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It is no doubt Grayscale’s booming popularity as a mainstream investment has caused a lot of community hullabaloo lately. As such, I felt it was worth making a FAQ regarding the topic. I’m looking to update this as needed and of course am open to suggestions / adding any questions. The goal is simply to have a thread we can link to anyone with questions on Grayscaleand its products. Instead of explaining the same thing 3 times a day, shoot those posters over to this thread.My hope is that these questions are answered in a fairly simple and easy to understand manner. I think as the sub grows it will be a nice reference point for newcomers. Disclaimer: I do NOT work for Grayscale and as such am basing all these answers on information that can be found on their website / reports. (Grayscale’s official FAQ can be found here). I also do NOT have a finance degree, I do NOT have a Series 6 / 7 / 140-whatever, and I do NOT work with investment products for my day job. I have an accounting background and work within the finance world so I have the general ‘business’ knowledge to put it all together, but this is all info determined in my best faith effort as a layman. The point being is this --- it is possible I may explain something wrong or missed the technical terms, and if that occurs I am more than happy to update anything that can be proven incorrect Everything below will be in reference to ETHE but will apply to GBTC as well.If those two segregate in any way, I will note that accordingly.
ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?
No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?
ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?
The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor. Source: Creation and Redemption of Shares section on page 39 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here Note – The way their reports word this makes it sound like there is an army of authorizers doing the dirty work, but in reality there is only one Authorized Participant. At this moment the “Genesis” company is the sole Authorized Participant. Genesis is owned by the “Digital Currency Group, Inc.” which is the parent company of Grayscale as well. (And to really go down the rabbit hole it looks like DCG is the parent company of CoinDesk and is “backing 150+ companies across 30 countries, including Coinbase, Ripple, and Chainalysis.”) Source: Digital Currency Group, Inc. informational section on page 77 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here Source: Barry E. Silbert informational section on page 75 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
How does Grayscale acquire the ETH to collateralize the ETHE product?
An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Cash: The investor pays the subscription amount in cash and the Authorized Participant will use that cash to purchase ETH.
ETH: The investor transfers the ETH to the Authorized Participant, which will contribute the ETH in-kind to the Trust.
Source: Creation and Redemption of Shares section on page 40 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?
ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there. As an aside - I would actually love to see if anyone knows more about this as it’s something that’s sort of peaked my interest after being asked about it… I find it doubtful we can find that however. Source: Part C. Business Information, Item 8, subsection A. on page 16 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Can ETHE be redeemed for ETH?
No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself. Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Why are they not redeeming shares?
I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?
ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset. Source: ETHE’s informational page on Grayscale’s website - Located Here Source: Description of Trust on page 31 & 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the ratio of ETH to ETHE?
At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC. ETHE & GBTC’s specific information page on Grayscale’s website updates the ratio daily – Located Here For a full historical look at this ratio, it can be found on the Grayscale home page on the upper right side if you go to Tax Documents > 2019 Tax Documents > Grayscale Ethereum Trust 2019 Tax Letter.
Why is the ratio not 1:1? Why is it always decreasing?
While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC. As noted above, fees are paid by selling off the ETH collateralizing ETHE. So this number will always be trending downward as time goes on. Source: Description of Trust on page 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
I keep hearing about how this is locked supply… explain?
As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good. Knowing that ETHE cannot be taken back and destroyed at this time, the ETH collateralizing it will not be removed from the wallet for the foreseeable future. While it is not fully locked in the sense of say a totally lost key, it is not coming out any time soon. Per their annual statement:
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.
Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?
First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.) That said, there shouldn’t be any worry in the short to medium time-frame. As noted above, Grayscale can’t really remove ETH other than for fees or termination of the product. At 2.5% a year, fees are noise in terms of volume. Grayscale seems to be the fastest growing product in the crypto space at the moment and termination of the product seems unlikely. IF redemptions were to happen tomorrow, it’s extremely unlikely we would see a mass exodus out of the product to redeem for ETH. And even if there was incentive to get back to ETH, the premium makes it so that it would be much more cost effective to just sell your ETHE on the secondary market and buy ETH yourself. Remember, any redemption is up to the investors and NOT something Grayscale has direct control over.
Yes, but what about [insert criminal act here]…
Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?
Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015. Source: Independent Auditor Report starting on page 116 (of the PDF itself) of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here As mentioned by user TheCrpytosAndBloods (In Comments Below), a fun fact:
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”
Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Access to trading within a tax advantaged retirement account
Institutions can easily and safely get exposure to crypto in a more legal-friendly manner
Ease of use for those who are not very technologically savvy
Ease of access for someone who doesn’t want to set up a Coinbase account
Perceived trust in institutional platforms over something like Coinbase or Kraken
Degen traders who just want access to the volatility ETHE provides that have no interest in crypto beyond that
So for example, I can set up an IRA at a brokerage account that has $0 trading fees. Then I can trade GBTC and ETHE all day without having to worry about tracking my taxes. All with the relative safety something like E-Trade provides over Binance. As for how it benefits the everyday ETH holder? I think the supply lock is a positive. I also think this product exposes the Ethereum ecosystem to people who otherwise wouldn’t know about it.
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?
There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
ETHE is NOT redeeming shares and as such doesn’t have an effective arbitrage mechanism
ETHE has a 1 year wait to be sold on the secondary market, again negating the ability to effectively arbitrage the premium
People may simply be willing to pay a premium for the benefits stated above.
Why is ETHE’s so much higher the GBTC’s? Again, a few thoughts:
ETHE hasn’t been around as long, so there is less secondary market supply to go around
ETHE was listed at an insanely high premium to begin with
ETHE might simply be more popular at the moment
Could just be sheer stupidity (investors think ETHE is a 1:1 ratio not 1:11)
Are there any other differences between ETHE and GBTC?
I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?
There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing. For those more into a GAAP style report see the 2019 annual 10-K of the same location.
Is Grayscale only just for BTC and ETH?
No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund. In terms of institutional and accredited investors, there are a few ‘fan favorites’ such as Bitcoin Cash, Litcoin, Stellar, XRP, and Zcash. Something called Horizion (Backed by ZEN I guess? Idk to be honest what that is…). And a diversified Mutual Fund type fund that has a little bit of all of those. None of these products are available on the secondary market.
Are there alternatives to Grayscale?
I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know. Per user Over-analyser (in comments below):
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?
I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
For Trading JULY 8th JOLTs 5.4 vs. 5 Million NVAX gets $1.6B from BARDA Today’s market got off to a very soft start in the DJIA but not so much in the NASDAQ and S&P-500, with the DJIA starting off -240 and managing a rally only as far as -125 before spending several hours going sideways until the last hour of trading when the NASDAQ and S&P ran out of steam and fell below the close and the selloff resumed. It’s never a good thing when and overbought index makes a new all-time high and then closes down and on the lows. The DJIA was -396.85 (1.51%), NASDAQ -89.76 (.86%), S&P 500 -34.30 (1.08%), the Russell -26.89 (1.86%) and the DJ Transports -108 (1.1%). The internals were 3:1 down on NYSE and 2.5:1 on NASDAQ with volume on the NYSE 2:1 down also. The DJIA was 28 down and only 2 up with WMT the big gainer +55 DP’s and on the downside, BA-62, GS -55, and UNH -43DP’s. Even with the good JOLTs number, this market is just over-extended and tired. The stat I mentioned in tonight’s video about the S&P is very telling, I think, with the S&P only 2% off its high, the median S&P stock is down 11%. This market has simply gotten too narrow and it will correct. We sold half of the remaining NEM 7/17 $60’s bought @ 1.55 and added to last Friday @ $1.30 for an average of $1.47 triggered a 100% Up Rule sale at $2.94, and today’s sale was @ $3.20. They closed today $3.20. We also own a position in SLV 8/21 17 calls @ $ .74, and they closed $ .75, and we also added a spread using the NEM 8/65 / 70 calls at a $1.30 debit. Tonight’s closing comment video https://youtu.be/5afUNy48sFI Our Discord Forum link is on the video description.. SECTORS: The FAANG names all finished near the lows, several like MSFT coming off a new all-time high and closing down on the day. Not a good sign if they follow-thru to the downside tomorrow. Also having trouble was CCL, who has had to cancel several cruises for Q4 and Q1 2021. It closed $14.57 -1.04 (6.7%). Add to that, the UAL report that it is giving warnings that it will be laying off “10’2 of thousands of employees.” UAL finished $32.55 -2.66 (7.55%). These two companies do not operate in a vacuum, so both groups are in