Summing Up The Week

The market once again demonstrated how it’s favoring the downside when negative news sent the indexes tumbling throughout the week until the U.S. jobs report released Friday started to turn things around.

Just when it started to look like every analyst was turning bearish on the global economy with predictions of recession, at least some of the data seems to argue for the bulls.

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

Market News

Weakest Manufacturing Reading in 10 Years

The markets dropped on Tuesday following the Institute for Supply Management (ISM) saying that U.S. manufacturing activity has contracted to its worst level since June 2009, reported CNBC. 

The Dow Jones Index – made up of many industrials and manufacturing companies – took the brunt of the selloff, dropping 100 points immediately after the ISM release.

Charles Schwab Ending Commissions

Charles Schwab (SCHW) announced Monday that it is ending commissions on stock trading beginning October 7. 

While great for investors and traders (Schwab has been my preferred broker for nearly two decades, in fact), the news caused the share prices for all brokerages – including Schwab – to plummet in response.

Naturally, with commissions dropping from $4.95 per trade to nothing, Schwab’s profits will see a significant cut. SCHW’s shares dropped nearly 10% in Tuesday trading. Want to learn more? Check out my feature on Schwab.

Private Payrolls Report shows Hiring is Slowing

ADP and Moody’s Analytics’ private payroll report showed slowing in hiring when compared to prior years, reported CNBC on Wednesday.

While payrolls rose by 135,000 in September compared to Dow Jones’ estimates of 125,000, the monthly average was brought down to 145,000 when compared to 214,000 for the same time period last year.

The market took the news poorly with a dramatic sell-off ensuing, causing the Dow Jones Industrial Average (DJI) to lose more than 500 points and the S&P 500 (SPX) to sell off more than 1.5% during Wednesday’s trading. 

Unemployment Falls to 50-Year Low

In a week where one bad news story followed another, the unemployment falling to 3.5%, a 50-year-low, with payrolls increasing by 136,000 on Friday was welcome news. CNBC reported that the 3.5% jobless rate is the lowest since December 1969.

Next Week’s Gameplan

I’ve been talking to many investors who are selling their positions in fear of a significant market pullback similar (or even worse) than the fourth quarter of last year when we saw a pullback of 20% in the S&P 500.

While history certainly does rhyme, it doesn’t repeat itself verbatim. Given the low expectations on company earnings combined with mixed-to-positive news on economic growth, it’s hard for me to bet on the full bearish scenario.

That being said, I always Buy in Stages. I have a plan to add to my positions at key levels anywhere from a 5% pullback in the markets to a 50% pullback. No one knows where the market’s going to head, but being overly bearish or overly bullish is usually a recipe for losses, not gains.

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 tested and slightly broke last week’s low of $7712.45 on Monday, creating a new weekly low of $7701.00 and showing the $7700 mark as a key level of support. Bitcoin attempted a slight bounce over the week, setting a weekly high of $8535.00.

For the majority of the week, Bitcoin has remained relatively stable with low volatility as both the Bears and the Bulls wait to see what the next big move will bring.

Coinbase More Than Triples its Trading Fees

In a world where Schwab has just eliminated trading fees for stock equities, Coinbase announced on Wednesday that it will be more than tripling its trading fees beginning on Monday, October 7, 2019.

Personally, while I understand the desire for Coinbase to be profitable, I think this move is particularly risky as cryptocurrency’s volatility is already intimidating many speculators from entering the space.

Making trading Bitcoin and Coinbase’s other carried coins more expensive will just be another in a long list of reasons for those not already in the space to simply avoid it than to take on what seems to be ever-increasing risk.

Bitcoin Gameplan

I added another small amount to my Bitcoin position on Sunday at $7889 when Bitcoin tried to retest its lows, lowering my per-coin cost to $8721.90.

Currently, I hold about 5.50% of my entire desired allocation with my next buy order at $6677.66, slightly above Bitcoin’s key 26-Month Exponential Moving Average (EMA).

From there, I have buy targets at $6138, $5210, $4487 and $3436 which will bring my position allocation size to about 25% or 1/4 of my overall desired target size.

As I said last week, I remain concerned that Bitcoin may break its $3128 low from 2018 and head south for another cold winter, so the majority of my significantly-sized buys are targeting much lower levels, starting at $2700 and proceeding as low as $1800. 

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.