Before I get into it, I saw this yesterday and it made me legit lol:
If that doesn’t sum up crypto Twitter I don’t know what does. Onward.
Alts have been popping lately, and I can’t help but think it’s a game of hot potato. As mentioned yesterday, I don’t think sentiment is bad enough yet for us to call this the bottom of the crypto bear market.
But the way alts have been acting, you can bet that more than a few people are feeling like this is the bottom. Take a look at some of these moves:
These are just a few of dozens of examples I could post.
Don’t get me wrong, I’m not taking shots at these moves. Shit coins pump. They’ll always pump.
But it’s not for me.
The FOMO has been strong as I’ve seen folks allegedly nailing these big runs all over Twitter. My friends are posting chart setups all day in Telegram, trying to capture the next runner.
And I’ve taken my stab at one or two of these, getting out at break even on both.
The thing is… I don’t day trade penny stocks. My strength is in assessing the overall technical picture of the market, taking a position, and staying patient while my setup resolves one way or the other. Generally speaking I do well.
I am not great at pinpointing nearly perfect entries quickly, and getting out just as fast and almost as perfect. One thing about pumps like this is that the dump is never far behind.
Some folks certainly do well trading this coins, likely accumulating for days or weeks ahead of what they expect to be a nice run. But again, that isn’t my style.
My friend JonnyMoe summed up my feeling well today:
Welp, I’m packing it up on my 2019 shitcoin adventures for now.
Do not love the way $BTC looks, and I’m worried that alts are going to get crushed if (when?) it does. New lows vs. $BTC? Probably not for most, but lower from here.
If $BTC and $ETH break down like I’m expecting, the guys that are FOMO’ing into these shitcoin trades are going to be left holding the bag, likely for a very long time. I’m not going to be one of them.
CRYPTO Official Trailer (2019) Kurt Russell, Luke Hemsworth Movie HD - YouTube
Then, while watching Netflix’s Russian Doll the other day I stumbled on this hilarious clip:
He’s huffin’ because he knows the bottom’s not in yet.
I’m shocked about the recent optimism in the crypto space. One thing you can’t call these folks is pessimistic. It also amazes me crypto is still making such mainstream appearances after the massive decline we’ve experienced. And it’s for all these reasons why I can’t get bullish yet. It just feels like “top things” rather than “bottom things”.
There’s been a fair bit of chatter lately in the crypto markets about open interest, largely because it’s reaching what traders consider to be extreme levels. For those unfamiliar, when I refer to open interest I’m referring to Bitfinex margin positioning.
As of this writing Bitfinex $BTC open interest is 57% long and 43% short.
$ETH open interest is 78.6% long and 21.4% short.
Why open interest (might) matter
The concern here, an argument presented by bears, is that bulls have become overzealous and we can’t possibly go higher with so many folks already positioned long.
Jonny Moe broke this out nicely in a recent tweet with a chart that shows local tops coinciding with similarly extreme $ETH open interest levels:
P.S. If you don’t follow Jonny you’re doing yourself a disservice.
It’s pretty convincing, but I wanted to see what the data looked like if we bumped it out to account for some period of time when crypto wasn’t trading in a bear market.
Unfortunately, Bitfinex open interest data only goes back to August 2017, but even still we’re able to see some interesting points in time:
The first area of interest is in November/December 2017 when Ethereum’s short positioning hovered in the 67-74% range (similar to levels we’re seeing now). But crypto was in a bull market then and instead of the selloff that folks would make you believe we must experience, we actually saw price rip higher.
So there’s one clear instance of net positioning being “correct”.
But it gets even more interesting. If you keep following along on the chart you’ll see open interest was extremely net short by late February 2018. About a week later, Ethereum started a price decline of nearly 60%!
You would think, given Bitfinex position was at extreme short levels, we’d have seen price move the opposite direction, but again this wasn’t the case.
By April 12th, 2018, Ethereum longs were at extreme levels. And once again open interest was “resolved” via a move higher in Ethereum’s price, the exact opposite of what you’d expect.
Does open interest even matter?
It’s only been recently, as seen in Jonny’s chart/tweet, that extreme levels of open interest have coincided with turning points in ETH’s price. This correlation could be due to a change in conditions: now that we’re operating in a bear market, things are different.
But you could argue that we were already in a bear market in February and April when open interest extremes did not correlate with price reversals. For what it’s worth, you could also argue we weren’t yet in a bear market either.
My view is there are two potential takeaways (neither likely being wrong):
1) Open interest holds no weight, and it’s simply a meme.
2) Open interest extremes are only correlated with price reversals during bear markets.
If you subscribe to #2 you need to ask yourself: are we still in a bear market? Again, I think you could argue both sides, but I believe there’s a fair chance that the crypto bear market is either behind us or we’re entering an extended bull or neutral trend within the bear market.