jeopardy, again. Novavax (NVAX) got a $1.6billion grant from BARDA (Biomedical Advanced Research and Development Authority) to help it along in it’s search for a workable vaccine. The stock, up from $8 as late as the end of February had worked its way up to $85 last month and opened today $104 and traded as high as $111.77 and finished $104.56 +25.12 (31.63%). Don’t get too crazy with this one, this is not its first rodeo. In 2015 it was trading $300 before it had a failure on a different vaccine and the stock fell to $80 before a rally and then in the week of 9/16/2016 it fell further from $169.80 to $23.20 and then on to the adjusted (1:20 reverse) low around $4.00. We’ll hope for a better outcome this time around. Walmart was the big winner on a RECODE that said they are ready to launch Walmart +, to compete with Amazon Prime for same day grocery delivery and next day for other products. Its move today added 55 DP’s to the averages. I don’t think it’s a big deal since for the same money, with Prime you get streaming too. And the margins on groceries are razor thin. FOOD SUPPLY CHAIN was MIXED with TSN -.67, BGS +.70, FLO -.03, CPB -.11, CAG +.54, MDLZ -.22, KHC +.22, CALM +.03, JJSF -1.43, SAFM +.54, HRL -.14, SJM +.18, PPC -.34, KR -.03, and PBJ $31.56 +.06 (.19%). BIOPHARMA was MIXED with BIIB - -1.72, ABBV +.72, REGN +14.50, ISRG -9.30, GILD -.13, MYL -.43, TEVA -.29, VRTX +8.35, BHC -.59, INCY +.86, ICPT -.74, LABU +3.36, and IBB $140.15 +.71 (.51%). CANNABIS: was LOWER with TLRY -.13, CGC -.40, CRON -.19, GWPH +2.93, ACB +.17, CURLF -.07, KERN -.62 and MJ $13.08 -.01 (.08%). DEFENSE: was LOWER with LMT -8.59, GD -3.29, TXT -1.73, NOC -7.89, BWXT -1.78, TDY – 7.84, RTX -2.12 and ITA $160.32 -6.10 (3.67%). RETAIL: was LOWER with M +.03, JWN -.58, KSS -.72, DDS -.88, WMT +9.11 (7.66%), TGT -1.40, TJX -1.84, RL -2.49, UAA -.41, LULU -6.66, TPR -.51, CPRI -.18 and XRT $43.78 -.43 (.97%). FAANG and Big Cap: were MIXED with GOOGL -7.40, AMZN -44.69, AAPL +1.06, FB -.91, NFLX +.69, NVDA +3.06, TSLA +9.42, BABA -2.60, BIDU -4.54, CMG -10.92, CAT -2.03, BA -8.57, DIS -.53 and XLK $106.34 -.77 (.72%). FINANCIALS were LOWER with GS – 7.91, JPM2.52, BAC -.63, MS -1.32, C -1.53, PNC -3.15, AIG -1.36, TRV -2.45, AXP -3.48, V -3.13, and XLF $22.93 -.48 (2.05%). OIL, $40.62 -.01. Oil was lower in last night’s trading before we rallied in the morning. I mentioned in last night’s charts with comments section in the Weekly Strategies letter, prices are trying to work higher towards $45.00. We needed a close over the previous high close of $40.83 and while we were there, we sold off to close below that number. The stocks were higher with XLE $36.26 -1.19 (3.18%). GOLD $1,809.80 +16.40. It was a continuation rally and a new recovery high OF $1807.70 Last night I said “we’ve moved $50 since the low on Friday and while the trend and momentum are positive, we may have to test 1790 to consolidate our gains.” Unfortunately, we pulled back to 1,767 instead. We rallied a bit and finished only slightly better. We bought back the 3rd and final lot of NEM @ $58.86. And, we also added a half position in NEM 7/17 60 calls @ $1.55, and additional 50% @ $1.30 on Friday. We sold half on the 100% Up Rule @ $2.94 and half of what was left today @ $3.20, we closed $3.20 + .80 today. BITCOIN: closed $9,290 -65. After trading back to 8985 we rallied back to close – only $5. Since last week we have closed between 9200 – 92.85 every day with narrow ranges and today was a good start to move higher. A break over 10,000 still sends us higher. We added 350 shares of GBTC @ $10.02 to our position of 400 @ $8.06, bringing our average price to $8.97. GBTC closed $9.76 - .19 today. Tomorrow is another day. CAM
Accumulation by institutions: Overlay the NASDAQ chart over bitcoin and you see incredible increase in correlation since November 2019. What has happened here? Simple, the retail investors/miners who have been selling for the last 3 years have been selling to institutions, rather than fellow retail investors. Bitcoin did not die, it was just entered a bear market where money traded hands from retail and into institution's hands.
Buy the rumor sell the news: digital dollar. For those of you who do not know, there has been strong bipartisan interest in the United States creating their own digital currency, using blockchain technology. There was legislation hidden for the creation of this digital dollar inside one of the early stimulus bills that almost passed.
Technical analysis: If it bitcoin breaks 10.5k, expect an explosive price pump to 14k, and I honestly don't think 14k will be very strong resistance, I honestly would expect the most serious level of resistance will be around 19-20k. If bitcoin fails to break 10.5k, expect a shakedown to the 20 week moving average which currently is around 8.2k.
Gold fundamentals are bitcoin fundamentals, both are stronger than ever: The idea of having a currency that is finite, and divorced from any centralized bank or government is super attractive in the post covid world we live in today. Countries have getting a little too comfortable pressing the print button to print their way to riches. On the very long time frames, birth birthrates are freefalling on the global level, especially among the wealthiest countries whose currencies' supply are inflating exponentially to record highs. The supply of unbacked fiat will at some point surpass the demand and we will see the age of centralized banks come to an end.
Bitcoin has already overtaken silver: Bitcoin has a market cap about 4 times larger than silver, and gold has a market cap about 75 times larger than bitcoin. Bitcoin has plenty of room to grow in this niche, and the digitization of it's nature could allow for it to expand in many areas where gold can not.
The inflation rate gets cut in half every four years: it's current yearly inflation rate is 1.80%. In four years, the inflation rate will be approximately 0.9%. In 8 years, the inflation rate will be at ~0.45%, etc... Even if the demand stays the same for gold and bitcoin, bitcoin will overtake gold's market cap in a few decades just by looking at the stock to flow ratio of both commodities.
A Market Liquidity Theory of the Current Financial Crisis
Huge update from the Fed this morning: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm I'm not going to have a chance to look through this in detail this morning, but it looks like the Fed might be engaging in a massive loan program and taking just about anything as collateral. This is going to be a long post and analysis that I have written as much to get my thoughts in order as much to post on here for any feedback or criticism. Essentially, like many on here, I do not believe that the current situation is a temporary down-turn, but a full blown financial crisis. We have already been hit with the initial shock of this crisis, so the question becomes: what comes next? Helping us understand what is fundamentally happening in the market will aid in making intelligent future predictions and investments. That leads to the question: what exactly is happening in the market right now? What caused us to suddenly drive off a cliff? And is there any way we can save it? Unlikely many here, I do not believe that COVID-19 is the actual underlying crisis. In my opinion, our economy was basically the end stages of a Jenga game, and COVID-19 is just the swift breeze knocking the whole thing over. As I started looking for the next big market move, I started to wonder who was going to feel the most pain in these markets. Some reading led me to the thought that what we were seeing in the markets was a liquidity issue, and that companies with poor credit ratings will be most affected. I posted about this a couple of days ago, and several others came to the same conclusion as me. 123. There are other obliviously other problems in the market at the moment, but this analysis will focus on this problem in particular. I now strongly believe that this hypothesis was correct, even if my initial reasoning and analysis was flawed. I outline a theory, followed by some supporting evidence, and finally some speculation. Finally, I don't think the Fed understands the actual problem the market is facing right now, nor does it have the tools to deal with it. There are three prerequisites here: repos, collateral transformation, and rehypothecated collateral Variation-Separate has already written an excellent technical analysis, and explains repos in part I. I will assume you have already read that section. 2 The basic idea behind collateral transforms is this: Your company needs some short-term liquid cash. In order for someone to give you this cash, you need collateral. You only have risky assets (such as junk bonds), but no one will accept them as collateral precisely because they are risky. Everyone in the market wants a secure asset (such as a Treasury). Instead of giving up, you go out and find someone who will loan you their Treasury and accept your junk bonds as collateral. You then use that Treasury to obtain the cash you need. This process can be repeated among many parties in order to create a "collateral chain". Finally, we have rehypothecated collateral: Someone comes to you and wants to borrow an assets for a short period of time (such as a stock). They give you another asset (such as cash) as collateral in exchange for the stock. You know the borrower won't be back to collect this collateral for a while, so you invest that collateral to make money off of it in the meantime. As Variation-Separate explains, there have been problems in the repo market recently, and the Fed has acted as the believe appropriate. However, this is not the first time the Fed has run into this problem . In fact, we had a problem a problem in the repo market just in Sept 2019 and "Not only did the spike in the repo rate come as a surprise to the New York Fed, but they also haven't been able to normalize it as quickly as they thought they could". Finally, let's consider that even though the fed has offered to pump massive amounts of liquidity into the market, banks aren't taking it and are quickly repaying that which they do take. What exactly is going on then? The Fed tries to pump liquidity into the economy, and nothing happens. The reason for this is that the Fed knows that it doesn't understand the underlying problem in the market, and knows that is powerless to stop it. The Fed is trying to unleash every tool in its toolbox on the hope that if it just throws enough money into the market, eventually the problem will go away. So what is the root problem? Essentially, liquidity. More specifically, collateral transformations and rehypothecated collateral. In fact, this has been written about extensively: 45, with Snider in particular making a strong case that today's crisis fits the analysis of the collateral markets that he provided in 2018: 6 How are collateral transformations and rehypothecated collateral affecting liquidity in the markets? There are numerous ways, but let's start with 2: Let's say someone gives you cash as collateral, and you rehypothecate it as described in the example. However, instead of putting the cash in a safe asset, knowing you have to repay it, you put it in a very risky, high-yield asset such as a junk bond or MBS. Things go wrong, you lose your money and can't pay back your end of the repo. This is exactly what AIG did during the 2008 crisis. 