Tuesday Update: The Days Ahead

Next Monday is Christmas and traditionally the market grinds to a halt leading up to and coming out of this holiday period. Nonetheless, I am well aware that we have money on the line and will be monitoring the market (including bitcoin positions) as usual. What will not be "as usual" will be regular scheduled updates. After today's update only trade reversals to be posted and sent out, subject only to any extraordinary market events that will need to be addressed.

The Elephant In The Room

The elephant is associated with Buddha and the Indian deity Ganesh and can be used to symbolize power, wisdom, strength, protection of the home, fertility, and general good luck. - Link


When describing trend following as a strategic trading method I usually start with how price is all that matters when evaluating a trade or investment. Is price going up, down or sideways? Individual stock considerations relating to sales, earnings, growth, sectors, even such esoteric technical analysis concepts of overbought or oversold are irrelevant to the immediate direction of the stock, or in the case of bitcoin, a digital store of value.

Bitcoin is the elephant in the room, and its tentacles reaching out to over 1400 other "stores of value" all under the umbrella of cryptocurrency sector. That is about the extent of my discussion of what, because all that this service cares about is where, that is where the price of bitcoin, and its related investments in our intermediate term portfolio, is going. We already have our measuring stick, it's the same trend following line that we have been using for going on 8 years. So let's simplify our bitcoin trading to this: We are primarily just following a price trend, and what it is that is trending is secondary...If even that. 

What can go wrong?

(1) The entire sector crashes overnight before we can exit. Accordingly, use some more conservative money management in handling your exposure. That can mean anything from keeping size down, to taking some profits off of the table along the way. The way it has been going so far, it's just a matter of time before positions double in size, so taking 1/2 off leaves your risk at zero.

(2) You initiate entry into the sector at a bad time, right at the top before one of the deep and dramatic drawdowns cuts 20% off price. Unless the trend lines are breached, stay in. Every one of those scary drawdowns has so far been followed by new highs.  If the lines are broken and we get reversals, manage the position as any other stock position in the portfolio. A trend line is a trend line and our entries and exits are strategic, not perfect, but calculated to capture the most of any elongated trend, in any direction. Whipsaws happen, but so do exponential gains. 

Trading Update

Fortuitous or not, going into what should be a lightly traded few days ahead there are a minimum of open option trading positions. This makes both mine and your holidays like real days off. As stated above, trading signals will be sent out, albeit maybe not as timely as usual. Not that it matters so much as often a delayed entry/exit results in better entry/exit prices. I'll send out with new reversal levels anytime those levels need updating. (A few cents here and there is not a need to update, a few dollars is.)

I'll be around for a couple more days, but in case you are not, by most sincere, best Holliday wishes to all, along with my continuing appreciation for your support for my work all of these years.- Allan