Weekly Tic Thoughts
Crypto Carnage
Hi Traders,
This week’s installment I am primarily going to focus on Bitcoin, S&P500 and a couple of stocks. I am not too keen on the deep end of individual stock names until I feel Powell’s taper induced sell-off eases.
Past 5 days, we saw extreme volatility compared to recent months and certainly much more so for seasonality adjusted expectations. This is the holiday season after all! For most part I stayed on the right side of it as my primary expectation was to sell rallies after the rug pull on Black Friday.
A lot of pundits tend to think this sell off is due to the Omicron variant. However, I disagree. This volatility has nothing to do with Coronavirus and everything to do with FED. In the past, similar FED events have sell offs that tend to last 5-6 months. Key driver of FED action is political calculations by the admin to take a more hawkish stand against inflation and to garner public support for some of the social spending initiatives which really have very little popularity. I am not in the camp that thinks this inflation is going to be widespread and long lasting. If anything, in my opinion this inflation will not last beyond next year: whether that is good or bad for the equities, that is up for debate.
A) Bitcoin
Bitcoin had a very bad week and a very bad month. If you bought this coin at the all time highs, you are now down more than 25% . However if you bought this at my 29000 from earlier in the year, the crypto coin is up 90%, not too shabby for an asset that costs 50 grand apiece.
A lot of FinTwit is now bearish on crypto. They think this is the end. I think it is premature to say. I think it will not be easy to close below 45000-47000 which are good orderflow levels. This coming week will be a pivotal week for risk assets. Personally, I do not think Bitcoin dips below 45500. At the time of this blog, Bitcoin is trading at $48000 and change.
If 45500 holds, I think we go back to retest 70-74 K on this. If we have Daily close below $45,500, in my opinion this opens the gate to 32000.
Remember, Bitcoin is supposed to be insurance against all this disruption by the FED and inflation, deflation etc. It is a cure-all , if you listen to the believers. In my opinion, Bitcoin will soon decouple from every thing else, and begin a long steady march towards 74,000 and may be even beyond!
B) S&P500
Boy did we have a week in S&P500! Personally, I did very well on trading side while my investments suffered. My trading, 60-80 point days are the sweet spot and I like them just from a trading perspective. However the downside of such volatility is always that your investment accounts suffer. Though, if you have a good shopping list, that is not always so bad. See Section C BTW for some names I am beginning to nibble on.
What am I watching for the next week?
On late Friday, I saw very first signs in about 5-6 days that there may be some sort of decent bottom put in S&P500. Here are my key observations:
We failed to close below the key three (3) day low , despite having a large amount of volume on down move.
On Friday afternoon, there was very little liquidity available on the bid side. Suggesting it was a steal to be able to break through the 4490 handles and an easy grab what’s out there at 4450 - however, we did not. Or could not.
Contrarian, majority view seems to be we can trade 4400 next week.
These 3 factors have made me conclude the following scenarios for next week:
4500 nice-round level is going to be extremely important all through next week.
If by Monday or early Tuesday, we are not able to close below 4500, my thinking is we may go up to retest 4610-4610.
If we instead close above 4539 on Monday, my play for rest of the week will be to look for dips, target 4620.
A close below 4500 round number early on Monday session will be a bearish confirmation for me, with targets at 4403.
See Figure A for context indicating we may have seen a climactic low on Friday.
Now beware, I am not full-on bull with this. Not yet. Not below 4620. I am still of the opinion that the rallies into 4620 may be sold as typical FED induced sell-offs tend to last on average 6 months. If so my ultimate target for this move is 4326. For now, I am giving myself a trade-able range of 4500-4620 for next 5 days. Let me know down below or on Twitter if you are bearish or bullish on S&P500 going into next week? As always, my subscribers are the first to get daily-fresh updates and plans for most days Monday through Thursday. So, you don’t want to miss subscribing to me, if you want more of these levels/posts 🙃 Section D has few sample trade plans for review.
C) A 10 Billion Dollar Lottery
At a 10 billion dollar valuation and a 60 dollar price tag, Zillow has been reduced to ashes from a lofty 200+ dollar levels, just a few months ago. If I had some pocket change left in some nook, this is where I rather throw it away in!
Zillow is synonymous with home buying in the US. They are getting rid of their under water homes by a record. I expect this stock to rebound once the dust clears , paving a way for 89-94 dollar range. This is long term bet for me, potentially end of 2022 and beyond. What do you think, is this too early to dip my toes in Zillow?
D) TSLA at 980
On Thursday I went bearish on Tesla TSLA at 1100 bucks. My target was 990 and we did quite close to it on Friday close around a 1000 bucks.
If my thinking about S&P500 finding a temp bottom is correct, then TSLA may be a beneficiary too. I think if TSLA 965-980 holds on Monday , we may see 1130 on this name again! This is a very good stock for order-flow trading.
What else you wanna see me cover? @ me on Twitter or let me know below.
As always, thanks for reading. Share and subscribe for your interactions is what makes my newsletter great!
~ Tic
Disclaimer: This newsletter is not trading or investment advice, but for general informational purposes only. This newsletter represents my personal opinions which I am sharing publicly as my personal blog. Futures, stocks, bonds trading of any kind involves a lot of risk. No guarantee of any profit whatsoever is made. In fact, you may lose everything you have. So be very careful. I guarantee no profit whatsoever, You assume the entire cost and risk of any trading or investing activities you choose to undertake. You are solely responsible for making your own investment decisions. Owners/authors of this newsletter, its representatives, its principals, its moderators and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission, CFTC or with any other securities/regulatory authority. Consult with a registered investment advisor, broker-dealer, and/or financial advisor. Reading and using this newsletter or any of my publications, you are agreeing to these terms.
Mr. Tic, simply covered easy way to understand for Bitcoin, S&P & Zillow. Thank you. If you can share your views for ETHE, Gold & Silver.
Any thots on gold and silver in the medium term?