Week 2017-08-14 Eclipse. Bitcoin. ES Puts.

This Week

FOMC minutes will be the biggest mover. Don't expect a divergence from the status quo.


Eclipse in USA

Aug 21 is a total eclipse of the sun in the USA. I have traveled to some very exotic locations around the world to view totalities. This is because the line of totality is small and 1% is NOT close enough. On the center line, the total eclipse will look like a black hole where the sun used to be.

A total solar eclipse (on the totality line) is the most impressive natural phenomenon in the world. If you are anywhere near the line of totality, I strongly urge you to go to the line and see the eclipse.

I hitch hiked across Madagascar (3 days in, 3 days out) to see a 3.5 minute totality. It was worth it!

In South America, it was a trek in the back of a truck across the salt flats of Venezuela. By comparison, this one is very easy to attend.

So if you are in the USA then cut work on Monday and view something that will blow your mind. Be aware that anything less that total is worthless. 1% is NOT good enough.

Bitcoin

Look for a profit opportunity.

Bitcoin has had a great run up after the August split. There is still more upside to this current run, but start to look for a place to take profits off the table. It looks like that will be over US$4000.

If tensions in Korea persist, then wait to sell. Fear is a driver of price right now. It appears that Bitcoin has become a place people are putting money in a "fear trade." This was once the provenance of gold, but it looks like Bitcoin is taking some market share.

Longer term, there is every expectation that Bitcoin will shoot higher. This could be 3 times the price in 5 years, or 10 times. It remains to be seen what crypto currencies will become the norm, just as Google, Amazon and Netflix have taken market share post tech run.

Be mindful that in November, there will be another Bitcoin event: SegWit2. That fork is where Bitcoin code makes the move to a new longer format of 2MB. Currently, there is no reason to think it will have issues. However, in late September to mid-October, look for a place to take some profits off the table. Then get back in for the fear dip opportunities leading up to the November fork.

S&P Puts

I was expecting the S&P to hold value longer. However, some very big players are taking a short position. This may end up being a self-fulfilling prophecy. Buy-and-hold players are not pushing money into trader pockets. Fear is entering this market, and that usually causes markets to avalanche.

Historic market falls have taken months, and in some cases years, to shake out. So, when looking for a good short, buying puts for farther out contracts is a good way to go. Dead cat bounces can be an opportunity to add to a position, so don't let a minor reversal scare you out of profits.

Downward action can be much faster than up-moves, but not so fierce that you should panic buy a reversal. When worried ask: Is there a change in the underlying fundamentals?

Invariably, the answer will be No. So, keep selling into profits.

DISCLAIMER:

YOU ARE AN ADULT and must make your own decisions. ONLY YOU know what level of experience you possess. ONLY YOU know what level of risk you are willing to take. ONLY YOU know what your financial goals are, and to what lengths you are prepared to go to meet those goals. You will be the one to wear your losses, so trade with caution and do your own research.

Henry Ledyard is an independent trader. He has NO affiliations with banks, brokerages, funds, trading houses or markets. He trades for himself and posts trading ideas merely to share information. He does NOT want your money, advice or opinions. He does NOT want your unsolicited emails. If you require further financial advice, seek it elsewhere. Henry`s opinions should be considered as addled as his blog site:

www.addlepated.com.au

If you like the information I provide, feel free to donate via Bitcoin:

Bitcoin: 1PJE1Nz3E6UtbDGdhbKWQX2TBB8kqr3P1q