Moves to Make as the Media Focuses on Crypto and Powell
During the last crypto crash in May — when Technoking Elon Musk disavowed his predilection for Bitcoin due to its carbon footprint — we wrote that Bitcoin’s “long-term positive trend won’t officially end until prices get down to about $30,000.”
Well, the Cardinal Cryptocurrency dipped down below that bellwether balance point in this morning’s trading… And bounced right off it.
Source: Bloomberg
Don’t look now, but that’s looking less like a bearish formation and more like a bullish double bottom.
I’m not gonna lie… I’m inclined to speculate a little here.
While Federal Reserve Chair Jay Powell’s testimony this afternoon has tentatively put markets at ease — especially regarding inflation — I’m not so sure that’s the correct take.
After all, ol’ J-POW can talk about lumber’s correction as a “transitory” example all he wants… It’s still up about 80% versus last November, when it was also up nearly 100% over April’s COVID-19 lows.
Source: Bloomberg
And that’s even before we look at the rest of the commodity space.
Sure, we’ve seen a pullback in copper (the dip for which we bought last Thursday), corn, soybeans and a handful of other commodities.
But oil, gasoline and steel are all marching on, up 98%, 115% and 137%, respectively, since November.
Source: Bloomberg
That’s not all, either. Corn and soybeans are consolidating, and iron ore is back near all-time highs, up 80% over the past eight months alone.
So commodity inflation hasn’t slowed… In fact, these high prices are sticking.
And with bitcoin — again, we treat all cryptocurrencies as commodities — sitting firmly in correction territory…
I think we should buy the dip.
You don’t have to go out and get a crypto wallet if you don’t want to, though. There are a couple of ETF-type products leveraged to the cryptocurrency space.
The Reddit crowd likes Michael Saylor’s MicroStrategy Inc. (Nasdaq: MSTR), but I don’t like the recent disconnect from bitcoin pricing.
Source: Bloomberg
Instead, I prefer the Grayscale Bitcoin Trust (OTC: GBTC), which has a much closer price correlation.
Source: Bloomberg
Just going for an eighth tranche here, as Bitcoin still has immediate-term downside to $29,000 (roughly equal to $25 per share of GBTC), and I would want to pick up the other eighth tranche at that level.
YOLO!
Sell the Rips: Additional Portfolio Maintenance for Tomorrow’s Open
Last Thursday, we put out a whopping eight dips to buy during the latest round of Wall Street Hedge Fund Laxbro performance problems.
Of those eight dips we bought, seven ripped up to new highs Tuesday (not too shabby if I do say so myself) and we want to book some of those profits.
Boyd Gaming Corp. (NYSE: BYD) and Caleres Inc. (NYSE: CAL) are stocks I like over the long term. We have them at what I think is a good price, so we’re holding those.
We’re also holding gold and silver (UGL and AGQ) for now. The U.S. dollar pulled back as I expected the last couple days, but neither precious metal moved much despite a heavily negative recent correlation. As such, I need some more time to evaluate it.
But the 1/8th tranches we bought Thursday in Freeport McMoRan Inc. (NYSE: FCX), Ivanhoe Mines (OTC: IVPAF) and the United States Copper Fund (NYSEArca: CPER) are up 6.9%, 4.9% and 1.4%, respectively.
Just sell the rips there, and take the wins… We’ll jump back in on the next correction.
Similarly, we put another quarter tranche into Designer Brands Inc. (NYSE: DBI) on Thursday, which is up a little under 6% since. That more than effectively offsets my early re-entry back at the $18 mark, so we can just sell that quarter tranche back into the market at the open and move back to our core position.
Whew! That’s a lot of activity for a free newsletter in just five days… hope you have all been able to profit a little from it.
Now, I’m not exactly sure why we were gifted all these opportunities last week, and I’m not inclined to think about it too much.
As I said last week, “I don’t analyze the gifts we get… I just take them.”
But there’s an underlying reason the media is focused on all of these same BS headlines — J-POW, crypto, inflation, short squeezes, commodities, et cetera. It’s that they have no idea what to talk about…
…because the economy isn’t really quite doing as well as we might think.
I don’t know if the transition from BOOMING recovery to SLOWING growth will take place over the next four weeks or the next four months… I just know it’s going to happen sometime.
Holding gold and silver is the first step of many to prepare.
Stay tuned for the rest, folks… I have a hunch things are going to get really interesting.
All the best,
Matt Warder