7 Now let's say you engage in a long chain of collateral transformations. You start with a really risk assets, trade that for a sligtly less risky asset, trade that for a moderately risky asset, etc, until you eventually get a pristine asset. Now anyone along that chain can rehypothecate their collateral into some risky investment, causing a huge number of problems. Not to mention that if you, for some reason, can't fulfill your end of the repo, you screw a whole chain of people who have traded with you. Now, if we are in a strong market, these problems won't arise too often. But what happens if, say, a virus comes out of now where causing wide-spread economic disruptions? Now, maybe those risky investments that would have paid out more often than not aren't pay out at all, causing systemic problems. Now let's add a couple of things that exacerbate this problem even further: These chains get so complicated that no one even knows who owns which assets anymore 4 When these chains collateral transformations start to fail, people may become less willing to take the risk of engaging in them 5 All of this caused heavy regulation on the exchange of collateral by primary lenders after the 2008 crisis. This has pushed these transactions into dark markets where we don't really understand what is going on. Here is my hypothesis, heavily taken from Snider's analysis: Corporations have become heavily reliant on short-term lending for liquidity. However, most of them don't have pristine assets to exchange for cash, or DisneyBucks to float them through hard times. So what to do? You engage in collateral transformations: keep exchanging your junk assets until you get the pristine assets you need to get liquid cash. A bunch of corporations do this over and over again, and eventually they really don't have a clear of idea of what assets they really own. Further, in these collateral chains they are rehypothecating collateral to make a quick buck. All is well, until this virus comes along. Suddenly, corporations are losing their collateral in these risky investments. Further, they need cash. The first thing they do is try to transform their collateral for short term liquidity. However, a bunch of people have just lost their money playing this game and don't want to play anymore, so it becomes more difficult and expensive for the companies to engage in these collateral transformations. The assets they have are worth less, so they have to sell other assets to compensate. However, everyone is doing this at the same time, devaluing the assets. Devaluation of assets makes it even more expensive to engage in collateral exchanges, and the cycle continues. Finally, when these companies take account of their actual assets, after all of these complicated exchanges, they realize they don't actually own what they think they own, creating additional panic when they are already in crisis mode. This causes huge turmoil, and the markets fall off a cliff. If this theory is correct, what will we see next? Whether the markets will go up or down is dependent on too many factors to predict. However, I do have some speculation. First let's categorize corporations as follows: Type I: Safe Large banking institutions Large P-1/A-1/F1+ Companies Companies with huge cash reserves Type II: Possibly Safe Small businesses "Essential" business (i.e., Boeing) Type III: Doomed Business with >500 employees, no large cash reserves, not P-1/A-1/F1+ The self-employed Type I businesses will certainly weather the storm. If they don't have the direct support of the Fed, they have large cash reserves on hand. If they don't have large cash reserves on hand, they have the credit rating to make use of corporate paper. They can find the short term funding needed to make it through this. Type II businesses may be safe depending on the government response. I am currently underwhelmed by the "support" for small business in the stimulus bill, but there seems to at least be talk about this so maybe things will change. "Essential" businesses may receive a bailout to get them through tough times. Type III businesses are completely screwed, no one seems to know they are even there. They won't qualify for support as "small businesses", and they have no way of obtaining liquid assets in this market. In particular, the larger businesses don't have the pristine assets to obtain liquidity in these markets, they are dependent on collateral transforms. I won't predict whether the markets will go up or down this week, next, etc. But I will speculate this: I think the calm we saw in the markets was an actual calm. I think there was panic as businesses tried to obtain liquidity. They now believe they have the liquidity to make it through the near future, and are satisfied. There could be fire-sales in the near term for other reasons, but I don't think short-term liquidity will be the cause. However, most corporations don't speculate very hard when it comes to the future: they listen to the "experts". And these "experts" in government and the financials have been predicting doom and gloom for the next couple weeks, but that things will "bounce back" afterward. This is flatly false. As this becomes more apparent to these companies, I think we'll see another run on the market. Particularly, it will be the large Type III business that will be the most vulnerable. They won't have any government stimulus support, and they won't have access to their normal modes of obtain cash. The last panic in the markets pushed bond yields so high that issuing new bonds will be completely out of the question. For them, it will be like a game of chess where your 4 moves away from being mated no matter what you do. Many of them will decide that bankruptcy is the best option in front of them. Can the Fed prevent this? I don't think so. The Fed has the ability to soak up P-1/A-1/F1+, but they can only do this through the banks. But the banks aren't the ones in trouble this time, its the market itself. I have not read anything that leads me to believe that the Fed would be able to purchase junk assets from non- P-1/A-1/F1+ corporations without an act of Congress, and Congress is too slow and incompetent to see this problem coming or fix it in time. The Colosseum will be protected as Rome burns around it. Sorry for any typos, poor wording. This was a long post.
Someone posted on here a few days ago asking about forex and forex trading in Kenya, I have gone through the responses and clearly, most people don’t have an idea. It is 3am in the morning and am in a good mood so let me make this post. This will be a comprehensive and lengthy post so grab a pen and paper and sit down. We’ll be here a while. FIRST OF ALL, who am I..? I am a forex trader, in Nairobi, Kenya..i have been actively involved in forex since I found out about it in Feb 2016 when I somehow ended up in a wealth creation seminar (lol) in pride inn Westlands, the one close to Mpaka Rd. Luckily for me, it was not one of those AIM global meetings or I’d be on Facebook selling God knows what those guys sell. I did not take it seriously till August of the same year and I have been active ever since. I don’t teach, mentor or sell a course or signals, I trade my own money. I am also posting from a throwaway account because I don’t want KRA on my ass. What the fuck is forex and forex trading. In simple plain English, forex is like the stock market but for currencies. Stock Market = Shares, forex = currencies. If you want more in-depth explanation, google is your friend. These currencies are pegged on specific countries, united states- dollar, UK- pound, euro zone- euro, Switzerland- Swiss franc, Kenya- Kenya shilling.. you get the point. Now, there are specific events and happenings between these economies that affect the movement and values of the currencies, driving their value (purchasing power up and down). Forex trading exploits these movements to make money. When the value is going up, we buy and vice versa (down –sell) Is forex trading illegal in Kenya? Is it a scam? Illegal, no. scam, no. All the banks in the world do it (KCB made about 4 billion from trading forex in 2019) Have there been scams involving forex in Kenya? Yes. Here is one that happened recently. This one is the most infamous one yet. Best believe that this is not the end of these type of scams because the stupidity, greed and gullibility of human beings is unfathomable. However, by the end of this post, I hope you won’t fall for such silliness. What next how do I make it work..? Am glad you asked. Generally, there are two ways to go about it. One, you teach yourself. This is the equivalent of stealing our dad’s car and hoping that the pedal you hit is the brake and not the accelerator. It is the route I took, it is the most rewarding and a huge ego boost when you finally make it on your own. Typically, this involves scouring the internet for hours upon hours going down rabbit holes, thinking you have made it telling all your friends how you will be a millionaire then losing all your money. Some people do not have the stomach for that. The second route is more practical, structured and smarter. First Learn the basics. There is a free online forex course at www.babypips.com/learn/forex this is merely an introductory course. Basically it is learning the parts of a car before they let you inside the car. Second, start building your strategy. By the time you are done with the babypips, you will have a feel of what the forex market is, what interests you, etc. Tip..Babypips has a lot of garbage. It is good for introductory purposes but not good for much else, pick whatever stick to you or jumps at you the first time. Nonsense like indicators should be ignored. The next step is now the most important. Developing the skill and building your strategy. As a beginner, you want to exhaust your naivety before jumping into the more advanced stuff. Eg can you identify a trend, what is a pair, what is position sizing, what is metatrader 4 and how to operate it, what news is good for a currency, when can I trade, what are the different trading sessions, what is technical analysis, what is market sentiment, what are bullish conditions what is emotion management, how does my psychology affect my trading (more on this later) an I a swing, scalper or day trader etc Mentors and forex courses.. you have probably seen people advertising how they can teach and mentor you on how to trade forex and charging so much money for it. Somehow it seems that these people are focused on the teaching than the trading. Weird, right..? Truth is trading is hard, teaching not quite. A common saying in the industry is “Those who can’t trade, teach” you want to avoid all these gurus on Facebook and Instagram, some are legit but most are not. Sifting the wheat from the chaff is hard but I did that for you. The info is available online on YouTube, telegram channels etc. am not saying not to spend money on a course, if you find a mentor whose style resonates with you and the course is reasonably priced, please, go ahead and buy..it will cut your learning curve in half. People are different. What worked for me might not work for you. Here are some nice YouTube channels to watch. These guys are legit..
