NASDAQ Drops Becoming Serious; Bitcoin Exploding Higher

On February 12, the NASDAQ closed at an all-time high of 14,095.47. Since then, there's been no lack of pain for holders of tech equities, even as the economy is set to stage a recovery from the coronavirus crisis that has endured for over a year.

Monday, the NAZ rocketed nearly 400 points higher, closing at 13,588.83, in what now, in retrospect, can only be seen as a knee-jerk reaction to severe declines over the prior two weeks. Tuesday's affirmation via a 230-point loss served notice that stocks may have jumped the shark, so to speak, discounting the end of the pandemic by bidding up prices on the rumor.

And now, it's time to sell the news.

Nothing good can befall the overpriced NASDAQ at this juncture. If the effects of the pandemic wear off over the next few months, it will be assumed that buyers were premature in taking the NAZ to all-time highs. On Tuesday, Texas governor, Greg Abbott, announced an end to many of the restrictive executive actions that has kept the Lone Star State locked down and under a state-wide mask mandate for far too long.

His latest order will rescind prior orders and allow all Texas businesses to open at 100% capacity as of Wednesday, March 10. The order also ends the months-long mask mandate.

So, for tech investors, if the Texas gambit proves successful, the rally should stall out because it had already priced in the end of the pandemic. Should Abbott's executive order cause the virus to re-emerge, that would be bad for business all around and likely bad for tech stocks as well, making the current status of the NASDAQ - already down 5.2 percent - tenuous. For the year, the NASDAQ is up just three percent, making the next two to three weeks make it or break it time for the index and possibly the rest of the market.

While tech investors will likely continue to plow money into equities, the fate of bitcoin took a positive turn over the past few days. After dropping to a double bottom at $43,170 (prior low, $44,222, Feb. 10) on Sunday afternoon, the world's leading cryptocurrency has blown higher. Hodlers are waking up to find Bitcoin at $51,800 and higher, with a market cap once again approaching $1 trillion.

Bitcoin's previous high of $58,367 was achieved on February 21st. There's every indication that Bitcoin will exceed even some of the rosiest predictions for the year 2021 at its current trajectory, which includes bouts of 20% gains or declines over excruciatingly short periods of time. The normal pattern for bitcoin is to make 10-20% moves in hours or days, but, despite the apparent volatility, its movement is actually quite orderly. In other words, it's going to the moon and nothing can stop it.

Only brief periods of FUD or "whales" selling into the strength keeps it reasonably well-priced. Once it exceeds $50,000 and stays above that level, the pattern may become extended, but it will pull back, consolidate, and move forward.

With the all-time high again coming into view, the next likely stopping point is $70,000, roughy 20% beyond the current ATH. How soon it will get to that level is a matter of some conjecture, but if prior indications are correct, it can easily do it this month and continue to add value as the year progresses, even with a slowing trajectory.

Considering that in a recent three-month window - mid-November to mid-February - the price tripled from $16,000 to $48,000, it would not be outside the realm of possibility for another tripling in price over the following six months, putting it close to $150,000 before September. A mere doubling over the proceeding four months would have Bitcoin around $300,000 at the end of 2021.

While these predictions may alarm some (central bankers, mostly), there is little doubt over the value proposition Bitcoin presents in a world replete with failing fiat currencies. While probably a majority of investors and speculators will be put off by a price over $50,000 or $60,000, the consideration of a six-fold increase in 10 months certainly will be appealing to many, likely enough to move it considerably higher.

In the world of speculative investments and stores of value, Bitcoin has no constraints, as do gold and silver, the usually-reliable wealth-preservation vehicles. While precious metals will remain viable alternatives, they are unlikely to achieve the returns from Bitcoin, which legendary investor, Paul Tudor Jones" has called "the fastest horse in the race."

Taking the horse racing analogy a step further: While a very solid steed, few thought Citation could win 16 straight races, but that he did, between 1948 and 1950. Nearly 50 years later, along came Cigar, a turf campaigner switched to dirt in 1995, on which he matched Citation's feat of 16 consecutive victories against the best stallions in the world. The streak ended at the Pacific Classic at Del Mar, when he ran second to Dare and Go. Analysts and racing pundits contend that jockey Jerry Bailey committed a tactical error in the race, engaging in a speed duel with two other horses, Cigar the widest of the trio, causing all to tire in the stretch and be beaten by a closing Dare and Go.

