Time to Start Paying Attention to Bitcoin again?

Bitcoin news has been quiet for a while, huh?

Now could be a time to start sneaking in (do it, NOT to make money, but to EDUCATE yourself).

Last year, May 5, 2017, I wrote this blog post. At that time, Bitcoin (BTC) was $1545 and Ethereum (ETH) was $95. Even after the insane run up and subsequent crash, today’s prices are BTC = ~$8100 and ETH = $466.

BTC has shown nice price support and has shot out of a Head-and-Shoulder chart pattern. H&S is a typical pattern found at major turning points (according to classical chartist, Peter Brandt).

ETH is forming an Ascending Triangle pattern. I love this pattern because it provides a nice risk-reward setup. Buy up to $480, sell if it drops below ~$450.

Look, I’ve written this from a trade/investment perspective, but going back to my article, “The best thing you can do is educate yourself”.  

Open a Coinbase acct, buy $10 worth, get your own wallet, and move the coins around.

See what it feels like to hold digital currency. It’s a little scary, if I’m honest, but I’ve learned a lot and it’s tempered my excitement about decentralized cryptos for the masses (at least for western civilization).

If you really want to roll the dice, look at 0x coin. 🙂

Is it Time to Pile into Gold Now?

There are a lot of very well-respected market participants out there that are starting to really toot the Gold horn at this time. I mean, there are always gold bugs out there who will say buy gold at any time because gold is real money.

But the last 6 years have not been too kind to gold investors, since topping out at just over $1900/oz back in mid-2011. In fact, the Fed has since cranked up the printing press into over drive several times since then and gold still found itself stuck in a bear market.

Most are talking about the technical break of a multi-year downtrending line as the set-up.

Martin Armstrong is noting that Gold is pressing higher. He’s not yet calling a technical breakout, but he’s noting significant support at current levels.

Greg Weldon has recommended getting in at these levels so much so that he’s actually recommending using leverage as well through UGL ETF, which is a 2x ETF.

Jesse Felder is starting to ask if the Gold Stars are Aligning.

There are several others as well that have come across my wire but I’m not going to list them all. It’s enough times that it’s very noticeable.

If this is the beginning of the run, there is time. The next big run will certainly take us to previous highs around $1900. And it’s not going to happen overnight.

If one is looking to diversify their portfolio a bit and add some gold, I can see now being a good time to start to average in. Averaging in is certainly how I will go about it. Designate an amount to allocate and split it up to average in over the next few months.

I’ve decided to go in with some leverage using UGL. I’m not in a hurry to get in and I’m going to do this over time. So my strategy is to actually sell a Naked Put on UGL and try to get in on a dip.

UGL closed today at $40.07. I’m going to sell the UGL 06/16/2017 40.00 Put contract for $0.50. That means $50 to me. If UGL closes below $40 next week, then I’ll be assigned 100 share at $40. But remember, I will have collected $50, so it’s as if I’m getting in at $39.5 per share.

I’ll be in the RED on this strategy whenever UGL is below $39.50, but again, the idea is to average in. So this is the first tranche of several…



Hold Hold Hold … It’s So Hard Not to Sell

BitCoin and Ethereum (as well as other cryptocurrencies) are on a parabolic trajectory. It’s so hard not to sell here. I mean, when you’ve 3x and 6x your investment and you see this trajectory, isn’t it prudent to take some winnings off the table?

I would say normally, taking some off the table (at least lock in the initial investment so that what’s left is “house” money). But here is my investor greed setting in, perhaps.

I truly believe that this is really only the very very beginning and HUGE gains are ahead because the blockchain technology is that revolutionary. I don’t want to get into the mindset of trading in and out because the Fear Of Missing Out (FOMO) if I sell will kill me more.

I don’t have a huge portion of my portfolio allocated into these, so I can afford to lose it all and still sleep at night. These really are like lottery tickets, but I like the odds here.

I’m considering diversifying and buying into some Ripple. I’ve been reading that Tezos is also an ICO to watch for. These aren’t as simple to buy, though. I mean, they aren’t hard, but I’d have to set up other wallets.

Interesting times…

3 Little-Known Companies Helping Shape the Movement to Autonomous Vehicles

Quanergy, Velodyne, and Luminar Technologies. They are all LiDAR technology companies.

