Summing Up The Week
The market continues to baffle analysts, shrugging off bad news to reach higher and higher gains from its Christmas Eve lows.
From Brexit to airline crashes, the indexes ignored bad news in favor of holding out hopes for a finished U.S.-China trade deal and any other optimistic market moving stories.
Let’s check out what moved the market this week!
Trade Deal? Will we? Won’t we?
Potential news of a U.S.-China trade deal has moved the markets since 2018, and this week was no different as CNBC released a report Thursday suggesting that an official state visit by President Xi will lead to a finalized trade deal. The markets raced up to close the week higher – once again.
Brexit’s a mess but U.S. stocks don’t care
Brexit news came out in spades this week as British parliament members can’t decide how (and if) they want the U.K. to leave the European Union. Normally, a story carrying such significant effects to the global economy would cause the stock market to pull back, however stocks shrugged off the news and continued higher throughout the week.
Noted investor Nelson Peltz pushes cannabis higher
Nelson Peltz, billionaire activist investor, signed on to strategically advise – not necessarily invest in – market darling Aurora Cannabis (ACB) announced CNBC on Wednesday. Peltz’s storied track record carrying many companies’ values higher caused ACB to pop mid-week.
Boeing’s stock crashes following plane crash
One of Boeing’s (BA) new 737 MAX 8 airliners operated by Ethiopian Airlines crashed immediately following takeoff on Sunday, killing all 157 people on-board. This is the second crash in less than six months in the 737 MAX-8, Boeing’s new and most popular plane. Boeing’s stock bounced after plummeting in Monday’s trading, but continued lower throughout the week as investigations continued, bringing the Dow down with it as Boeing makes up a significant percentage of the index. Even Trump got in on the action, tweeting “airplanes are becoming far too complex to fly.”
Although the Federal Aviation Administration (FAA) stood behind the 737 MAX-8 declaring it still air-worthy, airlines around the world grounded use of the plane until investigations into the crash reveal the cause. The FAA eventually grounded the plane in the U.S. later in the week.
This tragedy serves an example of stock-specific bad news and makes Boeing (BA) a no-touch stock until the investigation is finalized and investors know for certain whether these two crashes are a fluke or a devestating design flaw with the popular airliner that will cause much further downside to BA’s stock price.
Next Week’s Gameplan
We’re sticking to our knitting here at Get Irked. We might sound like a broken record, but, for the moment, we’ve taken all the profits we want to take and are happy with our current positions.
Although we have a substantial cash position ready to go to work, the market simply hasn’t had a big enough pullback from the upward race from Christmas Eve’s bottoms to make us want to put more money to work.
As investors – not traders – our job is to manage risk. We still have about 60% of our portfolio invested and are comfortable with that risk moving forward. If the market sees a substantial pullback (5%+), we’ll put more money to work. In the meantime, we’re definitely happy with these ongoing gains.
Will Bitcoin successfully cross The Line That Shall Not Be Crossed?
Can Bitcoin cross “The Line??”
Last week, we told Bitcoin speculators to be wary as Bitcoin touched The Line That Shall Not Be Crossed, a bearish trendline that Bitcoin has been unable to successfully cross since early 2018. After attempting a cross, Bitcoin lost more than 4% of its value from its weekly high to weekly low over the past week.
The above chart shows each day’s trading activity as a single candlestick with the first red line (far-left) pointing where Bitcoin collapsed in November 2018 after breaking the $6,000 mark. Bitcoin consolidated for several months before attempting to break through “The Line” on February 23, 2019, only to rebuffed again, losing more than 12.5% from its nearly $4,200 high.
So, when Bitcoin was approaching the line this week, we started anticipating similar activity.
Then THIS happened…
On March 14, 2019, Bitcoin once again made a failed attempt to cross “The Line,” however, unlike the previous three tries where an attempted cross was followed by an extreme down-day, Bitcoin is making a second attempt to cross The Line at the time of this post’s release, just one day later.
What does it mean??
As we said two weeks ago, if you don’t know what to do, do nothing at all, and that adage still applies. We are waiting to see Bitcoin break through The Line, close above it, and then – more importantly – try to test The Line (i.e. try to break BACK through it to a lower low).
If Bitcoin doesn’t crash back through The Line, then it’s possible that The Line That Shall Not Be Crossed will become SUPPORT rather than RESISTANCE – signaling the point where Bitcoin positions should be added to rather than sold.
However, for the moment, Get Irked continues to sit on our hands as the story plays out. There’s no need to be a hero if Bitcoin decides to test $2,000 as some analysts believe might happen.