parliament wants to request a time extension from the EU, it’s possible that the EU won’t grant such an extension as many other countries see no justification for the UK’s continual delays in finalizing the referendum passed by the general public that Britain should exit the EU.

For the next month, Brexit will likely have little effect on the markets, however, when Parliament comes back into session mid-October, you can bet this topic will loom large in the geopolitical landscape.

Next Week’s Gameplan

Right now, the markets are in “Selling Season” as many of the positions continue to make gains. There are very few, if any, interesting buying opportunities, so it’s time to keep funds on the sidelines and wait to see where our next big move will take us.

With all the negative potential news on the horizon and the current overbought conditions of the market, a selloff seems far more likely than new higher-highs.

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’s attempt to break $11,000 left the crypto with a weekly high of $10,939.34 while its low on Wednesday of $9,862.46 gave its weekly low. Essentially, Bitcoin’s price remained exceptionally flat for the week with a change of just -1.3%, historically small for the crypto asset.

Bitcoin Gameplan

The gameplan is to wait-and-see. For me, waiting is one of the most important lessons I’ve learned over the years I’ve been trading cryptocurrency. While the power of FOMO can feel overwhelming, Bitcoin has given no indication where it intends to move next.

Over the past week, Bitcoin hasn’t oversold or overbought its Relative Strength Indicator (RSI) in any significant way. This means the crypto asset is marking time before its next move and the longer it stays flat, the more dramatic the move.

While I remain bullish on Bitcoin’s long-term prospects, I prefer to stay bearish in the short term, having lived through the dramatic 50% drop in Bitcoin’s value less than a year ago. I may be wrong and Bitcoin’s next move could be higher, however, I’d rather miss the upside than endure another halving of a risky investment.

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.