Summing Up The Week

Despite signs from major industrial companies Boeing (BA) and Caterpillar (CAT) indicating a global macroeconomic slowdown, the markets closed the week surprisingly upbeat.

However, October is historically a negative month, particularly if September isn’t too bad. Should we be scared of next week and what may come?

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

Market News

UK Delays Brexit Vote & Wants Extension

On Saturday before the trading week even began, the House of Commons in the United Kingdom voted to delay a vote on Prime Minister Boris Johnson’s Brexit deal, asking the P.M. to return to Brussels and request an extension on the October 31 deadline, reported CNBC.

From here, the E.U. doesn’t need to accept an extension with some ruling out giving Britain any additional time to approve a Brexit deal. However, neither side wants a “no-deal” scenario or “Hard Brexit” as the potential economic impact could be severe for all involved.

As of Sunday, political pundits felt that EU leaders would take their time with a response, however, some suggested a response could come as early as Monday.

On Tuesday, it looked like Britain might be making progress as Parliament backed Johnson’s Withdrawal Agreement Bill before voting against the timetable minutes later, reported BBC. The EU Council President Donald Tusk said he would support an October 31 deadline extension. 

Caterpillar (CAT) misses, Boeing (BA) still Optimistic

Two of the Dow Jones Industrial Average’s (DJIA) largest positions, Caterpillar (CAT) and Boeing (BA) reported their earnings, and both were pretty dismal. Historically, both companies have been bellwhethers of the condition of the global economy, however, given Boeing’s current troubles with the 737-Max, CAT is basically indicating things are slowing.

CNBC reported Caterpillar released earnings of $2.66 per share, far missing analyst estimates of $2.88 by a margin of more than 7.5%. Revenues came in almost $1B lighter than expected at $12.758B vs. $13.572B. To make matters worse, CAT lowered full-year guidance. Despite a disappointing report, Caterpillar’s stock held up remarkably well, almost staying flat.

Boeing (BA) decimated its earnings report, missing dramatically on every possible metric, and the stock popped +2.50% on the news. Why? The company remains optimistic and is assuming that 737 Max will receive regulatory approval by the end of 2019, reported CNBC. 

With Boeing leadership headed to testify in front of Congress this week plus last week’s revelations regarding what test pilots did and didn’t know before the 737 Max’s release, the company’s optimism seems unfounded, however, investors piled into the stock assuming the company’s duopoly status with Airbus as the only other airplane provider to be a sure thing. 

Keep in mind that if Boeing’s 737 Max sees any kind of issues with the Federal Aviation Administration (FAA) or other major country’s air travel authorities, the stock could be in for an absolute world of pain.

Unemployment Report Better Than Expected

The U.S. Unemployment Report shows the number of new jobless claims each month, and October’s jobless report showed 212,000 new claims versus 215,000 expected, reported CNBC on Thursday.

Economists expected a higher number thanks to the United Auto Workers strike, however, that number didn’t come to pass which indicates a still-tight jobs market even with hiring and economic growth slowing.

Next Week’s Gameplan

If there’s one thing I’ve learned when it comes to the markets, history might not repeat itself but it certainly does rhyme. Next week could be incredibly volatile as traders seek to prepare themselves for what is traditionally a rocky end of the month.

Of course, this might not happen, either. So, what to do? Make a gameplan and stick to it. Sometimes, ignoring macro market moves and focusing on just your positions can help filter out the noise so you can see what’s really going on.

This Week in Play

Stay tuned for this week’s episodes of my two portfolios Investments in Play and Speculation in Play coming online later this weekend! 

Crytpo Corner

Bitcoin Price Action

Bitcoin broke multiple weeks of price consolidation on Wednesday morning, crashing to the downside and losing more than -6% of value in 15 minutes. This recent move offers additional evidence that the space is heading into a bear trend for some time.

The new weekly low of $7296.44 made Wednesday held, and while the charts seemed to reveal a “bear flag” on the Daily timeframe, everything reversed on Friday when Bitcoin climbed +16.15% in 5-1/2 hours to form a new weekly high at $8800.10.

Should Bitcoin reverse course and seek lower lows, Bitcoin may see support at a few key levels: the 26-Month Exponential Moving Average (EMA) is floating between $6500-6600; $6000 provided key psychological support throughout 2018; and the 50-Month EMA is floating between $4400-4500.

The “Support of Last Resort” line (shown in green on the above chart) shows the level of support that Bitcoin bounced off of repeatedly during the November 2018 – February 2019 down cycle. The Support of Last Resort prevented the Bears from making further downside and resulted in the Bull Run of 2019 to the high $13,000s.

At this point, it’s hard to know how solid a bull move Bitcoin’s quick run is as it didn’t break the previous weekly high of $8826.00. 

Bitcoin Gameplan

Patience continues to be the only way for me to play the Bitcoin space, as I add tiny amounts to my position with each substantial price drop.

During Wednesday’s selloff, I added another 0.5% a bit early at $7838 which lowered my per-coin cost -0.92% from $8659.99 to $8580.21. I currently hold 5.72% of my entire desired allocation of Bitcoin.

I have additional buys set at:

• 0.3% @ $7320
• 0.3% @ $6620
• 0.4% @ $6190
• 1.8% @ $5600
• 2.6% @ $5020
• 3.7% @ $4465

My long-term gameplan continues to remain unchanged: my big buys won’t begin until after Bitcoin crosses the 50-Month EMA. My first real-sized buy will be roughly 6% of my desired allocation around $3830 followed by 12.5% at $3065 (if we break 2018’s low), 15% at $2610 (a key support level), 20% at $1875 (another key level) and 30% at $1420 (Doomsday Target).

Since Bitcoin is currently consolidating right around my per-coin cost, I have no intent to take profits or reduce my position size as we wait for crypto’s next move.

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.