Data first. It’s easy to explain the market weakness over the past few days: People may have done a bit of selling in order to put some cash in the bank for 2018. Today, though, unless you’re trading options, the settlement in three days won’t be in this year…so we half-expect a minor rally.
About the only fresh data out is the International Trade in Goods and Services. If this turns your crank…
“The international trade deficit was $69.7 billion in November, up $1.6 billion from $68.1 billion in October. Exports of goods for November were $133.7 billion, $3.8 billion more than October exports. Imports of goods for November were $203.4 billion, $5.4 billion more than October imports.
A couple of other points:
Advance Wholesale Inventories Wholesale inventories for November, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $610.2 billion, up 0.7 percent (±0.4 percent) from October 2017, and were up 3.8 percent (±0.7 percent) from November 2016. The September 2017 to October 2017 percentage change was revised from down 0.5 percent (±0.4 percent) to down 0.4 percent (±0.4 percent)*.
Advance Retail Inventories Retail inventories for November, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $619.1 billion, up 0.1 percent (±0.2 percent)* from October 2017, and were up 1.9 percent (±0.5 percent) from November 2016. The September 2017 to October 2017 percentage change was unrevised at virtually unchanged (±0.2 percent)*.
God, is this exciting, or what?
The Bitcoin Rap
We continue to observe Bitcoin with a mixture of scientific curiosity and horror. An hour before press time, it was trading around $14,000 each.
To be sure, there are still plenty of “True Believers” who are saying it will go to the Moon, or a million, but we aren’t so confident.
Take a look at this comparison of the pricing of Bitcoin with prices by the Dow in the run-up in the 1929 collapse and you’ll see why we’re concerned:
This is not to claim a direct correspondence. You will see that the Dow run-up took place over a number of years while the Bitcoin run-up has taken place over a number of months. Which gets us to an interesting line of thinking.
If the old University of Colorado Long Wave Econ group were still active, I’d ask the “old hands” this very important question: “How much of the time-scale of such an obvious bubble is related to transaction speed?”
You have to remember that when stocks were running up in the 1920’s, the price of a stock would close at X and the news of that closing would be either in the evening papers, or the morning newspapers. Out west, the afternoon papers might have the report of prices, but it would be the next morning before orders could be placed.
Upon rising, the 1920’s speculator would take coffee and the newspaper and study the market closely. Then, if warranted, a telephone call to the brokerage. But here’s another time-lag. Brokers didn’t have instant to-the-trading-floor coms. It was a telegraphed order, manually sent around by “runners” and then the traders would (or not) strike a price. A good estimate under ideal conditions was about a one-day turnaround on transactions.
With Bitcoin, it’s a different thing: One click and you’re in, or out, and then whatever the time is to update the blockchain (distributed ledger).
If things are going well, as was noted in an article this past summer, a transaction can clear in about 30-minutes.
What’s interesting “mental floss” is to estimate the “time compression” and wonder if that’s why the ramp in Bitcoin has been so fast compared to the 1920’s market.
I try to refrain from “talking my book” because even though we do exceptionally well when following our trading model, it was never designed to call tops, or bottoms, but rather it’s designed to capture the big moves in the market and it does that marvelously.
Still, one way to look at Bitcoin is to run a subscriber tool I built called the openbrain.xlsx spreadsheet. It makes a SWAG at where prices should go in a “normal market” that seems to be following conventional Elliott Wave rules.
In this case, it’s not pretty, at all. Remember, just a couple of weeks back Bitcoin was in the $19,500 range, and then collapses to the $11,060 range for a moment. When we plug that in to the spreadsheet, it looks like Bitcoin MAY be about to enter a third wave down and that could end…well, you look for the Wave 3 targets here:
I won’t label this a “prediction” (yet), but in the event that Bitcoin takes out the previous low (the $11,060 momentary low) then the odds might be shifting toward a Wave III down wash-out.
There is still the bullish case, however. So don’t let me rain on your empty digits backed by nothing but other digits…
The way THAT “much higher and to the moon” wave count could still play out goes like this: We start from some nominal Bitcoin floor (no one holds up a flag at incept points) so I tossed a dart at $1,000 each, and then things rally like hell. From whatever the floor is ($1,000?) up to $19,500…as a large Wave I up.
That would make the recent correction a Wave II down which in turn foreshadows the mega-upside wet dream of Coinsters:
You can argue that the recent pullback was to right around where the Wave II SHOULD have gone…and I won’t argue the point.
Typically, the “great arbiter” discussion in this column. Instead, it’s the breakout or breakdown. Unless you just have to spend it today, waiting a while may be the smartest thing to do.
In order for the BitBulls to hit their $35,817 minimum up-side expectation for Wave III, we first need to sail above $19,500.
BUT, if instead, we break through to the downside, and see prices like $$10,900 and lower arriving, then it’d maybe be time to find the next bigger fool than you. That’d be a good level to become a BitBear.
As always, we just watch with horror and amusement. World events are likely to drive.
The GOP: Winemaker’s Party?
Not following? Wine is all about sour grapes and we saw this in the NY Times that got us thinking that way: “Roy Moore Sues to Block Certification of Alabama Senate Election Results.”
Earlier, the Alabama secretary of state dismissed the Moore petition to delay…so the Courts are the only recourse. Just for the sake of absurdity, maybe we will see an Obama-appointee hear this one. Popcorn ready?
In Fairness to Trump
You did see where Pew: Trump media coverage three times more negative than for Obama?
When I tell you of crooked media, it ain’t all smoke.
Not Enough SJW’s, Already?
Oh, spewers of guilt, organizer for activism, loonies of the left, here’s the big story of the day: Physicists are trying to create the perfect snowflake.
We don’t have enough?
At the deep, spiritual level, I thought it clear to students of zennly-news that like-attracts-like has been demonstrated this week in the Northeast: So many perfect snowflakes and so much perfect snow. (Auummm…)
Sorry if I’m drifting. Let’s plow forward. Chill.
We Are Not Alone!
And with the coldest cold EVER being reported, where are the global warming pimps when we need ’em?
Seems to me, a little hot air would be welcome about now.
Climate change? No. IQ drops? Hell yeah. Look up the word average.