nrd525 Market Tracker

[nrd525]

Stock market is catching up.  Down 10% in the US.  10 year Treasury yield is at some historical low (1.28%).  Bitcoin at 8700 and dominance up a bit (64%).

Though I'm very confused about Coronavirus. Everyone is talking about a potential pandemic when cases in China are slowing down dramatically. Even if it spread to the US, I'm guessing we'd be very unlikely to see more than 100 fatalities - which is a hundred times less than the Flu - which kills 12,000-61,000/year according to the CDC. https://www.cdc.gov/flu/about/burden/index.html

[exstasie]

Stock market is catching up.  Down 10% in the US.  10 year Treasury yield is at some historical low (1.28%).  Bitcoin at 8700 and dominance up a bit (64%).

Though I'm very confused about Coronavirus. Everyone is talking about a potential pandemic when cases in China are slowing down dramatically. Even if it spread to the US, I'm guessing we'd be very unlikely to see more than 100 fatalities - which is a hundred times less than the Flu - which kills 12,000-61,000/year according to the CDC. https://www.cdc.gov/flu/about/burden/index.html

It might be the perfect FUD. Nowhere near in scope (or deadliness) to historic pandemics but everyone is mad with worry anyway. Cases dramatically drop in China and then the news cycle starts focusing on death counts in the teens in Italy, and single cases in other countries.

The S&P 500 dipped below 3000 today, I'm curious where it'll open tomorrow. The 3000 area was a huge resistance on the way up.

I expect dip buyers (in both stocks and BTC) to be rewarded but I'll admit, I'm on the edge of my seat.

[nrd525]

0.5% emergency fed rate cut today.  The Fed can only cut so far before they hit zero and it doesn't work as well.  Trump is the type of person who'd probably be fine with $1-$2 trillion in fiscal stimulus, especially during an election year.

On the other hand, China seems to be doing a great job of containing Coronavirus.

10 year US treasury went below 1%. Lowest since 1960 or before?

Surprised bitcoin is holding up.

[exstasie]

0.5% emergency fed rate cut today.  The Fed can only cut so far before they hit zero and it doesn't work as well.  Trump is the type of person who'd probably be fine with $1-$2 trillion in fiscal stimulus, especially during an election year.

On the other hand, China seems to be doing a great job of containing Coronavirus.

First emergency cut (and biggest one-time cut) since 2008. The benchmark is still above 1% though. This could go on for a while.

Between China's recovery and the ridiculously excessive fear around the corona virus in the US, and now the emergency rate cut on top, this is a recipe for a strong recovery and eventual new ATHs. We will probably look back at this period as just another consolidation before a bullish 2020-2021.

Here is a look at how the swine flu affected the stock market in 2009-2010. Different context I know, but important to think about. It's hard to stop a bull market:

For comparison, look at the swine flu pandemic that began in early 2009 and ended in late 2010. The CDC estimated afterwards ~61 million people in the US were infected and ~12,500 people died. https://en.wikipedia.org/wiki/2009_flu_pandemic#Follow-up

What happened to the stock markets at that time? It was a nonstop bull market recovery during the entire active pandemic period:

[nrd525]

Bitcoin went up for the past several weeks therefore it is a safe asset. Nope.  We're in a crazy stock bull market and most assets are inflated.
https://www.coindesk.com/stop-treating-bitcoin-as-risky-its-a-safer-asset-than-most

Of course my case hasn't been proven yet as we haven't had a global economic slowdown in Bitcoin's price history.  So I could be wrong. But there is no reason for most people in the world to use bitcoin as a safe asset.  Even if you live in an authoritarian country, your bitcoins will be useless when the government shuts down the internet (or if they outlaw them and then use them as a reason to arrest you).

There's a small possibility that if you have say $1 billion in assets, and put $10,000 in bitcoin you might be reducing your risk in the 1/100000 chance that something causes bitcoin to stay strong while all of your other backup plans fail.  But for most people, you are better off stocking food, water, power, and other basics.

[exstasie]

There's a small possibility that if you have say $1 billion in assets, and put $10,000 in bitcoin you might be reducing your risk in the 1/100000 chance that something causes bitcoin to stay strong while all of your other backup plans fail.  But for most people, you are better off stocking food, water, power, and other basics.

Are you expecting a zombie apocalypse?

Of course my case hasn't been proven yet as we haven't had a global economic slowdown in Bitcoin's price history.  So I could be wrong. But there is no reason for most people in the world to use bitcoin as a safe asset.

Mainstream investors and institutions abandoning safe havens like bonds and cash for BTC? I'd like to see that.