LiDAR is how the vehicles detect what is around them. LiDAR sensors measure distances by measuring the Time of Flight (TOF) that it takes a short laser pulse to travel from the sensor to an object and back, calculating the distance from the known speed of light.

Each of those 3 companies has raised many millions in early rounds (none beyond Series B). According to James Altucher sources, they each carry a $1B+ valuation which puts them in the Unicorn classification. (I can’t link to the source because it is an insider newsletter)

James believes that Velodyne is the clear leader at this point. Velodyne raised $150M in August 2016 from investors that included Ford, Google, and Baidu. He mentions that Velodyne’s products are currently being used in 25 different self-driving programs.

Of course, as private companies, we can’t invest in these companies. But James is recommending to look at Ford as a way into Velodyne.

Of all the car companies, I do like Ford the best. They have made interesting investments and partnerships. My wife has a Ford Focus and it’s a pretty decent car.

I can’t bring myself to invest in car companies at this time, though. I’ve been reading too much about sub-prime car loans going bust, similar to how sub-prime housing went bust in 2007. Obviously, the car market isn’t nearly as big, but it’s still significant.

I’m currently short GM and that is going pretty well so far…


When a Stock Breaks $80 to the Upside, It Often Finds its Way to $100

This is a theory that I heard a while back and it has stuck with me. I wish I had the skill set to backtest this theory. I don’t know if I happen to notice this more because I’m aware of the theory or because it actually holds true more often than not. (You know when you think: “most BMW’s are black, you start to notice more black BMW’s”)

The most recent stock that seems to be experiencing this phenomenon is Shopify (SHOP). Look at that chart…Amazing! Maybe dangerous territory at this point as it has gone parabolic. But SHOP has to be one of the best performing stocks of 2017 so far.

Shopify isn’t profitable yet, but the growth rate is really strong. Shopify is an e-commerce platform that makes it super-easy to set-up and e-commerce shop. Rumor is they are a takeover target.

Another recent one is Dycom (DY). I totally missed this boat. I’ve been watching this stock for a while and I believe in the story of this company. They help build out networks for the giants. It’s probably not too late to invest here. I think this is a good company to average into.

As a trading strategy, the 80-to-100 strategy could offer a good risk/reward ratio. You want to buy on a close over $80. Let’s say you put a stop-loss at 8%, which is $6.40. Therefore, your stop-loss is $73.60. Your target is $100. That’s a 3:1 ratio. For this strategy to be profitable, it only needs to be right 33% of the time.

Again, I haven’t backtested this, but it could be interesting to and see if it worked. You could also apply other rules such as trailing the stop to $80 once it hits $88 or so (10% trail).

Aqua Metals (AQMS) Update: This Stock has Moved

And the verdict is in … DOWN!

Earnings came out yesterday and they lost over $4M. I don’t even know if this was above or below expectations because I don’t think any one covers them. But clearly the stock is sinking on 3x volume.

Recall my post from last week: Aqua Metals (AQMS): This Stock is Going to Move…

If this stock is destined to fill the gap, which puts it down to $11.50. If this breaks $10, it’s going down to $3 and perhaps to $0 as the bear argument (referenced in the previous post) suggests.

I tried to short the stock in the morning, but this stock is hard to short through my broker. I was tempted to buy some way out-of-the-money put options, but I’ve not had much luck in the past with timing. I could be proven right, but be early, and thus lose on the trade.

So, I took the safer route. I layed up. Not as big a reward, but more measured and a higher chance to succeed. I sold some May 19 $15.00 Call options. These are already out-of-the-money and expire at the end of next week. I’m feeling good about that.

I can envision a dead cat bounce happening tomorrow or soon, but the gravitational pull of that gap will be strong.

Adding Data Center REITs to the Watchlist

Contrary to almost everything else on the market, REITs (as a group) are down from last year. But bucking that trend within the group are the Data Center REITs.

Recall, a REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. REITs typically pay out all of their taxable income as dividends to shareholders, so they are income producing assets.

REITs have likely sold off as investors are anticipating higher interest rates. Higher interest rates raise debt-financing costs. REITs carry debt because they are acquiring properties. But if the business is thriving, then it’s still a good trade-off. And I only see upside for data centers.