After a short period of time, you will be able to sniff out bs teachers with relative ease. You will also discover some of your own and expand the list. Two tips, start with the oldest videos first and whichever of these resonates with you, stick with till the wheels fall off. How long will it take until things start making sense Give yourself time to grow and learn. This is all new to you and you are allowed to make mistakes, to fail and discover yourself. Realistically, depending on the effort you put in, you will not start seeing results until after 6 months. Could take longeshorter so there is no guarantee. Social media, Mentality, Psychology and Books Online, forex trading might not have the best reputation online because it takes hard work and scammers and gurus give it a bad name. However, try to not get sucked into the Instagram trader lifestyle as it is nowhere close to what the reality is. You will not make millions tomorrow or the day after, you might never even make it in this market. But that is the reality of life. Nothing is promised, nothing is guaranteed. Your mentality, beliefs and ego will be challenged in this market. You will learn things that will make you blood boil, you will ask yourself daily, how is this possible, why don’t they teach this in school..bla bla bla..it will be hard but growth is painful, if it wasn’t we’d all be billionaires. Take a break, take a walk, drink a glass of whatever you like or roll one..detox. Chill with your girl (or man) Gradually you will develop mental toughness that will set you up for life. Personally, I sorta ditched religion and picked up stoicism. Whatever works for you. Psychology, this is unfortunately one of the most neglected aspects of your personal development in this journey. Do you believe in yourself? Can you stand by your convictions when everyone is against you? Can you get up every day uncertain of the future? There will be moments where you will question yourself, am I even doing the right thing? the right way? It is normal and essential for your growth. People who played competitive sports have a natural advantage here. Remember the game is first won in your head then on the pitch. Books: ironically, books that helped me the most were the mindset books, Think and grow rich, trading for a living, 4 hour work week, the monk who sold his Ferrari..just google mindset and psychology books, most trading books are garbage. Watch and listen to people who have made it in the investing business. Ray Dalio, warren, Bill Ackman and Carl Icahn. This is turning out to be lengthier than I anticipated so I’ll try to be brief for the remaining parts. Brokers You will need to open up an account with a broker. Get a broker who is regulated. Australian ones (IC Market and Pepperstone) are both legit, reliable and regulated. Do your research. I’d avoid local ones because I’ve heard stories of wide spreads and liquidity problems. International brokers have never failed me. There are plenty brokers, there is no one size fits all recommendation. If it ain’t broke..don’t fix it. Money transfer. All brokers accept wire transfers, you might need to call your bank to authorize that, avoid Equity bank. Stanchart and Stanbic are alright. Large withdrawals $10k+ you will have to call them prior. Get Skrill and Neteller if you don’t like banks like me, set up a Bitcoin wallet for faster withdrawals, (Payoneer and Paypal are accepted by some brokers, just check with them.) How much money can I make..? I hate this question because people have perceived ceilings of income in their minds, eg 1 million ksh is too much to make per month or 10,000ksh is too little. Instead, work backwards. What % return did I make this month/ on this trade. Safaricom made 19.5% last year, if you make 20% you have outperformed them. If you reach of consistency where you can make x% per month on whatever money you have, then there are no limits to how much you can make. How much money do I need to start with..? Zero. You have all the resources above, go forth. There are brokers who provide free bonuses and withdraw-able profits. However, to make a fulltime income you will need some serious cash. Generally, 50,000 kes. You can start lower or higher but if you need say 20k to live comfortably and that is a 10% return per month, then you can do the math on how big your account should be. Of course things like compound interest come into play but that is dependent on your skill level. I have seen people do spectacular things with very little funds. Taxes..? Talk to a lawyer or an accountant. I am neither. Family? Friends? Unfortunately, people will not understand why you spend hundreds of hours watching strangers on the internet so it is best to keep it from them. Eventually you will make it work and they will come to your corner talking about how they always knew you’d make it. The journey will be lonely, make some trading buddies along the way. You’d be surprised at how easy it is when people are united by their circumstances (and stupidity) I have guys who are my bros from South Africa and Lebanon who I have never met but we came up together and are now homies. Join forums, ask questions and grow. That is the only way to learn. Ideally, a group of 5-10 friends committed to learning and growth is the best model. Pushing each other to grow and discovering together. Forex is real and you can do amazing things with it. It is not a get rich quick scheme. If you want a quick guaranteed income, get a job. And now it is 5am, fuck. This is oversimplified and leaves out many many aspects. Happy to answer any questions.
re: July 15 Twitter hack - what would you have done instead?
Background to what happened today at Twitter: https://www.vice.com/en_us/article/jgxd3d/twitter-insider-access-panel-account-hacks-biden-uber-bezos Essentially, someone or some group gained access to Twitter internal tools and was able to post on large, verified accounts like that of Elon Musk, Bill Gates, Joe Biden, and official company Twitter accounts like that of Apple and Uber. They mostly posted the same message - "send us some bitcoin and we'll send you 2x the amount you sent us because we are feeling generous." Of course, they dont send back 2x. They made off with around $100k worth of bitcoin. Imagine you had that access - you could post on Musk's or Biden's or some Kardashian's Twitter - what would you do with this power? Assuming you had maybe an hour or two to post because Twitter stopped all verified accounts from posting and all that? For example, many people suggested something with the stock market (though this occurred after markets closed in the US, the assumption was they would do it during market hours). Others said that this is the quickest way to get caught. I'm not convinced you would get caught if you trade super high volume stuff - anyone know if I'm off base here? Closest example is all the airline-related trading activity on 9/11, but those were all found to be unrelated. I'm wondering how FINRA or SEC (not sure which) would pin you as "insider trading" or something. So, reader: What would you do if you had access to post with these accounts? What would you do to make the most money (and get away with it), and what would you do to cause the most chaos?
Don't Fight the Trend (Sidenote - Fuck r/investing)
TF, like these corn balls out here removing posts that have any bit of a bear thesis? lmao Getting to the point of my post, The Trend is Down.... Compiling data of closing points every two weeks from the start of 2020, each of the indexes are down-trending for the year & Bitcoin as well. Now the graphs which I've attached here hold little/next to no weight when looking for an indication on what position to take/when, but it's a piece of the puzzle when talking about the outlook for 2020. Another piece to the puzzle, since that 'judgement day' post (referencing something I posted 3 weeks ago on investing, would link but that got removed along with my post on april 19th warning the clowns in there that they shouldn't be buying into USO/investing in oil lmfao); we have seen 6 green trading days & 9 red trading days on the S&P, signaling to me that investors are favoring selling in the 280-295 range much more so than buying. While the S&P has rallied above 290 on the back of NASDAQ/MAGA movement, it hasn't broken into/through this range with any conviction at all, it's actually forming a head and shoulder top in the trading range - seen here. Further Dissecting the SPY - Price action is currently bouncing between the 50 & 200 EMA (EMA is quite significant as it weighs the price around volume traded, while SMA's simply calculate based on closing price day-to-day.) Friday's close placed us right under the 200 EMA (I view it as the ceiling currently.) and would point to downside come open market on monday (tomorrow.) *At the time of this post, futures opened with a gap down to 291 and has bounced back up to test this 2940 resistance. Will they push it above for a proper bull break before US markets open? Perhaps, maybe the bulls get their 300 touch; However, I see the indicators hinting to downside more convincing atm.* Further DD of 'leading indicators' when looking at ST trends (DXY, BTC, XLF) - XLF - (4Hr chart, rather than daily.) The Financial sector has been getting absolutely SLAMMED, like seriously, its almost worse than the beatdowns the small-caps have been receiving. Imo, this questionable performance from the financial sector says A LOT when considering investor uncertainty at the moment. On the four hour, this sector is currently bouncing between the 50 & 200 EMA's as they pinch closer together; which you could say is bullish, however, any and all uptrends on the chart have been broken & it leaves the financials out in no mans land (bearish.) It's currently pressed against it's 'LT' downtrend line (Established in early January after COVID was 'open public info'.) and made a double top rejection off of 23.70. BTC- Touched 10k & crashed over 10% this weekend. As seen in the first screenshot I attached, BTC has been trading almost side by side with the general markets (Most reflective when looking at the S&P or NASDAQ.) I believe this to be a leading indicator of downside ahead similarly to how it was a leading indicator in mid-march when gauging 'how much downside was left in the markets.' DXY - Key when considering short term deflation/inflation of assets. Has broken out above an immense resistance & has been confirming this as new support (people are hoarding cash, much more than they're spending, contrary to popular belief; I wont comment much tho, because tracking the DXY can get complex quick. We're taking it at face value here.) Watch for another major breakout (Would signify people hoarding cash, most likely stocks are getting liquidated at that same time. Comparing the timeline of the last breakout, March 9th- March 20th, this was the same timeline which the S&P took its major leg down from 300-220.) TLDR - Stonks do go down, they've been maxing out for the last three weeks & deflation is around the corner. Positions - Heavy SPXU & SQQQ positions, AMD $46p May 22nd/ $40p June 5th, XLF $20.5p May 22th, MGM $10p June 5th
