Dec 17

Bitcoin: a tardy update

By Jani Ziedins | End of Day Analysis

Free After-Hours Update:

I contemplated writing about Bitcoin last week and given this latest dive, I really should have done it sooner. But hey, better late than never.

Bitcoin was hovering just above $7k support for a few weeks after retreating from this fall’s impressive $10k surge. Bulls have been trying to break the brutal bear market that started back in early 2018 and this latest run to $10k was the noblest attempt thus far. Unfortunately for the Bulls, the wider public failed to embrace the rebound and prices retreated from a lack of demand.

In 2018 Bitcoin went from the thing everyone wanted to the butt of every joke. Many late-to-the-party buyers were burned and they were not about to lose their hard-earned money a second time. And not only was the wider public not interested, but most of the Bitcoin bulls bought everything they could afford on the way down and they didn’t have any money left to add either. Mix those two factors together and you had the recipe for a failed rebound.

I’ve been warning Premium Analysis subscribers to be careful of Bitcoin’s latest rebound and while it seems a little late now that prices are down 35%, that warning is just as applicable. Buyers are still missing and if they didn’t save us at $7k, there is little reason to think anyone will come to our rescue at $6k.

If there is one saving grace, it is that Bitcoin bulls are a stubborn bunch. Anyone who hasn’t sold yet is a “Hodler” and plans on taking their coins to their grave. That undying confidence keeps supply tight every time prices dip under key support levels. Unfortunately, tight supply is only half of the equation and the best it can do is slow the descent. At this point, I see no reason to own Bitcoin because the bear market is alive and well. Expect prices to fall even further over the near and medium-term.

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Tags: Bitcoin $BTC.X

Dec 16

The Bull Market No One Saw Coming

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

This weekend Bloomberg published an article titled “The Bull Market Almost No One Saw Coming“. While I don’t want to delve into the content of the article, the title triggered me a little bit. I saw this bull market coming from a mile away and you should have seen it too.

I’m not psychic or anything of the sort, but to me, this decade long bull market was fairly obvious to anyone who spent time looking at long-term historical charts. Over the last 100 years, there have been multiple “Lost Decades”. These were extremely discouraging periods triggered stock market crashes and the indexes spent the better part of 10 years trying to get back to the old highs.  The most recent “Lost Decade” being 2000 to 2013.

While everyone was giving up hope 10 years ago after the Financial crisis, I saw tons of opportunituy. Sure, stocks obviously got too far ahead of themselves during the dot-com bubble and again during the housing bubble. But after a decade of trading sideways, a lot was happening in the real world that wasn’t being reflected in stock prices. In real terms, stocks were actually getting cheaper as the economy grew and equities failed to keep up.

Looking back in history, similar events transpired in the 1910s, 1930s, 1940s, and 1970s. Huge, brutal bear markets devastated stocks and turned an entire generation into cynics. But just when the masses had given up all hope, the market stunned us with the 1920s, 1950/60s, and the 1990s. Four times the market lost a decade and four times the market came roaring back. Was the 2000’s “Lost Decade” going to be any different? No, of course not.

Some of the best investment opportunities in the history of the stock market came in the 10 years following a “Lost Decade”. This time was no different. The only people who didn’t see this bull market coming were the ones who don’t know their history.

As for what comes next, is this bull market tired? Is a crash long overdue? Not if you look at history. Stocks rallied for nearly 20 years between the early 1980s and the late 1990s. By that measure, we could easily see another decade of strong gains before the next “Big One”. Of course, the worst day in stock market history happened during that 20-year bull market in 1987, so we cannot be complacent. But the prognosis for the next 10 years is still good even if we run into a few 20% corrections along the way.

(I’ve written well over 2,000 articles over the last decade, but it would be interesting to sort through some of the old ones from 10 years ago now that everyone knows how it turned out. Sign up for FREE Email Alerts if you want to read those posts when I write them.)

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM

Dec 13

Is AMZN buyable here?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 is racing to record levels, yet AMZN is stuck in reverse and down 13% from July’s highs. What gives?