It’s all about data and data traffic is increasing every day; maybe even accelerating, I’m not certain. But I’m long data.

The best of breed of the Data Center REITs is COR. Although the stock looks elevated here (again, as does everything). I won’t be buying here as this makes the yield low (~3.25%). I prefer a REIT yield between 6-10%. Let’s see if COR can pull back a little bit and present a buying opportunity.

As an aside, another interesting company on the long data theory is Dycom (DY). This one is also probably towards the top of an uptrending channel, but it’s certainly appears to be a company poised for growth on the backbone of internet growth.


Insider Selling at 7-Year Highs, Hmm…

Do you think Corporate executives know something about their business that we don’t?

Trim Tabs Investment Research recently reported that monthly insider selling has hit a seven-year high. Corporate executives are better informed than the public, and this is definitely a negative sign.

It’s perfectly normal for insiders to divest themselves via a structured selling program over time. However, when the transactions rise above norms, it could be a cause for concern.

Obviously, they know more about the business than we ever will. Why the sudden increase in selling by those “in-the-know”?

When you combine this with the growing risk of China’s credit bubble along with the age-old adage “Sell in May and Go Away” along with this being the 2nd longest bull market run in history along with the Fed’s reducing of their balance sheet…it’s a confluence of too many things providing upside resistance.

Note that I did not say that this means sell-off. I’m still weary of Martin Armstrong’s call for the DOW to double. But I am looking to sell naked call options to take advantage of what I believe to be some strong near-term resistance.

The Blockchain is Happening. You Should Start Paying Attention

Go buy some Bitcoin. This is investment advice that I guarantee you cannot lose on. Not because Bitcoin can’t go to $0; it absolutely can. You cannot lose because it is an investment into your education. You can “invest” as little as $1.

What you’re doing when you purchase some Bitcoin is you’re educating yourself on digital currency. You learn how to buy, where to buy, how to store it in a digital wallet and how to transfer it. This is the future. The future may not be Bitcoin specifically, but it will be some form of digital currency based on Blockchain technology.

The Blockchain is the genius behind Bitcoin. The Blockchain is going to transform/disrupt/revolutionize a whole host of industries. You should learn about it. Here are two starting points from Forbes and Fortune.

“The first generation of the digital revolution brought us the Internet of information. The second generation — powered by blockchain technology — is bringing us the Internet of value: a new platform to reshape the world of business and transform the old order of human affairs for the better.” — Don Tapscott

Yes, there is a chance if you buy Bitcoin and it takes off, you could do well. Bitcoin’s total market cap is ~$25B now. According to Visual Capitalists, there is ~$5T in cash worldwide. Bitcoin is an alternative to cash, so you see the upside potential. We’re still at the very beginning. One newsletter I read made the analogy to think about Bitcoin as a share in the Blockchain; you’re owning/investing in a piece of the Blockchain.

Something is going on with digital currencies these days. I’m not sure what but every cryptocurrency is screaming higher. 100%+, 500%+, 1000%+ … these are 6 month returns on some cryptos. Don’t bet the farm though, you’ll never sleep with the volatility. These are what some may call “Widow Makers”.

In any case, I don’t want to dwell on the monetary aspect. The point is that I recommend learning about cryptocurrencies and specifically the Blockchain. All the banks are looking at it. Alliances and Consortiums are forming. Banks that don’t figure out a Blockchain strategy will be left behind.

The best thing you can do is educate yourself; invest in yourself. Learn about the Blockchain. It’s coming. Buy some Bitcoin.


Interview with Danny Moss: The Trader from The Big Short

I loved the movie “The Big Short”.

This was a really interesting interview by Patrick O’Shaughnessy with Danny Moss, the trader at Frontpoint Capital that put on the trade.

It was interesting to hear his take on what actually happened and working with Michael Lewis.

Also, really interesting to learn how he’s thinking about Passive Vs. Active investing and the effects on the market. For example, as ETFs grow, an ETF can be the top shareholder of a given company (think GDXJ). If this is the case, the CEO is now working numbers to stay in the ETF. He/she looks at the ETF criteria and runs the business to make sure he/she stays within those parameters. Last thing you want is to piss off your top shareholder and cause a selloff.

More on Passive Vs. Active investing to come as I’ve been reading a lot about this lately and it is VERY interesting.