For Trading JUNE 10th Back to SOME Sanity NASDAQ at Another New High! U.S. DOLLAR CONTINUES TO WEAKEN Today’s market was just another day dominated by a switchover to focus on the FAANG and mega-cap stocks. After a couple of quiet day the big guns took off again. The star was AAPL moving to a new all-time high at $345.61 and closed not much below that new mark. AMZN, with its new price target of $3,300 was also strong with a move to $2,626.43 before a late market close at $2614.50 +90.44. Unfortunately for those invested in the big 5 or 6, the rest of the market didn’t fare quite so well. DJIA -300.14 (1%), NASDAQ +29.01 (.30), S&P 500 -26.21 (.,78%), the Russell -29.84 (1.94%) and the DJ Transports -227 (2.2%). Volume was slightly above the recent average with the A/D on the downside with NYSE 3.5:1 and NASDAQ 2:1 lower. Unfortunately, the DJIA stocks were heavily stack in the loss column with only 2 higher and 28 down. The big gainer was AAPL +72 DP’s and the loser, BA -95. Our “open forum” on Discord, which allows me to interact with subscribers and others to allow direct questions and chart opinions on just about any stock, continues to grow with more participants every day. It is informative and allows me to share insights as the market is open and moving. The link is: https://discord.gg/ATvC7YZ and I will be there and active from before the open and all day. It’s a great place to share ideas and gain some insights, and we’ve grown to almost 1900 members. I also did this video titled “How to survive being an options trader and not blow up your account,” over the long weekend. I think it’s very informative as a guide to stock selection and option choices. The link is https://youtu.be/Y7H9RpWfLlo Enjoy!! Tonight’s closing comment video https://youtu.be/CsENlkRH81g SECTORS: The big news was no news initially with BA falling back off it’s after-market run as high as $240 before a lower open at $227 before falling back to $213.08 and a final trade @ $215.99 -14.51 and $25 off the overnight high. The two groups that were the biggest numbers were Airlines and Cruise lines. All the biggest winners for the last week or so were today’s losers. CCL $23.04 -1.87 (7.51%), RCL $69.91 -5.21 (6.94%), and NCLH $24.13 -2.73 (10.16%). Airlines were UAL $44.64 -4.05 (8.32%), DAL $34.17 -2.80 (7.57%), JBLU 14.21 -1.38 (8.85%), ALK $46.10 -4.14 (8.24%). And, last, were 2 big late movers. Immuron: (IMRN) an Australian biotech with what they characterized as a cure for HIV, closing $2.10 yesterday had the news about a major move forward with the FDA committee for discussion of a trial permit was trading as high as $10.00 premarket opened $9.97 before a runup to $28.99 before settling back to close $20.00 +17.9 (852%) and in afterhours back to $16.30, still a nice gain of $14.20 or still 700%. The other name was LAKE: Lakeland Ind., a maker of protective garments for use in treating COVID-19 patients that finished $16.20 +.45 before announcing that their production would continue for at least another 6 – 9 months, sending the stock back up to $24.97 before finishing $23.75 +7.55 (46.6%). FOOD SUPPLY: was LOWER with TSN BGS -.95, FLO -.12, CAG -1.41, MDLZ -1.05, KHC -.83, CALM -.31, JJSF -6.30, SAFM -6.07, LANC -3.85, HRL -.13, SJM -2.73, PPC -.55 and PBJ $31.99 -.15 (.47%). BIOPHARMA was MIXED with BIIB -7.52, ABBV +1.58, REGN +4.55, ISRG -8.18, GILD +.54, MYL -.33, TEVA -.23, VRTX +6.99, BHC -.41, INCY -1.27, ICPT +.18, LABU -.28 and IBB $132.75 -.35 (.26%). CANNABIS: was LOWER with TLRY -.29, CGC -.06, CRON -.64, GWPH +.76, ACB -.74, PYX, -.75, NBEV -.08, CURLF -.18, KERN -.56, and MJ $14.99 -.28 (1.83%). DEFENSE was LOWER with LMT -5.74, GD -3.75, TXT -2.15, NOC -3.89, BWXT -.08, TDY -14.28, RTX -3.37, and ITA $187.17 -6.67 (3.445%). RETAIL was LOWER with M -.83 in late trading after raising $4.5billion in the bond market and rallying as high as $11.00 pre-open and then in real time could only make it to $10.46 before a $8.72 finish in after hours trading. JWN -2.33, KSS -2.17, DDS -2.62, WMT +.06, TGT -1.49, TJX -.82, RL -4.78, UAA -.51, LULU +1.38, TPR -1.25, CPRI -2.29, and XRT $44.23 -1.12 (2.47%). FAANG and Big Cap: were HIGHER with GOOGL +6.96, AMZN +90.44, AAPL +11.94, FB +8.40, NFLX +15.51, NVDA +11.54, TSLA -12.93, BABA +1.80, BIDU -1.03, CMG -9.23, CAT -2.71, BA -14.51, DIS -2.88, and XLK $102.40 +.48 (.47%)> FINANCIALS were LOWER with GS -2.70, JPM -2.69, BAC -.28, MS +.45, C -1.64, PNC -4.13, AIG -1.69, TRV -1.25, AXP -2.56, V +.12, and XLF $26.17 -.57 (2.13%). OIL, $38.94 +.75. Oil has managed to trade $40.44 yesterday and fell back to the 5-day MA and closed there. We then traded as low as 37.07 today before reversing late in the day and closing higher. In fact, people came after every little depressed stock and many have moved several 100% in the past few days and they sold them just as hard today. The stocks were lower and XLE was $45.10 -1.76 (3.76%). METALS, GOLD: $1,721.90 +16.80. After trading down to $1671 last week we had a bounce higher again today after testing the 1697 level. The action in the US$ is projecting higher prices for the metals, but it does not necessarily trade with the dollar on a day by day basis. Support is around Friday’s lows. We bought back the 3rd and final lot of NEM yesterday @ $58.86. BITCOIN: closed $9,805 +25. After breaking down from just over 10,000 and trading as low as 8630 last Tuesday we have been clawing our way back toward 10,000. Last week we traded over $10500 but fell all the way back to the lows, but we’ve moved back toward $10,000. We added 350 shares of GBTC last Wednesday @ $10.02 to our position of 400 @ $8.06, bringing our average price to $8.97. GBTC closed $11.48 - .10 today. Tomorrow is another day. CAM
How I plan to identify and sell the top of the next market cycle.
In this post I will share with you some of the strategies I will use to identify the next market cycle top so I can sell for maximum profits (and of course buy back in later in the subsequent bear market!) In the first part of this post I will discuss the resources I will use and in the second part I will discuss tactics in selling and risk management.
As the bull run begins to drag on and the price of ETH starts getting closer and closer to $10k I will begin to start watching many of the data science charts over at Look into Bitcoin. This will not be the only source I will use since there are great custom tools on TradingView too as well as more subjective indicators such as friends and family talking crypto and hearing about crypto again in the mainstream media. I’d also like to note that many of the indicators I will be looking at will be Bitcoin focused despite my ETH centred portfolio. Like it or not, this market is still Bitcoin dominated and despite the many proponents of an ETH flippening (myself included), it is quite likely that we will not see it this cycle due to the macro investing environment favouring assets which are good stores of value to weather the uncertainty. Ultimately, Bitcoin has the best store of value meme in crypto and that will be very powerful in the coming years. I think it is likely that the time for Ethereum or a network like Ethereum with a yielding asset (ETH under ETH 2.0) and a native economy of DeFi, DApps, NFTs and much more will be once all of the stock market uncertainty is over and investors are ready to take on more risk again. I am of course still expecting Ethereum and altcoins to outperform Bitcoin this cycle. However, I think that Bitcoin losing the number 1 spot will be more likely to happen between 2023 and 2030 rather than in the next 2-3 years. I hope I am wrong though. While most of the indicators on Looking into Bitcoin are useful, I will list the ones I’ll be focusing on the most here:
And finally my favourite, the Golden Ratio Multiplier. This indicator has been remarkably accurate at predicting tops using the golden ratio (1.6) and the fibonacci sequence (0, 1, 1, 2, 3, 5, 8, 13, 21) multiplied by the 350 day moving average. With each market cycle, the 350 day moving average is multiplied by the next number down in the fibonacci sequence. For example, the 2013 peak only just passed above the 350 day moving average multiplied by 8 and the 2017 bull market just touched the 350 day moving average multiplied by 5. So if this indicator is to work in the next cycle, we can expect the price to slightly exceed 3 times the value of the 350 day moving average. This indicator also worked for Ethereum in the 2017 bull run. While there is no graph for it, on the 13th of January, when ETH hit a peak of $1,419, the 350 day moving average was at $270. $270 multiplied by 5 is $1,350. If you sold at $1,350 you sold incredibly close to the top and I don’t think that any macro traders/long term traders would complain about that timing. I’d like to note that while indicators like the Golden Ratio Multiplier factors in for less explosive growth each cycle, not all of the above indicators do. So be cautious of this when you think the peak is near as it may be closer than you think. In saying that, there is a lot of luck involved so I should also point out that it also might not be closer than you think. However, it would be better to sell before the peak at say $10,000/BTC as of 2017 than to be left holding all of your crypto when the bear market begins since Bitcoin didn’t spend much time above $10,000/BTC after the $20K peak. Ultimately it is up to you to decide your risk appetite and how well you want to try and time the market. For me, I will definitely be on the conservative side so that I don’t miss the boat completely and hopefully I will be able to sell most of my crypto just before we peak rather than afterwards.
Since timing the top requires a lot of luck, a good method of mitigating the risk is to spread out when you sell. I’m going to share with you my personal strategy but I recommend that you create your own strategy or use this as a basis from which you can use to adjust and tweak it to optimally suit your situation. If you have a large stack, you will probably want to sell early since you might not need such spectacular gains to lock in some life changing money. On the other hand, if you have a smaller stack or if you are younger, you can afford to take more risk and might want to try and time the absolute peak a bit better to get that much closer to making some life changing money. Personally, while my stack isn’t very big in dollar terms, it is a significant % of my net worth and so I don’t have a high risk tolerance with it (at least relative to other people in crypto!) For this reason I will be selling a little bit on the early side. My plan has three pots of crypto. 20% of my crypto I will hold indefinitely since I very strongly believe in the long term prospect of ETH and BTC as investments. This way if I time the markets terribly, I will always have some skin in the crypto game. The second pot of crypto is 40% which I will sell on the way up to take some profits and I don’t intend on putting this money back into crypto. Initially I will be selling very small amounts of this 40% and as the indicators listed above get closer and closer to calling a top, I will sell larger proportions of this crypto. I haven’t set specific target numbers since things change fast in this space and I feel like the best decisions in this case are made in the moment. For example, estimating a market top is hard when it is 2-3 years away, but it is much easier when it is just months or weeks away. Once again, this is just personal preference. Many of you will find that setting targets now makes it easier for you to pull the trigger and take some profits when everyone else is calling $1M BTC while it is at $100K or calling for $100K ETH when the current price might be $10K. Finally, the last 40% I will sell all at once when I feel like we are at the top and I am confident that the price will be lower a year on from that point in time. With this 40% I will try and buy back during the bear market with the help of many of the same indicators I listed above from Look into Bitcoin. I will also use some indicators which I didn’t mention above since some are better designed at identifying market bottoms. My goal is to be able to buy back the number of BTC and ETH I held before I sold anything with this 40% (plus the 20% I didn’t sell). This is a big ask but it is better in life to set hard goals that seem unattainable or unrealistic than it is to set easy goals. To summarise my portfolio strategy, 20% of my portfolio is an indefinite hold, 40% I will sell on the way up and I do not intend on buying back into crypto with this money so I can avoid being over-exposed to crypto. The last 40% I will use to try and sell the top and buy the bottom.
