Per SG: “The difference between the right tool and the wrong one is: time, money, and safety.” Watching people wrestle with their phones, tablets, laptops, desktops, and car screens is frustratingly sad. People are most likely being taught to use the wrong tool on the wrong job. My rule is simple: If/when I get frustrated with technology, there’s probably a better tool for me to use. It’s most likely worth my time to: ask, discover, and learn – because (in tech) investigating once will allow you to benefit for years.
We are about to embark on a journey into the next generation of investing. DeFi (decentralized finance) will change the boundaries of finance – because the speed of technological change is a magnitude higher than consumer behavior. You will begin to see changes in: content creation, strategy, and product innovation within a year.
The entrepreneur’s job is to build enough assets that each transaction gets easier and more profitable. The freelancer’s job begins by being clear about ownership, what they’re good at, and what they really like to do.
The Market:
The market is worried about COVID – again. Lockdown measures in parts of Europe and the rise of a new COVID variant are definitely impacting money flows - again. You need look no further than the price action in the past couple of weeks – as anything related to “reopening” and “getting back to normal” has been under heavy pressure. Even the small-cap ETF (IWM) has been showing weakness, and had a failed breakout from the 230-232 area.
For a more in-depth discussion see the: Next Week section.
InfoBits:
- Netflix will acquire Scanline VFX… that was responsible for special effects in: ‘Stranger Things,’ ‘Game of Thrones,’ and ‘Justice League.’
- Ericsson just closed on its largest deal ever… as it will buy the cloud-based communications provider Vonage for $6.2B.
- Authentic Brands (Brooks Brothers, Eddie Bauer, and Sports Illustrated) … will delay its IPO after closing a $2.7B investment deal.
- Tile, known for its Bluetooth-based tracking accessories… is being acquired by location tracking service Life360
- Samsung will build a $17B chip-making factory in Texas… as the Biden administration pushes for more US-made chips to ease shortages.
- GM bought a 25% stake in electric-boat company Pure Watercraft… as part of its effort to expand its EV business beyond cars.
- Apple is suing the NSO Group… over using their Pegasus spyware to attack Apple devices. Hopefully this helps curb surveillance against smartphone users.
- Reddit is introducing new video creation tools… for its own TikTok-like video feed developed by Dubsmash.
- ARK’s Cathie Wood said that she’s exploring a short portfolio. “The benchmark indices are where the big risks are. They are filling up with value traps – those companies that are going to be disintermediated and disrupted by the massive amount of innovation that’s taking place.”
Crypto-Bytes:
- In the last 12 weeks, startups have raised… more cash than startups did during the entire 1999-2000 dotcom cycle.
- The world's wealthiest dog… just listed his Miami mansion (once owned by Madonna) for nearly $32M.
- Domestic leisure travel may surpass pre-pandemic levels in 2022… but business and international travel (which make up the bulk of airline and hotel sales) isn’t expected to fully recover until at least 2024.
- NYC will be the 2nd city after Miami to get its own crypto - NYCCoin: Gotham will keep 30% of each NYCCoin that’s mined to support city initiatives.
- Cryptocurrency lender Celcius… has invested another $300m into N.A. bitcoin mining – bringing its total annual investment to $500m.
- The Central Bank of Brazil (BCB)… plans to start a pilot program for a digital currency next year,
- B of A’s published paper on stablecoins… should be a sense of urgency for regulators – given stablecoin’s potential to become a viable payment option.
- 45% of crypto holders… donated $1,000 or more to charities in 2020 versus 33% of all investors.
- Coinbase has acquired the crypto wallet startup BRD.
- Mt. Gox’s proposed rehabilitation plan to repay creditors is almost final. Creditors will receive ~140,000 BTC == $7B.
- The blockchain gaming space has exploded on the back of Sandbox’s (SAND) tie-up with Adidas. There is set to be an Adidas original space – within Sandbox’s virtual reality world.