I’m not a fundamental investor and will leave the financial report crunching to someone else, but this dramatic price divergence tells us something is definitely not right with this stock and it lost its darling status.

If there was one thing that could have saved AMZN, it would have been a blowout holiday shopping season. But rather than cheer Black Friday’s sales numbers, investors sent the stock down 3% since Black Friday. That pretty much dashed any hope of this stock rebounding before the end of the year.

The biggest challenge facing AMZN is it is struggling to find its footing just above $1,700 support. This is a key technical level stretching back a couple of years, but more importantly, it provided critical support during the June and October dips. Unfortunately for the stock, double-bottoms are a thing, triple-bottoms, not so much. And right now the stock is threatening to challenge $1,700 support for the third time in six months.

The very fact we returned to this level for the third time is a huge red flag and should make investors nervous. But more than that is these feeble rebound attempts since the October bounce. There just isn’t any life left in this stock. If people were going to buy this rebound, they would have done it already. Slipping back to these levels again tells me the worst is still ahead of us.

But not to give up all hope, a sharp crash under $1700 could actually be a good thing for the stock. That could be the capitulation the stock needs to recover its mojo. While I wouldn’t touch AMZN right now, if it slices through $1700 support in a fantastically ugly way, but then bounces back days or weeks later, that would be a compelling signal the stock is finally buyable again.

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Tags: S&P 500 Nasdaq $SPY $AMZN

Dec 12

The Trade War is over, now what?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The trade war is over and the S&P 500 surged nearly one whole percent!

Well, not exactly. The trade war is nowhere near over but Trump tweeted, “Getting VERY close to a BIG DEAL with China.” That kicked off this morning’s explosive rally. Well, calling it explosive might be overstating the situation a tad, but it was a good day and the index closed at all-time highs.

Anyone hoping for more is sadly disappointed by this somewhat muted reaction. But this shouldn’t surprise those of us that have been paying attention. Yesterday I wrote that the stock market was growing tired of trade war headlines and deal or no deal, we shouldn’t expect a move greater than 1% in either direction. Today we got the strongest indication yet of a deal and the index surged a measly 0.86%.

More important than deal or no deal is how well the market has been performing this quarter. Despite the relentless barrage of negative headlines, stocks continue pushing into record highs. While some people claim the market is complacent and that complacency precedes the fall, the thing most people fail to mention is complacency can last for a really, really long time. When confident owners refuse to sell, supply stays tight and prices remain firm. This will end badly at some point because it always does, but this is not that point. In the meantime enjoy the ride.

As for what happens in January, I have thoughts on 2020 but will save those for another post. Sign up for FREE Email Alerts so you don’t miss those thoughts.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM

Dec 11

Does the Trade War matter anymore?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Despite what the naysayers claim, the S&P 500 continues defying gravity and is hovering near all-time highs. This is even more impressive since the next round of tariff hikes are scheduled to take effect this Sunday. The list of reasons this market should be down is a mile long, yet here we stand.

Bears claim it is only time before the crowd realizes how bad the situation really is. But here is the thing, none of these bearish claims are secret. Everyone knows about the slowing global economy. The trade war between the world’s two largest economies has been raging for nearly two years. Impeachment, does anyone actually care? Everything is out there and the crowd already knows about it. There is no waiting for the other shoe to drop, the shoe already dropped. And most importantly, no one cared.

We trade what the market does, not what we think it should do. If this market doesn’t want to go down, we only have two choices, jump aboard, or get out of the way. Fighting it is only going to get yourself killed.

As for this weekend’s trade war escalation, the market has been growing bored of these headlines and every escalation and resolution has been received with a smaller and smaller reaction.  Deal or no deal, it really doesn’t matter. We pop 1% if we get a deal, we dip 1% if we don’t. The days of five and ten percent moves are long behind us. The people who fear the trade war sold a long time ago and confident dip buyers took their place. If these dip buyers were not bothered by Trade War 1.0, 2.0, 3.0, or 4.0, chances are 5.0 won’t bother them either.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM

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