A slowdown may not cause a big rush into safe havens anyway. It looks like the coronavirus fallout will not cause a market contraction, just a point or two off China's GDP growth. For the US, Goldman is forecasting 1.2% GDP growth in Q1 and 2.7% in Q2.
https://www.cnbc.com/2020/02/24/goldman-cuts-us-q1-gdp-forecast-to-just-over-1percent-on-coronavirus.html

I still don't see doomsday here. I think bears will be punished.

[nrd525]

We're already seeing a rush into US treasuries.  10 year dipped below 0.4%/year a couple days ago.  It was 1.9% at the beginning of 2020!  Sure is has recovered to 0.86% today, but nobody knows what the future holds.

https://www.cnbc.com/quotes/?symbol=US10Y

[nrd525]

Sold 1 BTC at 7600.

[nrd525]

And then it dumped to 3800!  Nice bounce back to 5500ish.  I think we still haven't seen round two or possibly round three.  Notably we haven't seen that many countries contain the coronavirus other than China (and South Korea seems to be doing better than average).  Of course it's impossible to know when we are at peak panic.

I'm concerned to think about how the crypto lending has possibly played a major role in increasing volatility.  There are many new lending services that let you use your crypto as an asset to get a USD loan.  However they issue margin calls and liquidations if your crypto collateral's value falls too far.  It's surprising that this 50% fall didn't cause any lenders to not be able to trigger margin calls and/or liquidations in time (or at least so far as we know).

It's perhaps good for the bitcoin as digital gold for gamblers use case that we had an unprecedented level of volatility.  Not so good for holders.

I'm mostly out of bitcoin and in cash, so waiting to buy the crash.

[exstasie]

And then it dumped to 3800!  Nice bounce back to 5500ish.  I think we still haven't seen round two or possibly round three.

Nice call on the global economic cycle, and the $5K BTC prediction. Credit where credit is due. I underestimated the corona virus panic for sure, as well as the possibility for a margin cascade on BTC.

I can't tell if this is a real V-bottom yet. If it is, this long term triangle still seems possible: https://bitcointalk.org/index.php?topic=5196072.msg54020305#msg54020305

[nrd525]

6.3k (nice bounce continues). But we're probably at 100k Coronavirus cases in the US, rather than the 13k reported due to a lack of testing. Might peak in the 100k-2 million range in the US.

This was 5 days ago:
https://thehill.com/policy/healthcare/487562-johns-hopkins-professor-estimates-at-least-50000-people-have-coronavirus-in

Placing bids from 3120 to 5120. 

Thinking about buying the SP500 once we're down by 40% or more.

Fast Us government fiscal and monetary response to the recession is helping. But we're still very low on tests, respirators, masks and other protective gear. I'm also unsure that the US public is ready to self quarantine.  I'm guessing we'll have a second round of panic when the tests show the real number of virus cases in the US.

Whether or not we'll see a third round of panic, if we fail to contain the virus, is questionable. I'm really hoping that doesn't happen!

[exstasie]

6.3k (nice bounce continues). But we're probably at 100k Coronavirus cases in the US, rather than the 13k reported due to a lack of testing. Might peak in the 100k-2 million range in the US.

That's quite a range! So many unknowns right now, but I still maintain these couple weeks right here are the peak of hysteria. Just look at the path things took in China. A week or two from now, panic will have subsided and things will normalize. At that point, people will have gotten used to the idea that the disease is spreading and will continue to, but there will be light at the end of the tunnel.

Placing bids from 3120 to 5120.

If bulls can push this rally to the upper $6K or lower $7K range, the stage is set for a confirmation of the 200-week MA zone as a higher low support. This would support my bullish triangle case which says $3,850 was the bottom. If I am correct, a run to the low $5K or upper $4K range would still be possible.

[nrd525]

So long as the virus spread is mostly done from people being too close to each other, we'll probably be ok in the US (and with an estimated  R0 spread factor of 2.5 this might be true - https://labblog.uofmhealth.org/lab-report/how-quickly-does-coronavirus-spread).

 But if surfaces are an issue, we might be screwed. Have you seen the measures China took?  I was watching a video of a reporter not in Wuhan, in Beijing.  They had a fence put up around their compound that kept getting higher, almost nobody and no vehicles on the street and when they ventured outside were repeatedly stopped and had their temperature checked (infrared thermometers I think). By contrast my neighors are all walking around as it is 75 degrees today in Philly.

I'm thinking we'll have max panic when 80%+ of the US is under a stay at home order and we have 100k+ cases.  Currently we're at 20%.  So maybe in 5-14 days (it'd be faster if we had more tests).


