Summing Up The Week

With promising news regarding COVID-19 coronavirus treatments breaking throughout the week, the indexes continued their nearly-unbelievable run higher from March’s lows.

Despite an epic 22 million unemployed Americans, the combination of stimulus checks arriving and positive vaccine/therapies seemed to perpetuate the Bull animal spirits.

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

Market News

OPEC+ Finalizes Historic Production Cut

OPEC and its allies finalized an historic agreement to cut production by 9.7 million barrels per day, reported CNBC on Sunday.

While the COVID-19 novel coronavirus was likely the key catalyst for the stock market’s 30%+ sell-off from its highs, many analysts also point to the huge oil production fight between Russia and Saudi Arabia as a significant contributor.

The 9.7M barrels per day cut will begin on May 1 and extend through the end of June, potentially providing temporary relief for the energy industry. However, due to the lack of demand, OPEC+’s historic cut did little to move the energy sector on Monday.

Markets Soar on Coronavirus Vaccine News

The markets continued higher on Tuesday following news that Johnson & Johnson (JNJ) can produce up to 900 million vaccine doses by April 2021 and there are now 70 vaccines in development according to the World Health Organization.

Although vaccine advancement is certainly great news from a global health front, market analysts still warn that the economic fallout will be severe, and that the market’s apparent expectation that life will return to normal shortly is far too optimistic.

Several banks did come out with bullish outlooks, however, with Morgan Stanley (MS) saying any dip from these levels should be bought. Personally, I’m waiting to see more earnings reports and outlooks before raising my price targets too much.

Trump Halts WHO Funding for COVID-19 Review

President Trump announced the U.S. will suspend funding to the World Health Organization while it reviews the agency’s response to COVID-19, reported CNBC on Wednesday.

CNBC also reported that it’s not evidently clear if and how Trump’s administration can halt funding given that Congress appropriates the funding and has already done so. Trump claims the WHO was slow to respond to the COVID-19 pandemic, saying, “So much death has been caused by their mistakes.”

Bizarrely, although Trump claims the WHO was slow-to-respond, Trump told the American citizens and press that COVID-19 wasn’t serious even following the WHO’s identifying the disease as a pandemic in March.

Weekly Jobless Claims @ 5.245M, Monthly @ 22M

The Labor Department reported an additional 5.245 million Americans out of work this week versus 5 million expected, bringing the monthly total to 22 million out of work due to the coronavirus, reported CNBC on Thursday.

The total jobs lost now effectively represents a return of all progress made in job development since the 2008-09 Financial Crisis. Markets sold off slightly on the news.

Gilead Drug Shows Promise in Early COVID-19 Tests

Gilead Sciences (GILD) announced that its antiviral drug Remdesivir appears to have rapid recoveries in fever and respiratory symptoms, reported CNBC after the market closed on Thursday.

Since Remdesivir has already been approved by the Food & Drug Administration (FDA), further testing is all that’s needed before medical professionals can begin using the drug as a treatment, no long-running side effect tests will be required as they have already been performed on the drug for its initial approval by the FDA.

While still in early trials, the potential of an existing drug treating the more severe symptoms of COVID-19 would have huge positive effects, dramatically reducing if not eliminating the mortality rate of the disease.

Gilead’s stock jumped 15%+ in after-hours trading and the S&P 500 popped 2%.

Next Week’s Gameplan

As I said last week, we’ve suddenly gone deep into Selling Season, so any moves I’m doing right now involve taking profits.

While a selloff breaking March’s lows (or even testing them) may no longer be in the works, the profoundly destructive effect the country-wide closure has had on the economy doesn’t seem to be fully taken into account.

The COVID-19 therapies and vaccines aren’t nearly ready for prime-time, and if any states fumble their reopening and see a resurgence, the market will definitely selloff.

For the moment, it’s a no-buy market as investors FOMO into it in droves… 

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

Over the course of the last week, Bitcoin sold off to a higher weekly low of $6456.00 on Thursday. From there, it bounced to its current level, but still retains its unbroken weekly-high of $7461.00 so the crypto’s trading in a range.

However, it’s still worth noting that Bitcoin hasn’t set a higher monthly-low than March’s precipitous $3858.00, so any trading plan has to take that into account.

BTC could pull back to the low $4000s, a decline in excess of -40% from today’s levels and still be trading in a range.

