Bitcoin goes mainstream!

Sat, 9th Dec 2017 Leave a comment

Daily chart of Bitcoin at 9th December 2017Since Bitcoin broke through the $10,000 level a few days ago, I’ve noticed a considerable amount of mainstream press coverage which, as a contrarian, makes me suspect we could be nearing a high. Another significant event is that two Chicago derivatives exchanges (CME and CBOE) are soon to offer Bitcoin futures which could increase the volatility of the cryptocurrency. If its surge continues, I think we could see a crash fairly soon, meaning that anyone buying in now could get their fingers burnt. I doubt this will be the end for Bitcoin though; we saw an 80% slump after it hit $1,200 in late 2014 and it has recovered from that, although it did take over two years to regain its high. If you are looking for a long-term, buy and hold investment, however, I think Ether could be a much better bet. It is the native token of the Ethereum blockchain which is supported by many large US companies and is currently trading at around $500. It saw a fifty-fold increase earlier in the year and has been consolidating since then, but recently achieved new highs and could benefit from any weakness in Bitcoin.

Chart of FTSE-100 at 8th December 2017With regard to the FTSE, it did fall to chart support at 7,400 as I suggested, where it paused and bounced back to the 20-day moving average, but has since fallen again to 7,300. It is now rebounding; could the traditional Santa rally see the break-out I have been looking for?

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Bitcoin target hit!

Sat, 14th Oct 2017 Leave a comment

Chart of bitcoin at 13th October 2017Bitcoin hit my $3,000 target for about three-quarters of an hour! And it got there a lot quicker than I expected so I didn’t catch the bottom, but, even so, I am currently running a nice profit on my investment due to the very strong rebound we have seen since then.

Chart of FTSE-100 index at 13th October 2017Turning to the FTSE, it seems that the low wasn’t quite in as there has been another dip, but I am optimistic that a break-out may be imminent. I wouldn’t be surprised to see a small decline back to 7,400 quite soon as the index may struggle to break out of its range straight away, but, hopefully after that, 8,000 should be on.

I remain hopeful of much greater gains to come as I am still looking for a final, blow-off phase to the current bull market. (And I am not alone in this; see the articles here and here). While some commentators are adamant that the US stock market is over-valued, I disagree; some indicators are high by historical standards, but if you look at the more fundamental ones such as the Trailing Twelve Months (TTM) Price/Earnings (P/E) ratio and dividend yield, there is still plenty of scope for advancement. Consulting an old edition of the Financial Times, I can see that the US dividend yield fell to around 1% at the peak of the dot.com boom, but it is currently around twice that level, so, even without further dividend increases, the market could double from here before we hit crash inducing levels. And the P/E ratio is also well below danger levels at about 20 for the Dow: I would say that 12-15 is typical, 6 very cheap and 30 very expensive. So again, even without any increase in company profits (earnings), the index could rise 50% before it hits danger levels. And with interest rates much lower than in 2000, it is perfectly possible that previous levels could be exceeded significantly before a crash occurs.

Buying opportunity in Bitcoin coming up?

Sat, 9th Sep 2017 Leave a comment

Chart of Bitcoin as at 8th September 2017.I’ve been thinking about getting into bitcoin for a while now and have finally decided to stop procrastinating. Looking at the chart of bitcoin’s recent activity, it looks to me like the rally is running out of steam for now and we could see a pullback. This article agrees with me, so it could be a good time to get in soon. As a computer programmer by trade, I would like to understand how bitcoin’s underlying technology (the blockchain) works, but I don’t! Bitcoin payments have also always seemed a bit esoteric, but I think I’ve got a handle on that now after reading a couple of articles. Some people say that bitcoin has no intrinsic value and it’s price increase is just a bubble, but sterling or US dollars have no intrinsic value either, yet people are quite happy to put their faith in them (for now anyway!). The fact that is not controlled by any government can be viewed as an advantage or disadvantage, depending on your point of view and, in that respect, it is more like gold than a fiat currency, as it cannot be debased by arbitrarily printing more of it. Though it has yet to become a mainstream means of exchange, progress is being made, and I think the price surge could continue for some time yet.

The price hit an all-time high of just over $5,000 last week, then fell back to $4,000 and is currently trying to bounce back from that. The bounce looks quite feeble to me and I suspect we could see a further drop to chart support at $3,000 which is where I would be looking to enter the fray.

Categories: Bitcoin, Cryptocurrency Tags:

Is the FTSE-100 low in?

Sun, 27th Aug 2017 Leave a comment

Chart of FTSE-100 at close on 25th August 2017The Korea wobble seems to have petered out and the FTSE failed to break out of its recent 7,300-7,550 range. So, again my prediction seems to have been too bearish; if the threat of World War III can’t drag the stock market down, then it looks like nothing will! We have a nice spike minimum in the chart and, on the principle that what doesn’t go down generally goes up, assuming nothing else happens to upset things I am optimistic that the index could hit 8,000 in the next few weeks. While this may seem irrationally exuberant when UK economic growth is slowing down, the reality is that the stock market does not correlate to the economy well at all and is far more dependant on US stock market performance where the mood is much more positive at the moment. If we can make 8,000 relatively soon after the decisive break through 7,000, then the doubters may start to pile in for fear of missing out on further gains.