The point is that rather than Cigar having an off day or some other mishap, it was likely that human error caused his defeat, the same as might be said of investors who haven't done their due diligence on Bitcoin and thus may miss out on one of the greatest investment opportunities of this generation.

Human error is the proximate cause of much pain and suffering. It doesn't have to be that way.

At the Close, Tuesday, March 2, 2021:
Dow: 31,391.52, -143.99, (-0.46%)
NASDAQ: 13,358.79, -230.04 (-2.69%)
S&P 500: 3,870.29, -31.53 (-0.81%)
NYSE: 15,277.02, -50.75 (-0.33%)

Stocks Bounce Higher On Positive Earnings by Berkshire-Hathaway, Target, and COVID Relief Bill

Apparently, some big money didn't exactly appreciate Friday's flush on the Dow nor the two straight weeks of declines on the NAZ and S&P, so money came pouring into stocks as bonds settled down (for now), with the 10-year note stabilizing at a yield just under 1.45%.

Market participants had any number of good reasons for confidence in buying stocks. Over the weekend, the US House of Representatives passed their version of "Money Drop 2021" in a supposed COVID-19 relief bill and sent it over to the Senate for approval. Berkshire-Hathaway reported huge numbers for their fourth quarter and full year, blowing away analyst estimates on Saturday, and, not to forget, the NASDAQ was down nearly 1000 points from its recent high (2/16).

Monday's rally turned out to be the best since June, 2020, but the jury's still out on whether it's indicative of a move to higher ground in the near term or just excessive dip-buying by perma-bulls, which is just about everybody these days.

Bulls got more good news prior to the open on Tuesday, as Target (TGT) - one of the few national retailers to thrive during the pandemic lockdowns of 2020 - blew out fourth quarter analyst expectations of $1.60 per share, posting an EPS of $2.79. This was Target's second straight blowout quarter. Third quarter EPS was $3.38, more than doubling the $3.62 estimate. The operator of roughly 1,900 stores and a huge online presence went four-for-four in 2020, beating estimates in each quarter.

Kohl's (KSS), operator of 1,159 stores nationally, also beat expectations Tuesday morning, posting an EPS of $0.42 when it was expected to lost $0.01 per share. The company also provided positive guidance for the remainder of 2021, citing the dwindling numbers of COVID-19 infections and deaths as a rationale for sales growth. Both Kohl's and Target were up modestly in pre-market trading.

Teleconferencing company, ZOOM (ZM), also reported before Tuesday's open, posting a big beat for the fourth quarter. Revenue came in at $882.5 million vs. $811.04 million expected and adjusted earnings per share of $1.22 vs. 79 cents expected. Year-over-year comparisons were out of the park. In 2020's fourth quarter, the company posted revenue of $188.25 and EPS of 15 cents.

Stocks were not alone. Bitcoin bounced off a weekend low just above $43,000, briefly trading over $50,000 early Tuesday morning. Other cryptos, including Etherium, were also sporting early gains.

Commodities took the brunt of the selling, especially oil, where WTI crude fell from above $63/barrel to below $60, finally ending Monday's session at $60.64. As usual, gold and silver were down and flat, respectively, but recovering in early trading.

With less than an hour to the opening bell, index futures are down slightly. Nordstrom (JWN) reports after the close. Wendy's (WEN) and Dollar Tree (DLTR) report Wednesday morning.

In yet another sign that COVID craziness may be on the way out, Major League Baseball began live Spring Training games with fans in the stands on Sunday and again on Monday with no cancellations. Teams are playing in Florida (Grapefruit League) and Arizona (Cactus League). The regular season is set to open on time, Tuesday, April 1. The player's association approved a full, 162-game schedule for 2021.

At the Close, Monday, March 1, 2021:
Dow: 31,535.51, +603.14 (+1.95%)
NASDAQ: 13,588.83, +396.48 (+3.01%)
S&P 500: 3,901.82, +90.67 (+2.38%)
NYSE: 15,327.77, +317.31 (+2.11%)

WEEKEND WRAP: Rough Week All Around; Stocks, Bonds, Bitcoin, Gold, Silver All Lower

It was another tough week for equities. The NASDAQ and S&P suffered through a second straight week of losses, while the Dow had held up well until Friday's 469-point washout.

