Archive for the ‘Stock Market’ Category

Bitcoin could be nearing its bottom.

Sat, 31st Mar 2018 Leave a comment

Chart of Bitcoin on 31st March 2018

The volatility in bitcoin has declined significantly in the last couple of weeks which could be a sign that the rout is coming to an end. We had bounces off the two support levels I mentioned in my last post, with a low just below $6,000. I suspect that level could be retested soon, but I am optimistic that it will hold. After possible consolidation, we should then see a rebound start.

Chart of FTSE-100 at close on the 29th March 2018

Well, my estimate of the size of the drop in the FTSE-100 was a bit on the low side, to say the least! I think we could be nearing the bottom here too though. The fall in the index has roughly conformed to a pattern I have seen several times, where there is a shelf about half way down, followed by two spikes back to the 20-day moving average (the green line) after lower lows. The chart shows that we are currently nearing the top of the second spike, so I am looking for a further dip back to around 6,800 after which the bounce-back should begin.

I have noticed some commentators arguing that this bull market is getting rather long in the tooth, and that the current dip could be the start of a major crash, but I don’t agree. The UK stock market crashed in the early 1970’s, bottoming out at the end of 1974 and didn’t peak until July 1987, nearly 13 years later. The bottom here was in November of that year, and the next crash after that didn’t start until the beginning of 2000, over 12 years later. The current bull run is only 9 years old so it could easily be another three years before it peaks.


December bitcoin low is breached!

Wed, 17th Jan 2018 Leave a comment

Chart of Bitcoin at 17th January 2018Well, it looks like I was wrong to call the current dip in bitcoin as normal volatility since the December low of $11,000 was breached yesterday night when the price fell to $10,000. That’s well below the 50 day moving average (the purple line in the above chart) which has been acting as a floor in recent times so it looks like the weakness is set to continue. If $10,000 is breached as well, then there isn’t much chart support until we hit $7,500 – $8,000 or, after that, $6,000. A low of $6,000 would be a fall of about 70% which would definitely qualify as a crash as far as I am concerned! (And there is no reason why it couldn’t go lower still). I suspect that, if the price did drop that far, it would take some time to recover due to the panicking effect this would have on all the new speculators who jumped in after bitcoin went mainstream when the price first crossed $10,000.

Chart of FTSE-100 at close on 16th January 2018The FTSE has continued to rise nicely after its breakout, but I think it might pull back slightly before really taking off as it seems to be running out of steam now. A short dip back to support at 7,600 would seem reasonable.

Bitcoin slump is perfectly normal!

Sat, 23rd Dec 2017 Leave a comment

Chart of Bitcoin price at 22nd December 2017This week Bitcoin slumped around 45% (from a high around $20,000 to chart support at $11,000) and has bounced back to around $15,000 since yesterday afternoon. This isn’t the crash I predicted a couple of weeks ago; it is just normal volatility. Looking at the chart above, you can see that the 50-day-moving-average (50dma – the purple line) has acted as a floor in recent times, and the fact that the price can dip 45% and still not hit this level just shows how overheated Bitcoin has become. As long as each low is higher than the previous one, the bull market is intact and we should see further progress after a period of consolidation from here (assuming that $11,000 proves to be the low for this dip). When the crash hits, the price will fall well below the 50dma and break the pattern of higher lows.

Chart of FTSE-100 at close on 22nd December 2017The FTSE-100 has made a new closing high this week, breaking the 7,600 point barrier for the first time. The Trump tax cuts signed off this week should boost the stock market, so I am hopeful the FTSE can continue its climb.

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?

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 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.

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.

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