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Weekly rollup | Jan 16-22 2023

Stocks Mentioned: Bitcoin (BTC), Volta (VLTA), SVB Financial Group (SIVB)

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January 16 2023

Buy Bitcoin at $21,100.

We're now past the previous band squeeze breakout point after reaching a lower low.

Sentiment on Twitter is as negative as I've ever seen it. Yes, this is a short covering rally. But that does not mean it cannot morph into something else. Emotionally, it's hard to buy something that's making new lows, and equally as hard to buy short squeezes. Knowing there's a chance of making a loss really quickly given the high volatility.

That's one reason everyone is bearish and waiting it out. However, if price action is your guide, then seeing bitcoin breakout from one level to the next and keep going is an entry signal. Not the perfect entry point, sure. But beats not taking the trade just because you let emotions and fear of loss get in the way.

Buy Bitcoin at $21,100. I'm on vacation so will update on stop loss in a few days. $17.6k is a good interim stop loss.

Counterparty risk is real. If you have access to a crypto exchange and self-storage, it pays to just hold crypto in your own wallet than to use futures, at least during times like this when fear is high.

January 18 2023

When I recommended these 3 EV stocks, I didn't buy Volta (VLTA) because it was too speculative. Shell is acquiring the company in an all-cash deal for 86 cents. This is bullish for the 3 EV plays we currently own so even though I missed Volta, this is still great news.

From Reuters:

Russia's current account surplus hit a record high in 2022, the central bank said on Tuesday, as a fall in imports and robust oil and gas exports kept foreign money flowing in despite Western efforts to isolate the Russian economy.

Russia's current account - a measure of the difference between all money coming into a country through trade, investment and transfers, and what flows back out - came in at $227.4 billion, up 86% from 2021.

Update bitcoin stop to $17.9k. That's 15% risk from my entry, and 13% from current price of ~$20,500.

My read is that this sell-off is just that - a sell-off in an uptrend. One to be taken advantage of. I averaged up on my GBTC position.

January 19 2023

“It is very important to watch the position of the different groups of stocks. To be a success you must keep up with the times and follow the leaders. The way to do this is to keep up a monthly high and low chart on several stocks of each different group; also keep a yearly chart of the different stocks. The further back you have records the better you will be able to judge the position of a group.

Many years ago, Traction and Railroad stocks were the leaders. Then followed the Copper boom. After that the Motors, Rubbers and Oil stocks. Of course, every few years some kind of a boom develops in different mining stocks, but they are a class of stocks which you have to be very careful of, as they are probably the most uncertain of all.

During the past few years the man who stuck to Rails has made very little money because the opportunities have not been there. The Motors, Rubbers and Oils have been the stocks which have made wide fluctuations and offered unusual opportunities for trading. The day of Railroads is passing and the big fortunes will not be made in them in future. Competition is getting keener every day in the Motor industry and it will eventually narrow down to a good return on invested money, but will not produce enormous profits. For this reason you must be wide awake and in future look to the new things which will offer unusual opportunities and attract speculators, causing wide fluctuations.

In future you must watch for the new industries that develop and get into their stocks, just the same as the people who let Rails alone and got into motors and made a fortune. Those who sold out Coppers in 1916 and played the Oils in 1918 and 1919 made fortunes. In my judgment, the Aeroplane and Radio stocks will be the ones in the next few years that will make fortunes as great as any that have been made in Oils or Motors. The Chemical stocks also offer great opportunities in future, as this country has made great progress along chemical lines since the war and the business is growing on an enormous scale.

A wide range is what the trader requires in order to make big profits. As long as stocks move between 20 to 100 points each year, you certainly will be able to make some money on the long or short side, probably both. But when they narrow down to 5 and 10 points in a year, your chances are very much against big profits.

In 1916 Copper stocks reached the highest level that they had made for many years. But in 1919 when Oils and Industrial stocks reached the highest level in their history, Coppers only had a moderate rally. After that they worked lower each year until 1920 and 1921. By keeping a chart of this group and some of the leading issues, you would be able to see that in 1919 the Copper stocks had been heavily distributed because they failed to rally to the 1916 level. Therefore, they were good short sales for a long decline.”

From the e-book The Truth of the Stock Tape by William D. Gann, written in 1923.

Sector rotation was important a 100 years ago, when the new technology changing the landscape was the motor vehicle ("the horseless carriage"). It's even more important today when we not just have many more sectors, but many more countries with their own dynamics.

January 20 2023

Buy SVB Financial Group (SIVB)

SIVB is a Silicon Valley bank, providing traditional banking services to tech companies in the Valley as well as providing VC investment services. Think of it as a proxy for investing in the growth of the early stage tech industry.

Note the clean gap higher above the 100 day MA. Stop loss at $237 for a risk of ~16%.

"U.S. crude oil stockpiles last week posted a large build that took analysts by surprise, as inventories in the Cushing, Oklahoma, storage hub gained while the market continued to recover from a winter storm last month, data from the Energy Information Administration showed on Thursday.

Crude inventories rose by 8.4 million in the week to Jan. 13 to about 448 million, their highest since June 2021, EIA data showed. Analysts in a Reuters poll had expected a 593,000-barrel drop.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 3.6 million barrels to 31.4 million, the highest since January 2022, the data showed".

Rising inventories vs China re-opening. Fundamentals are unclear, but I'd simply avoid crude oil exposure while the commodity is being buffeted by so many forces.

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