As counties and states come out of pandemic-inspired economic restrictions and other madness and the general economy begins to mend, stocks may be involved in a little buy the rumor, sell the news kind of action. Wall Street made hay throughout the COVID crisis, and now the sharpies may be taking profits before what promises to be an uneven recovery period.

Two months into 2021, the major indices have come off their recent highs and are close to flat for the year. The Dow is up just one percent, the NASDAQ has put on a gain of just over two percent, while the S&P is in between those two. The big winner is the NYSE Composite, comprised, in the main, of small caps, up 3.34% on the year.

For investors with short attention spans or investment horizons, the period between February and May could prove to be unsettling. March and April are often months in which rallies die or bull markets turn to bears. There's not a lot of reason for concern presently, though the $1.9 trillion stimulus bill passed by the House on Friday is likely to undergo some revisions in the Senate and passage is not, at this time, guaranteed. The pols have set a deadline for mid-March, when extended unemployment benefits run out. Getting the bill to Biden's desk - where he is sure to sign it - is the top priority for the Democrats and Republicans in the Senate may want to inflict some political pain after the second failed impeachment of Donald J. Trump. A staged floor fight may be on the agenda as the Republicans want to look like they're fiscally responsible participants and they'll be joined by a few Democrats in making some changes to the legislation.

In the end, the bill will pass through with the payments of $1400 to individuals mostly intact, but some other non-COVID-related items stripped out. It will be another huge waste of time and taxpayer money, but in the end most of it will be borrowed, boosting the federal budget deficit well past the $2 trillion mark. Already, the cumulative FY21 deficit through January 2021 (four months) is $736 billion, putting the current spendthrifts in Washington, DC are on pace to shatter last year's $3.13 trillion deficit.

By the time congress passes the current handout proposal before them, the federal debt will have surpassed the $28 trillion mark which is currently just $36 billion short of that number. With a run rate of about $3.67 billion per day, the national debt should be pretty close, if not beyond $28 trillion, by this time next week.

The latter part of the week saw round two of the attempted short squeeze by the group known as WallStreetBets over at reddit.com, as some unwary hedge funds layered back into short positions and put options against GameStop (GME) while the redditers waited for the ambush.

While this second go wasn't nearly as successful as the first round in late January, GameStop stock did see its share of wild-riding activity. On Wednesday, when the assault began, the price rose from the low to mid-40s earlier to nearly 100 by the close of trading. On Thursday, the shorts were sweating, as the stock opened at 150 per share and rose as high as 177, before coming in somewhat to 109. Friday, which was also options expiration day, the price went as high as 143 and as low as 87 and change, finally ending the week at 101.74.

Individual results surely vary, but it's a safe bet to say some shorts got smoked and some "amateur" traders from the reddit crowd gained a few shekels in the process. The organized efforts have now gone mainstream and are probably going to remain a feature of Us markets for the foreseeable future. Hedge fund managers beware: the proletariat are on the march for your money.

Equity investors were hardly alone in their sorrow. They were joined by all manner of plungers including those in Bitcoin and other cryptocurrencies and especially in precious metals, as gold and silver were hammered lower on the criminal COMEX.

Bitcoin suffered some serious losses after hitting an all-time high of $58,367 last Sunday morning (Feb. 27). It dropped as low as $43,365 just minutes prior to this posting. The world's leading crypto was down 24% on the week, presenting a buying opportunity for those intrepid enough to believe in a future devoid of central banks.

Etherium also took some blows by sellers. It reached an all-time apex on February at $2041 and currently is holding ground around the $1320 to $1375 level.

Yields on treasuries threatened to run off the page, with the 10-year note hitting 1.54% on Thursday before settling out at 1.44% Friday, sitll a full 10 basis points above the previous week's close. The 30-year was under stress as well with the yield topping out at 2.33% on Thursday. Friday's miracle bond rally send the yield back down to 2.17, which was still three basis points better than the prior week's close.

This is a very jittery market in fixed income and those with money on the line are extremely risk averse, so more volatility should scare yields higher and prices lower unless the Fed and the federal government can convince the world that price inflation is not an issue. Good luck with that, Jerome and Janet.

Crude oil (and other commodities) seemed to be the only place to hide, though it wasn't pretty. WTI crude opened the week at $61.67 per barrel and closed out on Friday at $61.66, but not before reaching a 52-week high of $63.53 on the 25th.