- Matt Damon is the new face of Crypto.com… starring in its $100m ad campaign. FYI: CRO has already recouped their investment in Matt.
- El Salvador’s ambassador to the U.S… made bold claims about his nation’s embrace of bitcoin. They are not only betting on a weakening U.S. dollar, but also proclaimed: “The U.S. is afraid because a lot of countries are looking at us, and will follow our leadership.”
Last Week:
Monday: After a couple weeks of the DOW falling off, I thought they might come in and give it a boost – but Europeans are getting worried about a new wave of COVID. It was just announced that Biden will nominate J. Powell to a 2nd term as FED Chair and Brainard as FED Vice-Chair. So, what’s not to love: he prints money and keeps rates at zero. One thing that looks interesting is CAT. Its 200-day crossed over the 50-day, but it bounced off that 50-day, and very well could be ready to move higher. Let's see if it follows through tomorrow.
Tuesday: Biden announces a 50m barrel release from our Strategic Petroleum Reserve (SPR). Hey Mr. Pres., you could just reopen the pipelines that you closed, bring the U.S. back to energy independence, and then navigate the road to green energy logically. Just sayin’. So today we’re finally rolling over. We all know the market is overblown, and really can’t go up forever. Dips are normal, and a 4% dip is meaningful. I did go ahead and take some BTU @ $11.06. BHP has climbed over its 50-day, and over $55.40 it looks okay to try. We are facing a ‘dark winter’ and energy has no choice but to go higher.
Wednesday: It's like a stealth bear market out there. Consider the following that are all down: CHGG -80%, PTON -75%, CLOV -75%, SPCE -70%, FSLY -70%, TDOC -70%, ZM -60%, BABA -60%, PINS -60%, ROKU -60%, HOOD -60%, and BYND -60%. So, while the indexes have moved higher – it hasn't been without casualties. That's why I scream ‘Caution’ – because there’s a lot going on below the surface.
Friday: A new COVID variant was found in South Africa. Moderna immediately came out and reported that it’s testing three Covid-19 boosters against the new Omicron variant. The market is dipping due to the COVID variant, and I’m not sure our FED is going to rescue it right now. Our FED-heads don't want to take the blame for cutting the market by 30%, so maybe this variant is the way to get that accomplished. Question: Given they found this variant 3 days ago: Why break the news on Thanksgiving night, when there's NO volume in the futures market, and when 90% of Wall Street is in the Hamptons?
For those of you not around for the 90’s bubble, when our market has enough people convinced that it only goes up – it lures people into doubling down, buying the dip, and then rolling over again and again. I've seen this behavior twice in my life, and we could be looking at a third time. Again, be cautious. While they might run in Monday and gap us up a ton – be careful because this one smells like 3-day old fish.
TW3 (That Was - The Week - That Was):
Oil prices, stocks, and bond yields all stumbled this week on the news of a new COVID variant. The World Health Organization called a meeting to study the variant known as Omicron (B.1.1.529). Pasi Panttinen of Europe shared: “It looks like this particular variant has a very concerning sets of mutations especially in the spike protein. So, based on the genetic information we are receiving – we are quite concerned.” Countries such as France, Italy, Japan, and Singapore have already instituted travel restrictions to South Africa. The U.S. went a step further and restricted travel from 8 African countries. All of the major indexes closed down more than 2%. The Russell (small caps) had their worst day since February, losing 3.7% of their value. Every sector got slammed, and energy (in particular) fell over 4%. Financials (XLF) flopped 3.3% and consumer discretionary (XLY) declined 2.7%. Pfizer shares popped over 6% to all-time highs, and Moderna marched higher by almost 22%. Bitcoin broke down 8% to $54,300 while Ethereum dropped over 9%. U.S. oil tanked 12.6% to below $70 / barrel – its worst session of the year.
Next Week: New Crash or Temporary Market Insanity?