The Bullish Case

The Bulls keep pointing to the halvening coming up in a few weeks as a reason to get excited and continue to stick to their argument that the epic selloff bloodbath in March is reason to believe we won’t see another pullback and that Bitcoin will break 2019 high’s as it heads higher from the halvening.

The Bearish Case

Many analysts believe Bitcoin is due for a significant selloff, and given its monthly low down at $3858.00, that’s certainly a possibility. However, I’ve found cryptocurrency is often a contrarian of contrary opinions meaning… as always… it’s completely unpredictable. That 40% drop is pretty dicey, though.

Bitcoin Gameplan

Previous Trade completely closed 4/9/2020 for +33.217% in profits

Current Allocation: 3.002%
Current Per-Coin Price: $7,060.49
Current Status: -0.366%

Bitcoin’s price action started acting funny shortly after I posted last week’s Week in Review so I opted to use a stop-loss to close the entire position and take all profits if Bitcoin broke a key level, which it did on Thursday night (last week was a 4-day holiday trading week thanks to Good Friday).

All-in-all, I ended up making +33.217% in profits over the course of the trade which started on January 28 and ended on April 9. As always, I opt to keep my crypto profits in the coin I traded so I can build a long-term accumulation, so this single trade added 5.336% worth of my entire available portfolio (USD & crypto) to my long-term Bitcoin holdings.

Not too shabby for a little over two months’ work.

Since $7000 isn’t a bad place to start a position in Bitcoin, I also reopened a new position shortly after BTC sold off, buying in small quantities (as always). Bitcoin continued moving downward so I continued adding, building to my current allocation of 3.002% with a per-coin price of $7,060.49.

Bitcoin Buying Targets

Based on past support levels, Moving Averages (both Simple and Exponential), and a positively terrifying past trendline, I’ve come up with the following buy targets:

0.639% @ $5751
0.864% @ $5217
3.895% @ $4289
3.748% @ $3865
8.905% @ $3219
6.422% @ $2989
5.118% @ $2636
11.992% @ $2089
16.244% @ $1774

Bitcoin Selling Targets

Once again, I’m back to holding an allocation so small that I won’t be targeting specific selling prices. Instead, I’ll be watching my levels and Bitcoin price action to determine whether it will be worthwhile to close the position and take profits.

Why the differing quantities at each level instead of a flat percentage?
Rather than buying an equal percentage, I change my buying quantity at each stage as a reflection of how likely Bitcoin could bottom and rebound from that stage. Rather than increasing my quantity on the way down, I’m used a fixed amount of money, so I’m basing how much I buy by how likely I think Bitcoin will drop to a certain level. In this case, I don’t think it’s likely Bitcoin will be able to break its $3128 low, so my quantities under that price point are less to account for the chances it will get to them.

No price target is unrealistic in the cryptocurrency space – Bullish or Bearish.
While traditional stock market investors and traders may think the price targets in the cryptocurrency space are outlandish due to the incredible spread (sometimes a drop of near -90% or a gain of up to +1000% or more), Bitcoin has demonstrated that, more than any speculative asset, its price is capable of doing anything.

Here are just a few recent price movements over the past couple of years:

• Bitcoin rose +2,707% from its January 2017 low of $734.64 to make an all-time high of $19,891.99 in December of the same year.
• Then, Bitcoin crashed nearly -85% from its high to a December 2018 low of $3128.89.
• In the first half of 2019, Bitcoin rebounded +343% from $3128.89 to $13,868.44.
• From June 2019, Bitcoin dropped -53.64% to a low of $6430.00 in December 2019.
• From December 2019’s low, Bitcoin rebounded +64% from $6430.00 to $10,522.51.
  
• In March 2020, Bitcoin dropped -63.33% to a low of $3858.00, mostly in 24 hours
• From $3858.00, Bitcoin has rebounded +82.34% to $7034.65.
• Where will Bitcoin go from here? Truly, anything is possible.

What if Bitcoin’s headed to zero?
The only reason I speculate in the cryptocurrency space is I truly believe Bitcoin isn’t headed to zero.

I am prepared for that possibility, however, by knowing I could potentially lose all of the capital I’ve allocated to this speculative investment. Professional advisers recommend speculating with no more than 5% of an investor’s overall assets. Personally, I’ve allocated less than 2% of my assets to speculating in crypto.

I feel that anyone who doesn’t believe in the long-term viability of cryptocurrency would be better served not speculating in the space.

On a good day, this asset class isn’t suitable for those with weak stomachs. On volatile days, the sector can induce nausea in the most iron-willed speculator.

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.