Precious metals were summarily dismissed on the COMEX and by the LBMA price fix in London. Goldbugs received no mercy at the hands of the control freak bullion banks. Gold was as high as $1809.95 on Monday, but spent the remainder of the week dropping off the charts, finally diving to $1734.40, its lowest level since last June.

In the face of a reddit.com-inspired raid on short sellers, silver was similarly battered, topping out around $28.15 on Monday, only to slide down to $26.68 the troy ounce at the New York close on Friday. The constant badgering and rampant mauling of gold and silver prices by the four large bullion banks has become a bone of contention for many in the precious metals space, but more optimistic souls continue to buy the dips and hope for a better future.

While the effect on the gold price at retail was obvious, with premiums still significant but prices lower all around, smaller silver retail buyers were still hungry for metal, which has been in short supply recently, though the shortages seem to be abating with the silver short raid a few weeks in the rear view. Nonetheless, one ounce prices for immediate delivery on eBay and elsewhere continue to ratchet higher. Silver seems to have separated the price of 1000-ounce bars, the province of COMEX and the LBMA, from single ounces and bars and coins up to 10 troy ounces. There appears to be a quite healthy appetite for the money of gentlemen.

Here are the most recent sales on eBay of common gold and silver one ounce items (numismatics excluded, shipping, often free, included):

Item: Low / High / Average / Median
1 oz silver coin: 38.00 / 68.95 / 47.88 / 43.79
1 oz silver bar: 39.00 / 64.90 / 44.95 / 40.75
1 oz gold coin: 1,849.00 / 1,995.22 / 1,909.88 / 1,886.01
1 oz gold bar: 1,846.45 / 1,873.83 / 1,859.07 / 1,856.91

Results of this week's survey puts the Single Ounce Silver Market Price Benchmark (SOSMPB) at $44.34, 40 cents higher than last week's price ($43.94) and the fourth consecutive weekly gain for Money Daily's proprietary silver gauge.

Upcoming this week are some interesting names reporting fourth quarter 2020 and full year results, leading off with Warren Buffett's Berkshire Hathaway (BRK.A), which actually reported on Saturday (Feb. 27). The results are likely to give the indices a boost come Monday, as the holding company delivered outstanding numbers.

Earnings per share (EPS) were $23,015, up 28.5% year-over-year (YOY). EPS beat the consensus estimate of $16,177.03 by 42.3%. Net investment gains were $30.8 billion, up by 24.6% YOY. Buffett also released his annual letter to shareholders [PDF].

After the close on Monday, high-flying Zoom Video Communications (ZM) reports what figure to be exceptional numbers. The mood may not be as bright on Tuesday when retailers Nordstrom (JWN), Target (TGT), Abercrombie & Fitch (ANF), and Kohl's (KSS) release. Keep an eye out after the bell for emerging discount grocer, Grocery Outlet (GO), which has beaten EPS estimates handily in each of the past four quarters.

Wednesday gives us Dollar Tree (DLTR) before the open and American Eagle Outfitters (AEO) after the close. Thursday's releases include grocery chain Kroger's (KR), BJ's Wholesale (BJ), and Costco (COST). Big Lots (BIG) and Ruth's Hospitality (RUTH), operator's of the famous Ruth's Chris Steak Houses close out the releases Friday, prior to the opening bell.

Also, of great interest at the end of the coming week is the Labor Department's release of February Non-farm Payroll. The current estimate is for 110,000 new jobs created during the month, following some months of disappointment. January saw a mere 49,000 jobs created nationwide, taking some shine off the recovery bloom.

That's a wrap.

At the Close, Friday, February 26, 2021:
Dow: 30,932.37, -469.64 (-1.50%)
NASDAQ: 13,192.35, +72.92 (+0.56%)
S&P 500: 3,811.15, -18.19 (-0.48%)
NYSE: 15,010.47, -196.20 (-1.29%)

For the Week:
Dow: -561.95 (-1.78%)
NASDAQ: -682.12 (-4.92%)
S&P 500: -95.56 (-2.45%)
NYSE: -352.23 (-2.29%)

Sorry, Internet Outage Kept Us Offline Thursday, Feb. 25

Another day, another internet outage.

