Black Lives Matter

While I try to stick closely to the matters affecting the markets on Get Irked, the horrific murders of George Floyd, Breonna Taylor, Ahmaud Arbery, and so many other black Americans combined with the mistreatment of minorities in the United States cannot go ignored or unaddressed.

I encourage my readers to educate themselves on the inequalities in America as well as read up on the racism and marginalization of minorities that has plagued the United States throughout its history.

Talk is Cheap – Put Your Money Where Your Mouth Is

It’s not my place to grab the microphone right now.

While I am a member of a minority class, my skin is white and this is the time for black and brown America to have the opportunity to speak out against the atrocities facing minorities in this country, not the time for white people to “whitesplain” the problem as if white people could possibly know what they’re talking about (which they simply cannot).

However, what white people can do is offer support to our black and brown brothers and sisters by aligning with the goals of equality and justice for all while also donating funds to organizations dedicated to the cause.

This week, I was inspired by an interview on CNBC’s Squawk Box morning show with Kwame Owusu-Kesse, the Chief Operating Officer of the Harlem Children’s Zone (HCZ).

The HCZ seeks to provide services and support to black children in the Harlem neighborhood in New York City, including healthcare and educational opportunities for parents starting from the birth of their children, two fantastic K-12 charter schools free for students, different opportunities for support from birth to college, and, finally, assistance in landing a career. The organization has been so effective that leaders throughout the United States are looking to expand the program nationally.

I started making financial donations to the HCZ this week and I invite my readers to do the same (you can either click my link or go directly to www.hcz.org).

You do not need to support my chosen charity, but I encourage you to find organizations working toward equity in America and give them your time and money.

Let’s not just talk about this. Let’s also do something about it.

Summing Up The Week

The Federal Reserve Bank drove the markets going into Wednesday’s expected forecast release from Chairman Jerome Powell. A rally on Monday was followed by a very minor pullback on Tuesday as investors continued to remain optimistic about the reopening of the economy.

In addition to the Fed, the markets were keeping a close eye on Texas who many medical professional felt reopened its economy too soon. Concerns over a second wave started coming to a head on Thursday with a market selloff as COVID cases rose throughout the week.

Market News

Texas Reports Record COVID-19 Cases Day-After-Day

After a rally on Monday, the market started to eye Texas, whose early reopening has resulted in record daily coronavirus hospitalizations with each day exceeding the last Monday through Wednesday, reported CNBC.

While medical professionals like ex-FDA Commissioner Scott Gottlieb assure the community that national and even statewide closures will likely never happen again as governments figure out how to isolate counties and/or cities for lockdown, the results from Texas were far from reassuring for investors hoping the consumer would return.

If history is any guide from the 1918 Spanish Flu Pandemic, a second coming of the COVID-19 virus could potentially bring worse results with increased cases and even more fatalities than the first round. 

Fed Announces No Interest Rate Change through 2022

On Wednesday, the markets were down waiting for the announcement of the Federal Reserve released at 2 p.m. ET. The news was positive for the long-term but negative for the short-term as the Fed expects no change in interest rates (staying near 0%) through 2022 and predicts Gross Domestic Product (GDP) to bounce to 5% in 2021, reported CNBC.

In addition to keeping the interest rate stead at 0.00%-0.25%, the Fed announced that it would continue buying bonds with a target of buying $80 billion a month in Treasurys and $40 billion in mortgage-backed securities. 

While the Fed sees the GDP at 5% in 2021, the forecast for 2020 was dire but not unexpected with a predicted tumble of -6.5% for the year. The markets sold off slightly into the close on Wednesday as a result of the dour economic forecast.

Market Drops on Concerns over COVID-19 Second Wave

The market sold off substantially on Thursday as reports of rising numbers of new coronavirus cases poured in from reopening states, reported CNBC. In addition to increasing cases from Texas seen throughout the week, nine counties in California reported a spike in new cases.

When combined with the Fed’s estimates from Wednesday that 2020 will be far from easy on the U.S. economy and the global economy, as a whole, investors started to take the many headwinds facing the overheated stock market seriously, with airline and retail stocks taking a brutal hit with expectations the consumer may take longer to return to normal than previously hoped.

Next Week’s Gameplan

The market seems to have finally wised up to the threats against it. From here, I’m back to eyeing individual positions for adding to them as well as taking profits. The potential for additional selloffs is still very real.

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

After a week where Bitcoin seemed to be building higher-highs and higher-lows, typically a bullish sign, the crypto lost all support Thursday, crashing through the Support of Last Resort to make a new weekly low at $9050.00.

The Bullish Case

Bulls will point out that the new weekly low is higher than the weekly low set back in May, potentially signifying a bull rally to higher-highs from here on the weekly chart which would indicate a break of $10,428.00 in the next week or two.

The Bearish Case

Bears will point out that the loss of key support combined with Bitcoin’s apparent correlation with the stock market (currently, at least) is going to cause a deeper selloff and a break of the $8632.93 weekly low set two weeks ago.

Bitcoin Gameplan

Current Allocation: 0.927%
Current Per-Coin Price: $9,593.18
Current Status: -1.43%

I was $25.00 off in calling the level Bitcoin would drop to during its selloff yesterday and missed my opportunity to add more to my position, so nothing’s changed since last week in terms of my current allocation.

Bitcoin Buying Targets

Using Moving Averages and supporting trend-lines as guides, here’s my plan of buying quantities and prices:

0.467% @ $9087
0.697% @ $8646
0.929% @ $8336
1.161% @ $7737
1.394% @ $7056
1.858% @ $6762
1.858% @ $5866
4.773% @ $5106
6.409% @ $4539
8.028% @ $4059

Bitcoin Selling Targets

For the moment,  I have no upside selling targets, instead preferring to use stop-losses to lock in gains when Bitcoin begins price consolidation and then reopening the position at lower levels if the stop-loss is triggered.

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 +170.30% to $10,428.00 in June.
• 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.