Goldman Sachs came out with a 3.1-3.8% GDP decline in 2020, and peak unemployment of 9%.   By contrast, JP Morgan's estimate from 1-2 days ago was about half of that.
https://markets.businessinsider.com/news/stocks/us-gdp-drop


In the US: 2% lost their job, 9% "laid off" (presumably they might get their jobs back after the crisis), 26% hours reduced.
http://www.surveyusa.com/client/PollReport.aspx…

[exstasie]

Goldman Sachs came out with a 3.1-3.8% GDP decline in 2020, and peak unemployment of 9%.   By contrast, JP Morgan's estimate from 1-2 days ago was about half of that.
https://markets.businessinsider.com/news/stocks/us-gdp-drop

The estimates are all over the place. The magnitude of the global slowdown is huge and in some ways unprecedented but at the same time, the extremely swift recovery in China is leading to expectations of a V-shaped dip in GDP growth: https://markets.businessinsider.com/news/stocks/coronavirus-recession-worst-wwii-economic-recovery-global-deutsche-bank-2020-3-1029012757

China will see its gross domestic product slump by 31.7% in the first quarter before rocketing to 34% in the following three-month period, the economists said.

That could make for some epic volatility in stocks! It might also stave off a 2008-style decline, but who knows? It will be interesting to see how the market prices in the corona virus recovery (or lack thereof) in the coming months.

[nrd525]

These models are probably assuming that the virus passes. If we spend two years developing a vaccine and have to do social distancing for two years, I'm not sure how well most of the economy will hold up. 

[exstasie]

These models are probably assuming that the virus passes. If we spend two years developing a vaccine and have to do social distancing for two years, I'm not sure how well most of the economy will hold up. 

Yes, if Europe and the US go full Italy on us, and effective treatments and vaccines are delayed, the optimistic scenario begins to evaporate.

It's worth pointing out though because a swift recovery in China is so crucial to any hope for a swift global recovery. At least the prospects for a "return to normal" in China are decent now. It's the West who is now the epicenter of this crisis.

[nrd525]

Sold 1 BTC at 5888 (blockfi, so bad exchange rates maybe a 0.8% fee?).  Only have 0.5 BTC left. I'm almost entirely cash and some Blockfi lending at 8.6% APR.  If you look at the past 20-30 years, a 8.6% return beats the stock market a lot of the time (hmm, or is this because I ignore dividends?).

https://dqydj.com/sp-500-return-calculator/

[nrd525]

Sold 0.5 btc at around 6700 (blockfi, high fee/lower rate).  So I've got practically 0 btc.

[exstasie]

Sold 0.5 btc at around 6700 (blockfi, high fee/lower rate).  So I've got practically 0 btc.

So nrd525 is officially a nocoiner now?

Interesting times. The stimulus package is expected to pass anytime now, which is causing stocks to rally. The S&P 500 is up 12.5%. The chart is still all lower highs, clearly still in a downtrend, but is now threatening a relief rally.

Some BTC whale is anticipating it. They accumulated the sub-$6K area hard. You can tell by the volume profile and market buying activity. They have been switching on market buy bots anytime bullish Fed news drops. Assuming the market hasn't crashed yet, they will probably do the same when the stimulus package gets passed.

I'm curious to see what happens. BTCUSD is pressed up against the 20-day MA and bullish momentum is fading out. BTC shorts have also collapsed, meaning not much buy pressure left from squeezed bears. My gut is leaning bearish but there is obviously breakout potential here, hovering so close to the $7K high.

Economic/Fed news is the wild card. I expect bad unemployment numbers on Friday, but a lot can happen between now and then.

[nrd525]

I'm thinking of buying Puts on the SPY (SP 500 ETF) to short it.  Any advice on this (perhaps more tutorials and general options trading, not specific advice)?  I'm thinking I mostly want to have fun (risk small amounts).  I am predicting that we'll have a second wave of bad economic and virus news in the next 2-4 weeks. So I guess I pick a time frame (which I have) and pick a target (2200 or less, new yearly low). And then got a bit conservative in case we don't hit the target.  Or maybe get a selection of options.

With the mainstream forecast at 100k-200k deaths in the US (this means 2 million - 10 million cases depending on the death rate), and the government moving quickly from "15 days to slow the spread" to it now looks like hard core social distancing until the end of May - I really don't understand people who think we'll not have a massive productivity shock even if everyone keeps their jobs.  Working from home just isn't the same.  And this shock could last two years or more (while we wait for vaccine).  What will everyone be thinking in around 6 weeks, after mask production is ramped up, when most people walking around outside (or at work) are wearing N95 masks?

There are still about 20% of the US population that isn't living under stay at home orders.  Also my neighbors are doing ok, but not great with it.