While running the underground fiber (100+ MBS), the ditch witch ripped up our old AT&T cable and poof! No internet.

The good news is that Moeny Daily is now running at super fast speed.

Will this enhance our writing? Probably not, but one never knows.

The NASDAQ suffered a serious blow on Thrusday. Will be looking into it.

See you Sunday for the WEEKEND WRAP.

They're Ba--aack! WallStreetBets Crew Sends GameStop Stock Soaring, Shorts Running for Cover

Wednesday turned out to be quite the fascinating day from a stock market and global finance perspective. While Fed chairman, Jerome Powell, was wrapping up his testimony to congress, promising more stimulative measures if needed to revive the economy, the Federal Reserve Systems' global payment network was on the fritz, as the system that allows wire money transfers crashed with intermittent disruptions for two to three hours, according to various reports.

The outage to FedACH and FedWire impacted banks, brokers, and mortgage lenders' ability to transfer funds in large and small amounts and also individuals and small corporations which employ the service to move payroll, deposits, and other sensitive financing.

Service was restored mid-afternoon, Powell went back to wherever he goes after speaking publicly and stocks were up across all indices in the US. All seemed to be going smoothly until shares of GameStop (GSE) began stretching out gains made earlier in the day around 2:00 pm ET.

After closing 44.97 on Tuesday, GameStop was already sporting a three to four-point gain when it began picking up momentum. BY 3:00 pm, it was at 53, hitting 67 a half hour later. Volume was spiking as was trading on related options, especially those with a nearby strike date of Friday, February 26. Trading in GME was halted twice in the final hour of trading, but the price continued upwards into the close.

By the 4:00 pm final bell rang, GameStop was in reddit wonderland, sporting a 91.70 handle, even as reddit.com was coincidentally knocked briefly offline. After hours, GME was up as high as 200 per share, backing off to around 150 overnight and into the pre-market.

Here's a note, posted early Thursday morning on the r/wallstreetbets forum at reddit.com explaining the situation to the incels.

If GameStop hits 800 before 2/26 we will trigger the Mother of All Short Squeezes, read up. from r/wallstreetbets

What is amazing about this second attack against the short-sellers of GME is not that the redditers have re-assessed their position, but that shorts have piled back into GameStop with many betting that the stock would retreat further. Could these hedge fund types have been so short-sighted to not realize the reddit crowd would be watching and waiting, especially after how they were shafted in the first attack?

The answer is yes. While the identities of the shorts, call sellers, and put buyers are as yet unknown, the level of activity in GME call options was extreme over the past two weeks. Wallstreetbets minions were watching, and it appears they have the hedgies trapped into losing positions again.

If the redditers are successful, it will mark an important pivot point for markets globally, signaling that the ordinary controllers of stock, bond, options, and futures markets are in the throes of a violent economic uprising, spurred by inequality and fomented over social media.

As the silver market - another touchstone of r/wallstreetbets - continues to evidence stress and a severe supply shortage, the entire financial system could be on the brink of collapse, thanks largely to some creative organizing and strategizing by any number of smart disrupters on reddit and elsewhere.

While the focus of the financial news punditry will be on GameStop for much of the next two days, the treasury and bond markets are where the real action lays. On Wednesday, the 10-year note spiked again, shooting past a 1.40% yield and closing out at 1.389%. Yield on the 30-year bond closed up three basis points to 2.24%, the highest yield in more than a year.

Also higher is crude oil, with WTI pricing above $63 a barrel. While a good number of Keynesian-style economists view higher oil prices as a sign of recovery, they fail to realize that it translates directly into higher prices for automotive fuel, which acts as a tax on everybody, hitting those at the lower economic levels the hardest. Unless the price of crude is corralled soon, gas at $3 and $4 a gallon could be just over the horizon, a level that would put a serious damper on the general economy while adding to inflationary pressures, which themselves are already showing signs of bubbling over into hyperinflation.

The next few days will be exciting, challenging, potentially life-changing, but the next six months will tell the global fortune for years ahead.

At the Close, Wednesday, February 24, 2021:
Dow: 31,961.86, +424.51 (+1.35%)
NASDAQ: 13,597.97, +132.77 (+0.99%)
S&P 500: 3,925.43, +44.06 (+1.14%)
NYSE: 15,539.42, +180.28 (+1.17%)