Week in Review (Feb.2 – Feb.8)
Equities – Bearish positions entered the previous week saw profits on Friday and were held in expectation of EMA crosses, with price and weekly confirmation occurring. Monday, Feb. 2, we saw unreasonable bullish action gapping up as virus spread into 14 other countries with infections tripling over the 5-day week. All other technical indicators pointed to a shakeout/false breakout, as price remained indecisive. By end of week Friday, we saw a hangman doji and spinning top indicating that buyers are wearing out around SPY $334.50.
Similarly, QQQ and DJI both saw either close or exact daily closes on multiple candles. Around 15 mins after closing bell last Friday, we saw bearish news come out for the general market and big cap companies like LMT, AAPL, and FB. It is my opinion that the virus concerns and bearish news are watered down to lure unsavvy investors into buying the dip, so that bearish investors will get worn down.
Jobs numbers were updated by a reduction of 500,000 showing that revisions in past job numbers were overdone. So all the jobs that were created in the last 3 months, were actually zero as the numbers from March 2018 to March 2019 were exaggerated.
In closing, we saw last week open bullish on bearish news, continue bullish to wipe out the weekly bearish trend, and by weeks end reverse back down returning the weekly trend to bearish. Definition of whipsaw.
Crypto – BTC broke $9500 earlier in the week with GBTC breaking $11.00.
By the weekend, BTC breaking $9800 on its way to $10k.
GBTC should open above $12 on Monday assuming we are still above $9800.
On a Weekly basis, BTC is looking very strong. We may not see a 5% pullback for the next week.
Level to watch for BTC is $10,883 (1.618 Fib Level Retracement).
Level to watch for GBTC is $12.60 (higher gap fill). After this point we are looking to fill lower gaps, and may seek to increase shares through cost basis reduction method.
Looking Forward to (Feb.9 – Feb. 15)
Equities – Coronavirus concerns will continue to pressure markets. Jerome Powell scheduled to speak on 2/11 (to House Financial Services) and 2/12 (to Banking Panel) on continuing repo operations after stating last time they are “unsustainable”, he will speak on virus impacts, and balance sheet expansion.
Crypto – Watching $10,900 as exit for GBTC trade (1.618 Fib Extension). If we see price slowing and trend turn bearish on daily, we look to reduce GBTC position by half possibly and rebuy on 20-50 cent dip (or greater).
Watching $9,200 as BTC level for 0.618 Fib Level extension from possible $10,900 high. If we see a selloff or pullback at $10.9K, the $9200 level will be our possible re-entry.
6mins 56sec - “Investors are trained in a Pavlovian manner to not assess risk and buy every dip” due to Fed stepping in. When Fed rescue no longer happens (or has less effect), and lack of risk assessment catches up to everyday investors, downside risk and volatility will increase dramatically. The higher we go, the great fall a 5-10% correction incurs.
10 mins 30 secs – In that last push over previous 4 days to ATH’s in SP500, there were 5 insider sales for every 1 share purchase. The largest insider sales volume since 2017.
Bloomberg video from 2/7 discussing supply chain constrictions due to Coronavirus. “Struck by how little reaction there was to the virus”; “Impact could be much worse”. During SARS, there was a dramatic drop off and quick recovery but the drop was severe in the markets. During SARS, China was 5% of global supply chain VS 16% currently. 200,000 people go in and out of China daily. The virus has 2 weeks without ANY symptoms and has 3-4 newly
infected from each 1 original case.
3. Jobs numbers exaggerated - https://www.cnbc.com/2020/02/06/january-jobs-report-may-have-gotten-an-extra-boost-from-the-weather.html