Traders Rush for the Exits:
- Last week, the new COVID variant (Omicron) was used as a catalyst for sell-side activity. The selling is less about COVID and potential lockdowns – than about a marketplace that was overbought and in desperate need of a correction. The S&Ps traded monumental volume on a shortened 3.5-hour trading session. The most important thing was NOT the damage that was done, but rather what the market place is seeing for the coming weeks and months.
- The move in oil, was a crash and liquidation type of event. An entire asset class doesn’t move 13% lower in a ½ day – without the entire marketplace wanting it to be lower. There were already elements in place (tapping the SPR) that were trying to reduce the price of oil. This simply brought that to a head. My concern for oil is that any continued sell-side activity will start to proliferate into the energy sector – and then potentially into the financials and the rest of the market.
- Capital rushed to Bonds in an almost ‘duck and cover’ fashion. Due to the amount of new capital in Bonds, we may not have seen the last of the damage to the S&Ps. The move in Bonds will inject a bit of ‘fear’ into next week’s trading – and could prove to be a catalyst for more of a substantial market move.
- Crypto was also crushed, but why was it moving with other risk assets? This is the first time (in a long time) that crypto moved WITH the equity markets.
- I was surprised that the Dollar was down and gold was flat. That means that Bonds were the only ‘flight to quality’ trade.
Volatility Update:
- The VIX ($28.62) had one of its highest closes for the year.
- The VVIX exploded into the 150 level. That tells me professional traders are out there buying risk mitigation products. FYI: there were 7 TIMES as many VIX calls traded on Friday, as in the last 5 trading sessions.
Early Next Week:
- Monday will be scary. It doesn’t matter if you’re bullish or bearish – next week will show us ‘the fear’ in most trader’s eyes.
- The Nasdaq is intimidating because it faired a little better than most other indices. If NVDA and TSLA continue underperforming, the week will be interesting with the expected moves exploding higher and rates tanking.
SPX Expected Move (EM):
- Last Week’s EM was $54.75 (EM) … and we moved over $100.
- Next Week’s Expected Move = $154.25 == so put on your ‘big boy pants’.
- As a trader, you should: (a) make sure you’re comfortable with your risk, and (b) not think for a moment that Monday’s initial move is indicative of where this week will end. Forget seasonality as there is no Santa Claus rally coming to a theatre near you. We’ve sparked volatility, and it won’t be going away any time soon.
Tips:
HODL’s: (Hold On for Dear Life)
- AMC – Holding
- **Algorand (ALGO = $1.75 / in at $1.54)
- *BitFarms (BITF = $7.14 / in at $5.12)
o Sold Nov, Dec, Feb, May, Dec ‘22: $7.50 & $10 Calls for income,
- **Bitcoin (BTC = $55,000 / in at $4,310)
- **Curve (CRV = $5.02 / in at $4.87)
- Energy Fuels (UUUU = $8.84 / in at $11.29),
o Sold Dec $11, and Jan $11 Calls for income,
- Englobal (ENG = $1.98)
o Sold Dec. $2.50 Calls for income,
- **Ethereum (ETH = $4,150 / in at $310)
- GME – Holding
- **Grayscale Ethereum (ETHE = $40.38 / in @ $13.44)
- **Grayscale Bitcoin Trust (GBTC = $44.33 / in @ $9.41)
- Hyliion (HYLN = $6.69 / in @ $0.32)
o Sold Jan. $9 CCs for income,
- **IoTeX (IOTC = $0.21 / in at $0.22)
- **Livepeer (LPT = $64.34 / in at $62.21)
- **Loopring (LRC = $3.05 / in at $2.27)
- **Solana (SOL = $199 / in @ $141)
- Uranium Royalty (UROY = $4.58 / in at $4.41)
o Sold Jan $5 Calls for income,
** Denotes a cryptocurrency
Thoughts: In crypto: Per MCC: “People are not going to see the supply crunch coming in BTC and ETH. Get out of every depreciating asset you own – and that especially includes the U.S. dollar.”
Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
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