As a closing note I would like to say that it will be important to be aware of the power of greed and FOMO. Do not under-estimate these emotions and try to remain a grounded and rational investor. Don’t be scared to take profits. I know from experience trading altcoins that it is better to exit a position early and miss out on another 100% price increase than it is to hold through a bear market and take >90% losses. If you go into this bullrun telling yourself you will take profits on the way up, you will have no reason to regret any early sales since you will know that you made a rational trade and not an emotional trade.
I keep hearing "Deflation before massive inflation"
So what can we do about it? Any ideas are welcome. It has a lot of "what if's"... It depends how tax and law play out with it.Historically speaking:
Commodities and things people use every day become expensive,
Luxury goods fall in value.
Inflation wipes out all savings, there is often a rush to spend money while it has value. "Bank runs" and "Bank Bail in's" where the bank will limit your withdraws to prop up the bank temporarily. Sure here the FDIC may insure it, but its nothing if your money is losing value by the hour and it takes months to get it actually into your hands. And many countries have issues with a person holding cash..."You're automatically a drug dealer! >your money is now drug money! >Asset forfeiture" ...I cant count how many times this happens.
People yell " physical gold and silver!" ... yeah, those do hold value well, however the gov does tax that at 26-30% when sold, and will often ban its use in dire times. ....huge grey / pirate area.
Mining stock is the same in the tax range, and nearly anything you "resell", imposed taxes and royalties can be added leaving you high and dry.
Precious metal holdings have been banned in the past, even here in the USA...aka Government confiscation.
Nationalization of Precious metals mines have happened.
Edit: I now realize there are many ways stocks can play out.
Real Estate will raise in value hugely, However so will the taxes, longer contracts at fixed rates benefits the lendee.
Things that you use, if you can stock or invest in it.
-I stock bulk diesel for my cars while following historical averages to buy cheap.
-Rotating food stock
-Extra maintenance items, including the big things like a roof on your home if its coming time. Not joking I have a spare water heater and backup heating options, along with minor parts and filters to fix them. Same with cars and engines, (spark plugs, filters (all different filters), oil, cheap sensors that usually go bad and are only 4-10$ each, 1-2 extra alternator per vehicle, belts, mowing belts, bearings, grease, ... and I've literally had to use everything on that list and reorder.)
Things that directly pay you back or are insurance. Saving money is making money.
-Security, Locks, Alarms, Cameras, people steal.
A deep freezer for instance can stock food you use and buy on sale.
Solar energy and solar heating supplements energy you use anyways
Rainwater can be collected and used rather than buying from a source.
A cooking gadget vs eating out.
Tools and learning to fix things vs hire.
House insulation.-Better insulative windows, and sealing.
Bidet on toilet (lol serious though...)
Your education can be a huge one, not just for prepping but also in your work.
Things that prevent rot, fire, flood / humidity, or failure. Humidity is a silent killer to many preps. (water sump pumps, dehumidifiers, leak prevention, fire extinguishers / sprinklers, )
Things that last and can be resold on the street if need be. This list can be huge, you have to balance it with liquidity, what you use but can also sell before it goes bad / fails.
Honestly and unpopularly, Things that can avoid tax when the price inflates out of control and you wish to sell. The numbers can be so distorted in both price and taxing of income. Eggs for instance, in many countries from Weimar Republic of Germany to Venezuela, increased 15,000%+, So that $15,000 egg / $150,000 dozen that you sold from your chickens gets taxed in the highest tax bracket? (which can go into the 90% range if rules aren't changed for the massive inflation) Taxes usually try raising during this and many companies flee the country, add robots / machines, or downsize as the result of more taxes making work and jobs even more of an issue. .. honestly history shows the whole thing being a cluster-duck in so many ways. Alternative currencies pop up, actual trades happen and go unreported, crime even shifts when things get too bad, again with Venezuela, I read that criminals were moving to other countries because the people were too poor to even make anything robbing! You can also have a business where you write off so many things that you would use anyways. The numbers get... err... odd, play the game.
It is usually around 10 years of chaos before things start "stabilizing." and even then, so much damage has occured.
This is a serious thing that has happened to once prosperous people / civilizations in the past...don't think you're exempt, especially when the numbers are at historical limits in many countries. Invest in yourself and what you use regularly.
DDDD - The Rise of “Buy the Dip” Retail Investors and Why Another Crash Is Imminent
In this week's edition of DDDD (Data-driven DD), I'll be going over the real reason why we have been seeing a rally for the past few weeks, defying all logic and fundamentals - retail investors. We'll look into several data sets to see how retail interest in stock markets have reached record levels in the past few weeks, how this affected stock prices, and why we've most likely seen the top at this point, unless we see one of the "positive catalysts" that I mentioned in my previous post, which is unlikely (except for more news about Remdesivir). Disclaimer - This is not financial advice, and a lot of the content below is my personal opinion. In fact, the numbers, facts, or explanations presented below could be wrong and be made up. Don't buy random options because some person on the internet says so; look at what happened to all the SPY 220p 4/17 bag holders. Do your own research and come to your own conclusions on what you should do with your own money, and how levered you want to be based on your personal risk tolerance. Inspiration Most people who know me personally know that I spend an unhealthy amount of my free time in finance and trading as a hobby, even competing in paper options trading competitions when I was in high school. A few weeks ago, I had a friend ask if he could call me because he just installed Robinhood and wanted to buy SPY puts after seeing everyone on wallstreetbets post gains posts from all the tendies they’ve made from their SPY puts. The problem was, he actually didn’t understand how options worked at all, and needed a thorough explanation about how options are priced, what strike prices and expiration dates mean, and what the right strategy to buying options are. That’s how I knew we were at the euphoria stage of buying SPY puts - it’s when dumb money starts to pour in, and people start buying securities because they see everyone else making money and they want in, even if they have no idea what they’re buying, and price becomes dislocated from fundementals. Sure enough, less than a week later, we started the bull rally that we are currently in. Bubbles are formed when people buy something not because of logic or even gut feeling, but when people who previously weren’t involved see their dumb neighbors make tons of money from it, and they don’t want to miss out. A few days ago, I started getting questions from other friends about what stocks they should buy and if I thought something was a good investment. That inspired me to dig a bit deeper to see how many other people are thinking the same thing. Data Ever since March, we’ve seen an unprecedented amount of money pour into the stock market from retail investors. Google Search Trends \"what stock should I buy\" Google Trends 2004 - 2020 \"what stock should I buy\" Google Trends 12 months \"stocks\" Google Trends 2004 - 2020 \"stocks\" Google Trends 12 months Brokerage data Robinhood SPY holders \"Robinhood\" Google Trends 12 months wallstreetbets' favorite broker Google Trends 12 months Excerpt from E*Trade earnings statement Excerpt from Schwab earnings statement TD Ameritrade Excerpt Media cnbc.com Alexa rank CNBC viewership & rankings wallstreetbets comments / day investing comments / day Analysis What we can see from Reddit numbers, Google Trends, and CNBC stats is that in between the first week of March and first week of April, we see a massive inflow of retail interest in the stock market. Not only that, but this inflow of interest is coming from all age cohorts, from internet-using Zoomers to TV-watching Boomers. Robinhood SPY holdings and earnings reports from E*Trade, TD Ameritrade, and Schwab have also all confirmed record numbers of new clients, number of trades, and assets. There’s something interesting going on if you look closer at the numbers. The numbers growth in brokers for designed for “less sophisticated” investors (i.e. Robinhood and E*Trade) are much larger than for real brokers (i.e. Schwab and Ameritrade). This implies that the record number of new users and trade volume is coming from dumb money. The numbers shown here only really apply to the US and Canada, but there’s also data to suggest that there’s also record numbers of foreign investors pouring money into the US stock market as well. However, after the third week of March, we see the interest start to slowly decline and plateau, indicating that we probably have seen most of those new investors who wanted to have a long position in the market do so. SPX daily Rationale Pretty much everything past this point is purely speculation, and isn’t really backed up by any solid data so take whatever I say here with a cup of salt. We could see from the graph that new investor interest started with the first bull trap we saw in the initial decline from early March, and peaking right after the end of the crash in March. So it would be fair to guess that we’re seeing a record amount of interest in the stock market from a “buy the dip” mentality, especially from Robinhood-using Millennials. Here’s a few points on my rationalization of this behavior, based on very weak anecdotal evidence
They missed out of their chance of getting in the stock market at the start of the bull market that happened at the end of 2009