At the end of the day I prefer to be aware of open interest but not put too much weight on it. It’s a supplementary indicator that is best used in conjunction with strong areas of support or resistance. For me, charts and basic technical analysis still win out, and from what I’m seeing, the lower time frame crypto charts are looking bullish.
First, I had no idea Airbnb’s moat was so weak. I suppose they have brand recognition, but how much is that worth if another company starts cropping up in the SERPs more often? What, if any, implications could a competitor like this have on Airbnb’s supposed 2019 IPO?
Second, the underlying implication of the post is that Airbnb has failed to keep up with SEO best practices. I admit that’s hard to believe given their size and resources, but I also know how easy it is to get complacent with an SEO strategy that is working well enough.
There are so many different ways to consider this when thinking about the markets. Traders and investors need to constantly rethink their approach. What worked last year may not work the next.
You should also constantly reevaluate your bias. It’s easy to get tunnel vision as a bull or a bear. We’ve seen this in equities lately as they made a ‘V’-shaped recovery, catching a lot of folks off guard on both sides.
We’re also seeing signs of it in crypto right now as many projects are showing strength. I’m not ready to be a bull yet, but I’m definitely open to the possibility.
If you aren’t constantly evaluating your bias and strategy you won’t make it long. That doesn’t mean it has to change, but you should always be open to the idea.
I’ve been playing a lot of poker again lately. I was surprised to see that it’s been three years since I’ve played with any regularity.
1/2 no-limit holdem results
Back in 2015 and and early 2016, before our first son was born, I was playing a fair bit of cards. In fact I logged 494 hours of play between 1/1/2015 and 1/31/2016.
After that I played only once when I was in northern Michigan visiting family.
Three years is a long time to not practice something, so I was unsure of how I’d play at first when starting up again. As you can see, I haven’t lost my poker playing skill.
I’ve played thousands of hours of poker. I started playing online in college and supported myself playing for a couple years post-college until I landed myself at a hedge fund in Chicago.
On top of the thousands of hours of play, I’ve probably spent just as much time talking over hands with a good friend, replaying them over and over, analyzing what could have been done better whether I’d won or lost.
This is how a skill is formed. And it’s hard to lose something that you’ve put so much time and effort into.
It’s no different than trading, but people don’t seem to grasp that. I see folks attracted to trading all the time, looking for a quick/easy way to make money or get rich.
It doesn’t happen like that, and the market will quickly churn through those folks.
Some people come to just take a shot, just like they do at the poker table. And it may work in the short-term. That’s the element of luck. But over the medium and long-term those are the folks paying me off.
Here’s the chart if you don’t want to click through:
This is a weekly chart, so it’s going to take some time to play out, obviously. But the break and retest of that trend line is just gorgeous. It’s hard not to appreciate technical analysis and all the psychology that can be seen on a single chart.
I’ve drawn a Fibonacci extension. A 100% extension would put us at $104 here in $GLD.
The last leg down from April to August took just over four months to complete. If January was the high for $GLD and this leg down happens with similar momentum, we would expect to hit our target sometime in the first half of April.
I hadn’t given this chart that much thought when I first put on my June 21st, $115 puts a week or so ago. They’ve been a bit underwater.
But after today’s drop I doubled down on those same puts. The position is currently down about 8%.
I haven’t done a long-term play like this in awhile, so I’m excited to see how it turns out.
I’ve been in a EURUSD long that I’m now clearly wanting out of as we test this support as resistance:
I’m mostly posting this because I’m afraid Oanda’s servers might be down and I want to build my case that I wasn’t able to close my trade, even for a slight loss. If this ends up moving lower (like I expect it might), I’ll be royally screwed. Never mind the fact that if I could close right now I’d be shorting.
I’ve been trying to close this trade for the last minute or two via my mobile app, and now the web platform. Nothing is working. Live chat seems to be down, and I can’t get a hold of anyone on the phone… it’s actually giving a busy signal!!
So when I inevitably have to complain to Oanda and request they close my trade at the price of this screenshot, whether the price is higher (in my favor), or lower (not in my favor) later today (I hope today, at least!) let this serve as my request to CLOSE MY TRADE!
I’ll update here with Oanda’s response to this issue.
In tonight’s video I talk about why I’m still bullish the US Dollar and looking to short EURUSD.
Why I'm bullish USD and shorting EURUSD - YouTube
Please note that in the video I mention I have already started a short position. I’ve taken that off for a tiny profit, as I’m not sure we’re quite ready to roll over yet.
Here’s a look at the 15-min chart and why I think we might be heading a bit higher yet:
We’re essentially consolidating this last leg higher and hanging out above the previous resistance zone. The 50 and 100-bar SMA’s have crossed the 200 and the 50 is nearing current price, likely to be supportive.
I’ve actually taken a small long at these levels, targeting just a 40 pip move for now. In short, although I’m overall bullish on the US Dollar, and therefore bearish EURUSD, I don’t see any clear signs to start that short position just yet.