How big will the Kim/Trump wobble be?

Sun, 13th Aug 2017 Leave a comment

Chart of the FTSE-100 at 11th August 2017Well, firstly, the bigger dip I forecast in my last post did not materialise, but I am wondering whether it might simply have been delayed. Another of my peak patterns appeared in May (though I wasn’t paying attention at the time) and this time it looks like there might be a more sizeable dip due to the tension between Trump and North Korea. (Trump threatened Korea with “fire and fury” if they didn’t stop threatening the USA and the Koreans immediately called his bluff by announcing plans to fire missiles near the US territory of Guam. It looks like someone is going to have to lose face in this stand-off by backing down, but the world is worried that neither party is minded to do so). I was influenced by the conspirators last time, who like to thwart my attempts to make money speculating, but, this time, they talked me out of selling my FTSE tracker at 7,550 last week, on the grounds that the dip wouldn’t be that large (although it would already have been worth selling) and so, as I am not speculating this time, perhaps they have less reason to mislead me. There is support at about 7,100 which would be my first target, and strong support between 6,800 and 6,900 which I would expect to hold, though the conspirators are adamant that the index won’t go down that far. I am hoping that this dip might be the catalyst for the start of the “blow-off” final phase of the current bull run so I’d like to see a significant step back of at least 5% which would take the FTSE to about 7,150 so maybe my initial target is reasonable.

The FTSE was up about 25% from its post EU referendum low within a year, which is a good start on my forecast for it to double within three years of that event. It would only need to do the same again this year and next to hit my target, but the conspirators are insisting that it will double within two years, i.e. hit 12,000 by June 2018. This is not impossible if we get a good blow-off phase, but only if the index gets a move on. I am still hopeful that a peak of 12-14,000 is possible as the dividend yield of the FTSE is still quite high at 3.8%. Prior to the last two crashes it fell below 2% and that was before the current ultra-low interest rate policy kicked in, so it could go even lower this time, meaning there is plenty of scope for the index to double from here. Though this may seem unlikely in the current environment, these moves up (and down) tend to happen when no one is expecting them.

Categories: Lunacy, Stock Market Tags: ,

I think the FTSE has further to fall.

Sun, 13th Nov 2016 Leave a comment

Chart of the FTSE-100 at close on 11th November 2016So, it’s Trump then. I can’t say I’m entirely surprised, as people who want change are significantly more motivated to turn out and vote than those who believe in the status quo. The markets seem undecided as to how to react however: Dow futures were down 1,000 points as the result became apparent on election night, but the Dow actually closed up after trading on Wednesday! The FTSE-100 gyrated similarly as the stock market decided it might quite like Trump’s tax cut and infrastructure spending plans. The bond market liked them less so though – inflation is likely to rise and his plans are unfunded so government borrowing will probably rise significantly as well. Never mind, this will help bring about the realization of the West’s bankruptcy all the sooner!

Turning to the FTSE, I think there is likely to be further to fall after the peak pattern I noted in my previous post. If we are at the start of a bull run, then a 10% correction at this stage would be typical, which would take us down to 6,400. There is a little chart support at this level (the April peak) so I’ll make that my initial target, but I wouldn’t be surprised if the index went a little lower. There is strong support at 6,200 however, and I would expect that level to hold. If it didn’t, then I would start to question my belief in the bull market. The index won’t fall in a straight line though, and, in the short term, I suspect that there may be another bounce from just below the last 6,693 low to just below the 20 day moving average this week.

Categories: Stock Market Tags: , ,

FTSE-100 peak pattern spotted!

Wed, 2nd Nov 2016 Leave a comment

Chart of FTSE-100 index at close on 1st November 2016My call for a breather in my last post was completely wrong, with the index taking off again. However, one of my peak patterns has occured in the FTSE since then (one small dip just above the twenty-day-moving-average, followed quickly by two just below) so I am now looking for a larger dip. I can see an obvious trigger for this: the US presidential election next week. Trump is the great unknown and a victory for him could cause mayhem. The polls are tightening, which could depress the stock market in the run up to election day and, if Clinton wins, this could be my dip, prior to a relief rally after the election, as she is the establishment candidate and a friend of Wall Street. If Trump wins however, there could be a much larger decline after the election as no one really knows what his policies are yet.

As for the December 14th Fed meeting where the next US interest rate rise is widely anticipated, this is still some way off, but it could also have a significant effect on the markets. Ordinarily, stock markets don’t like increasing interest rates as they increase companies costs, but bonds markets don’t like them either and this could increase the amount of money coming out of bonds and looking for a new home. Consequently, if this money finds its way into the stock market, the effect there could be limited or even positive.

Categories: Stock Market Tags: ,