They’ve all seen the stock market make record gains throughout their adult lives, but believing that the market might be overheated, they were waiting for a crash
Most of them have gotten towards the stage of their lives where they actually have some savings and can finally put some money aside for investments
This stock market crash seems like their once-in-a-decade opportunity that they’ve been waiting for, so everyone jumped in
Everyone’s stuck at their homes with vast amounts of unexpected free time on their hands
Most of these new investors got their first taste in the market near the bottom, and probably made some nice returns. Of course, since they didn’t know what they were doing, they probably put a very small amount of money at first, but after seeing a 10% return over one week, validating that maybe they do know something, they decide to slowly pour in more and more of their life savings. That’s what’s been fueling this bull market. Sentiment & Magic Crayons As I mentioned previously, this bull rally will keep going until enough bears convert to bulls. Markets go up when the amount of new bullish positions outnumber the amount of new bearish positions, and vice versa. Record amounts of new investors, who previously never held a position in the market before, fueled the bullish side of this equation, despite all the negative data that has come out and dislocating the price from fundamentals. All the smart money that was shorting the markets saw this happening, and flipped to become bulls because you don’t fight the trend, even if the trend doesn’t reflect reality. From the data shown above, we can see new investor interest growth has started declining since mid March and started stagnating in early April. The declining volume in SPY since mid-March confirms this. That means, once the sentiment of the new retail investors starts to turn bearish, and everyone figures out how much the stocks they’re holding are really worth, another sell-off will begin. I’ve seen something very similar to this a few years ago with Bitcoin. Near the end of 2017, Bitcoin started to become mainstream and saw a flood of retail investors suddenly signing up for Coinbase (i.e. Robinhood) accounts and buying Bitcoin without actually understanding what it is and how it works. Suddenly everyone, from co-workers to grandparents, starts talking about Bitcoin and might have thrown a few thousand dollars into it. This appears to be a very similar parallel to what’s going on right now. Of course there’s differences here in that equities have an intrinsic value, although many of them have gone way above what they should be intrinsically worth, and the vast majority of retail investors don’t understand how to value companies. Then, during December, when people started thinking that the market was getting a bit overheated, some started taking their profits, and that’s when the prices crashed violently. This flip in sentiment now look like it has started with equities. SPY daily Technical Analysis, or magic crayons, is a discipline in finance that uses statistical analysis to predict market trends based on market sentiment. Of course, a lot of this is hand-wavy and is very subjective; two people doing TA on the same price history can end up getting opposite results, so TA should always be taken with a grain of salt and ideally be backed with underlying justification and not be blindly followed. In fact, I’ve since corrected the ascending wedge I had on SPY since my last post since this new wedge is a better fit for the new trading data. There’s a few things going on in this chart. The entire bull rally we’ve had since the lows can be modelled using a rising wedge. This is a pattern where there is a convergence of a rising support and resistance trendline, along with falling volume. This indicates a slow decline in net bullish sentiment with investors, with smaller and smaller upside after each bounce off the support until it hits a resistance. The smaller the bounces, the less bullish investors are. When the bearish sentiment takes over across investors, the price breaks below this wedge - a breakdown, and indicates a start of another downtrend. This happened when the wedge hit resistance at around 293, which is around the same price as the 200 day moving average, the 62% retracement (considered to be the upper bound of a bull trap), and a price level that acted as a support and resistance throughout 2019. The fact that it gapped down to break this wedge is also a strong signal, indicating a sudden swing in investor sentiment overnight. The volume of the break down also broke the downwards trend of volume we’ve had since the beginning of the bull rally, indicating a sudden surge of people selling their shares. This doesn’t necessarily mean that we will go straight from here, and I personally think that we will see the completion of a heads-and-shoulders pattern complete before SPY goes below 274, which in itself is a strong support level. In other words, SPY might go from 282 -> 274 -> 284 -> 274 before breaking the 274 support level. VIX Daily Doing TA is already sketchy, and doing TA on something like VIX is even more sketchy, but I found this interesting so I’ll mention it. Since the start of the bull rally, we’ve had VIX inside a descending channel. With the breakdown we had in SPY yesterday, VIX has also gapped up to have a breakout from this channel, indicating that we may see future volatility in the next week or so. Putting Everything Together Finally, we get to my thesis. This entire bull rally has been fueled by new retail investors buying the dip, bringing the stock price to euphoric levels. Over the past few weeks, we’ve been seeing the people waiting at the sidelines for years to get into the stock market slowly FOMO into the rally in smaller and smaller volumes, while the smart money have been locking in their profits at an even slower rate - hence an ascending wedge. As the amount of new retail interest in the stock market started slowed down, the amount of new bulls started to decline. It looks like Friday might have been the start of the bearish sentiment taking over, meaning it’s likely that 293 was the top, unless any significant bullish events happen in the next two weeks like a fourth round of stimulus, in which case we might see 300. This doesn’t mean we’ll instantly go back to circuit breakers on Monday, and we might see 282 -> 274 -> 284 -> 274 happen before panic, this time by the first-time investors, eventually bringing us down towards SPY 180. tldr; we've reached the top EDIT - I'll keep a my live thoughts here as we move throughout this week in case anyone's still reading this and interested. 5/4 8PM - /ES was red last night but steadily climbed, which was expected since 1h RSI was borderline oversold, leaving us to a slightly green day. /ES looks like it has momentum going up, but is approaching towards overbought territory now. Expecting it to go towards 284 (possibly where we'll open tomorrow) and bouncing back down from that price level 5/5 Market Open - Well there goes my price target. I guess at this point it might go up to 293 again, but will need a lot of momentum to push back there to 300. Seems like this is being driven by oil prices skyrocketing. 5/5 3:50PM - Volume for the upwards price action had very little volume behind it. Seeing a selloff EOD today, could go either way although I have a bearish bias. Going to hold cash until it goes towards one end of the 274-293 channel (see last week's thesis). Still believe that we will see it drop below 274 next week, but we might be moving sideways in the channel this week and a bit of next week before that happens. Plan for tomorrow is buy short dated puts if open < 285. Otherwise, wait till it goes to 293 before buying those puts 5/5 6PM - What we saw today could be a false breakout above 284. Need tomorrow to open below 285 for that to be confirmed. If so, my original thesis of it going back down to 274 before bouncing back up will still be in play. 5/6 EOD - Wasn't a false breakout. Looks like it's still forming the head-and-shoulders pattern mentioned before, but 288 instead of 284 as the level. Still not sure yet so I'm personally going to be holding cash and waiting this out for the next few days. Will enter into short positions if we either go near 293 again or drop below 270. Might look into VIX calls if VIX goes down near 30. 5/7 Market Open - Still waiting. If we break 289 we're probably heading to 293. I'll make my entry to short positions when we hit that a second time. There's very little bullish momentum left (see MACD 1D), so if we hit 293 and then drop back down, we'll have a MACD crossover event which many traders and algos use as a sell signal. Oil is doing some weird shit. 5/7 Noon - Looks like we're headed to 293. Picked up VIX 32.5c 5/27 since VIX is near 30. 5/7 11PM - /ES is hovering right above 2910, with 4h and 1h charts are bullish from MACD and 1h is almost overbought in RSI. Unless something dramatic happens we'll probably hit near 293 tomorrow, which is where I'll get some SPY puts. We might drop down before ever touching it, or go all the way to 295 (like last time) during the day, but expecting it to close at or below 293. After that I'm expecting a gap down Monday as we start the final leg down next week towards 274. Expecting 1D MACD to crossover in the final leg down, which will be a signal for bears to take over and institutions / day traders will start selling again 5/8 Market Open - Plan is to wait till a good entry today, either when technicals looks good or we hit 293, and then buy some SPY June 285p and July 275p 5/8 Noon - Everything still going according to plan. Most likely going to slowly inch towards 293 by EOD. Will probably pick up SPY puts and more VIX calls at power hour (3 - 4PM). Monday will probably gap down, although there's a small chance of one more green / sideways day before that happens if we have bullish catalysts on the weekend. 5/8 3:55PM - SPY at 292.60. This is probably going to be the closest we get to 293. Bought SPY 290-260 6/19 debit spreads and 292-272 5/15 debit spreads, as well as doubling down on VIX calls from yesterday, decreasing my cost basis. Still looks like there's room for one more green day on Monday, so I left some money on the side to double down if that's the case, although it's more likely than not we won't get there. 5/8 EOD - Looks like we barely touched 293 exactly AH before rebounding down. Too bad you can't buy options AH, but more convinced we'll see a gap down on Monday. Going to work on another post over the weekend and do my updates there. Have a great weekend everyone!
For Trading JULY 16th GS Earnings a Beat Prop-Trading Helps NASDAQ Still Weaker TWTR HACKED Today’s market got off to a decent start with the futures indicating a gain of about 500+, but it didn’t live up to its promise, falling back and reaching up “only” 428 and making that high by 9:45 and trading sideways to lower and making a low around 12:15 at + just 50 before turning back up to make a lower high +240 and selling off again, but making a late gain back to +310 before the last little selloff to close +227.51 (.85%), NASDAQ +61.91 (.59%), S&P 500 +29.04 (.91%), the Russell +50.05 (3.5%) and the big winner, DJ Transports +424.96 (4.56%). Market internals were strong with the NYSE A/D 5:1 and NAZ 4:1 with slightly higher volume than yesterday. The DJIA was 25:5 with the big gainer BA, +55 and UNH the big loser -31 DP’s. There was plenty of good news from the Beige Book gains, Industrial production +5.4% v 4.6 est., import / export gains and mortgage apps +5.1%. Tomorrow we have Initial and continuing claims, retail sales, Phili Fed, NAHB housing and business inventories. Plenty to obsess about! Our “open forum” on Discord, which allows me to interact with subscribers and others to allow direct questions and chart opinions on just about any stock, continues to grow with more participants every day. It is informative and allows me to share insights as the market is open and moving. The link is: https://discord.gg/ATvC7YZ and I will be there and active from before the open and all day. It’s a great place to share ideas and gain some insights, and we’ve grown to almost 3000 members. I also did this video titled “How to survive being an options trader and not blow up your account,” over the long weekend. I think it’s highly informative as a guide to stock selection and option choices. The link is https://youtu.be/Y7H9RpWfLlo Enjoy!! Tonight’s closing comment video https://youtu.be/hEiml2wDNeA SECTORS: Goldman Sachs (GS) reported great numbers, buoyed by proprietary trading and while the stock traded as high as $225.24, it couldn’t hold those gains and finished $216.90 +2.89 (1.35%). So, as I mentioned in tonight’s video (link above) the airlines and cruise lines were propelled higher by the news from Moderna (MRNA) that their vaccine produces twice the antigens as those from patients that have recovered from the illness. MRNA finished $80.22 +5.18 (6.9%) after trading as high as $88.37. The airlines were AAL+1.87 (16%), DAL +2.49 (9.5%), LUV +.60 (2.2%), while the cruise lines were CCL +2.44 (16.2%), RCL +10.21 (21%), and NCLH +3.17 (20.6%). If I had to pick one that I’d go with, it would be none of these. I think the play will be in EXPE $90.23 +7.76 (9.4%) since people will need to book regardless of what they want to do or where they want to go. The TWTR hack of several high profile users, Obama, Biden, Bill Gates, Kanye West and Elon Musk was a crypto scam announcing a giveaway that required the sender to deposit .1 BTC in order to receive .2 BTC back…yeah, right…I’m so sure Joe Biden wants to double my money! And, the HOMERUN of the day was the Australian Biotech, Genetic Tech (GENE), whose “Severity Risk Test” was updated on a webinar. The stock was as low as $1.41 earlier this year and closed on Tuesday @ $2.26 and opened the day today @ 2.75 and ran up to $10.30 before closing $5.67 +3.41 (150.89%). Clearly a homerun! FOOD SUPPLY CHAIN was LOWER with TSN +1.71, BGS -.27, FLO -.13, CPB -1.06, CAG -.37, MDLZ -.19, CALM -.14, JJSF +2.11, SAFM +1.77, HRL -.27, SJM -1.31 and PPC $16.53 +.30 (1.85%). BIOPHARMA was HIGHER with BIIB +1.69, ABBV +1.60, REGN -8.49, ISRG +22.46, GILD -.44, MYL +.43, TEVA +.88, VRTX +1.28, BHC +1.25, INCY -.05, ICPT +1.93, LABU +4.17 and IBB $142.74 +2.48 (1.77%). CANNABIS: was HIGHER with TLRY +.24, CGC +.81, CRON +.67, GWPH -3.99, ACB +1.11, CURLF +.10, KERN +.42, and MJ $13.64 +.38 (2.87%). DEFENSE: was HIGHER with LMT +9.94, GD +2.64, TXT +1.05, NOC +5.21, BWXT +1.24, TDY +21.12, RTX +2.73 and ITA $165.19 +5.58 (3.5%). RETAIL: was HIGHER with M +.39, JWN +1.12, KSS +1.88, DDS +1.73, WMT +.37, TGT +1.59, TJX +2.57, RL +4.23, UAA +.87, LULU +4.19, TPR +.95, CPRI +1.35 FAANG and Big Cap: were LOWER with GOOGL -5.74, AMZN -86.00, AAPL +.61, FB -.53, NFLX -.38, NVDA -8.78, TSLA -5.80, BIDU -.69, CMG +33.98, BABA +.25, CAT +2.62, BA +6.32, DIS +1.74, and XLK $107.64 +.58 (.54%). PLEASE BE AWARE THAT THESE PRICES ARE LATE MARKET QUOTES AND DO NOT REPRESENT THE 4:00 CLOSES. FINANCIALS were HIGHER with GS +1.54, JPM +.99, BAC +.52, MS +1.32, C +1.60, PNC +2.89, AIG +.76, TRV +.79, AXP +2.54, V +2.72 and XLF $24.15 +.47 (1.98%). OIL, $41.20 +.91. Oil was lower in last night’s trading before we rallied in the morning. I mentioned in last night’s charts with comments section in the Weekly Strategies letter, prices are trying to work higher towards $45.00. We needed a close over the previous high close of $40.83 and we finally did that today. The stocks were higher with XLE $37.38 +.79 (2.16%). GOLD $1,813.80 +.40. It was a continuation rally and a new recovery high of $1,829.80. I have only the NEM August 65 / 70 spread on in the Gold market while we have been back in the Silver (SLV) calls @ $ .92 from Friday. Silver rallied from a down overnight session and the calls closed $1.40 +.12. We also added a GLD 7/24 170 call position @ $1.22 that finished $1.54 -05. BITCOIN: closed $9,190 -120. After trading back to 8985 we rallied back to close – only $5. Since last week we have closed between 9200 – 92.85 every day with narrow ranges and today was a good start to move higher. A break over 10,000 still sends us higher. We added 350 shares of GBTC @ $10.02 to our position of 400 @ $8.06, bringing our average price to $8.97. GBTC closed $9.48 - .25 today. Tomorrow is another day. CAM
The stock market has traded sideways for past 2 weeks. That has market analysts suggesting the rally has run its course & looking for a reversal to the downside. Rather, I think it is the pause that refreshes. S&P likely headed for 3100 next and ultimately headed for 4000+ this summer. I'm calling for an 80% bear market to follow this final leg of a 38 year secular bull market. A lot of damage has been done but there is a historic amount of liquidity being pumped into the system with much more to come. The consensus has it 180 degrees wrong. They said the bear market rally had run its course and bad earnings season would send market sharply lower. Instead the S&P is heading for 3100 in short order. Semis, FAANG, Miners will continue to lead & laggards will see some catch-up. We are beginning to see some of the hardest hit areas of the market begin to outperform as they experience catch-up rallies. Some of those groups starting catch-up rallies include oil, industrials, housing & financials. I expect the dollar to fall to 85-86 but the move to S&P 4000+ does not depend on it at all. It's all about sentiment & liquidity right now. After the secular top, we're heading for a deep deflationary bust. We won't see sustainable inflation for at least a couple of years. But then we will see the first inflation-led recovery since the 1970's. After a short pullback, gold & silver & the miners are now poised for another nice run. Gold to $2000+, silver to $26, GDX to $45, GDXJ to $70 and SIL to $60. Bitcoin will ride along quite aggressively. I think you are going to be very surprised when the S&P is soaring past 4000 this summer. Pullbacks will occur on its way there but no retest of the lows. Why? Very simple. Trillions of dollars being pumped into the system. That plus high bearish sentiment provides the backdrop for a parabolic run to new highs. Buybacks are not necessary. Once the secular top is reached, we will enter an 80% bear market (bust) down to S&P 800. We won't see 4000 again for decades because interest rates will move up with inflation. P/E multiples will be compressed. TLDR: S&P 4000+ this summer. S&P 800 end of next year. Don't fight the Fed.
Find the latest Bitcoin USD (BTC-USD) stock quote, history, news and other vital information to help you with your stock trading and investing. Bitcoin (BTC) prices - Nasdaq offers cryptocurrency prices & market activity data for US and global markets. Additionally, Bloomberg said it expected bitcoin to appreciate if the stock market rolls over. Technically, Bitcoin traded up 1%, to $9,762, on Wednesday. Read more: Coin information & market data sourced from cryptocompare.com & market data sourced from Bitcoin.com Markets API (publicly available soon). Latest News Market Outlook: Crypto Economy Sheds $10B Overnight, Exchange Inflow and Sell Pressure Rises Market Wrap: Bitcoin Near $9,600 as Gold Hits High, Uniswap Liquidity Over $100m. 1 day ago; Everything You Need to Know About Ethereum 2.0. 1 day ago; Bitcoin Is a Form of Money in DC, Federal
Bitcoin ready to push to 14k? How to take the trade.
The Chinese stock market also appears to be laying the groundwork for a fresh bull run, which could provide Bitcoin with a boost as the country’s investors build a larger appetite for risk. Powered by Restream https://restream.io/ December 31, 2019: Happy New Year! In case you're new or haven't seen my tweets/videos, I'm very bullish on Bitcoin Cash (BCH) regardless of what happens ... A. No. Absolutely not. I would be more likely to encourage people NOT to trade on the stock market than I would be to do vice versa. Q. So, you trade off your base of $10k, and live off of that? ... Buy Algorithmic Trading Bots to trade Bitcoin for you at Stacked: ... If you're interested in joining a cryptocurrency & stock market trading community, then come the Wolf Pack discord @ https: ... By Tanya Abrosimova ..The sell off on the stock market may put BTC under pressure. . At the time of writing, BTC USD is glued to $9,200. . The China US conflict is heating and threatening to ...