How to Trade the Crypto Chaos

It’s Not Getting Any Easier… [Morning Reckoning] January 16, 2024 [WEBSITE]( | [UNSUBSCRIBE]( How to Trade the Crypto Chaos Baltimore, Maryland January 16, 2024 [Greg Guenthner] GREG GUENTHNER Hi Reader, Too many investors waste valuable time attempting to explain what should happen in the markets instead of reacting to where prices are actually moving. Redirecting your energy toward understanding how markets move will not only remove most of the frustration from your investing process – it will also quickly improve your returns. Contrary to popular belief, years of study and practice are not required to begin improving your market timing. In fact, this week just so happens to be the perfect moment to adjust your mindset. Earnings season is set to ramp up over the next several days, and I’m betting we’ll see more than a few surprises that catch investors off guard. My theory about why earnings cause so much angst is that the numbers and the market reaction don’t always match. A company can report stellar sales, a growing bottom line, and raise forward guidance. Yet shares can still drop once the opening bell rings. These post-earnings shenanigans infuriate many market watchers because the stock in question isn’t acting right. “It’s not doing what it should be doing,” they grumble as the stock plummets despite beating analyst estimates. If you are a glutton for punishment or you happen to have a few hours to spare, sit through an earnings call or thumb through a quarterly statement. Then, try to predict how the stock will move without checking the price. Did it gap higher when you expected it to drop? Did it suddenly reverse at the end of the day after trending higher or lower? Chances are, you aren’t going to nail the reaction to the penny. In fact, I’d wager that you can’t consistently guess the direction and magnitude of earnings events – even with the benefit of seeing the numbers first. [2024 Will Be The Year of AI]( The coming second wave of AI could change your life and your finances starting in 2024. This is why our team of experts went live to show you what you need to do to prepare before it profoundly impacts you and your wealth in the coming months… And to reveal THREE tiny AI stocks set to explode during AI’s Second Wave. [Click here for all the details.]( [LEARN MORE]( Sell the News Earnings aren’t the only situations where investors drastically overestimate their forecasting abilities. In fact, we just witnessed some fresh market shenanigans during the chaotic Bitcoin ETF news cycle. Unless the rock you’ve been living under is having internet connectivity issues, you already know the SEC officially approved the first US-listed Bitcoin ETFs last week just one day after its hacked Twitter account posted a fraudulent announcement. The news sparked plenty of excitement throughout crypto exchanges and news providers, as well as the broader investing community. The mainstream media even dubbed the approval a watershed moment for Bitcoin and the broader crypto industry. But for traders attempting to play the news, this watershed moment failed to yield spectacular gains immediately following the announcement. Instead, the new crypto ETFs dropped. As did Bitcoin. Other cryptocurrencies followed suit. The crypto celebrations flipped to confusion. How could this have happened? Behavioral finance (and a well-known stock market adage) offer an answer to this question… Buy the rumor, sell the news. Investors held overwhelmingly bullish positions into the SEC decision. The market then got its expected result: approval! But all the gains were front-loaded into the announcement. The bulls had already bought. When the mind-bending gains didn’t materialize right away, impatient traders sold the news. The Bitcoin ETF debacle is a classic case of the market getting way too far ahead of itself. This doesn’t mean the ETF approvals aren’t good for crypto in the long-term. But we’ll probably need to see Bitcoin (and crypto-adjacent stocks and ETFs) backfill and consolidate before they resume their rallies that began late last year. Last week’s Bitcoin move has all the hallmarks of a failed breakout. It pushed above $49K on the ETF announcement, only to immediately retreat back toward $46K, then into its previous consolidation range below $44K. This is classic sell the news action. It’s Not Getting Any Easier… Crypto isn’t completely broken – it probably just needs time to regroup. Whether this takes three weeks, three months, or longer remains to be seen. If we take the time to look around the market, Bitcoin’s stumble isn’t the only potential trouble we’re seeing. Some of the powerful rallies we enjoyed in November and December continue to lose steam as the month progresses. As we recently discussed, this means traders will need to be a little more tactical when it comes to trades on the long side. Despite a strong bounce early last week, many of the tech leaders outside of the Magnificent 7 mega-caps failed to push higher into the back half of the week. If we continue to see weak bounces, narrowing breadth, and distribution, we’ll need to adjust our expectations and prepare for choppier trading and a potentially bigger pullback. As always, don’t chase breakouts without adequate confirmation – especially when the move is associated with an anticipated news event. If and when these breakouts do fail and you’re involved, obey your pre-set stop loss conditions and get out of the way. False moves tend to lead to fast action in the opposite direction. That quick $5,000 drop in Bitcoin is all the evidence you need… If we continue to see more stocks and sectors stall out, we’ll probably need to shift our focus to more defensive strategies. Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [Secret Gold Back currency RUINING Biden’s plans for a digital dollar?]( [Click here to learn more]( What you see here is a completely new form of money… As we speak, it's being used as an alternative currency across the U.S. minting in places like Utah, New Hampshire and Nevada… And since it’s made out of a thinly printed sheet of REAL gold... It may be the single best way to protect your wealth from Biden’s plan for a government controlled digital dollar. That’s why, we'd like to offer to send one to you today. But since there are a limited number, I need you to respond to [this message]( by Wednesday at midnight. [Watch this short 2 minute message that explains everything here.]( [LEARN MORE]( In Case You Missed It… Putin: The Master of Europe Sean Ring, Editor [Sean Ring] SEAN RING Good morning Reader, The Emperor is naked, and the world can’t unsee it. Last week, in this very space, I wrote about how a bunch of goat herders from the Arabian Peninsula had halted world trade. As I sit here on Wednesday night, one of Zero Hedge’s headlines reads, “[US Warship Directly Targeted In 'Largest Ever' Houthi Red Sea Missile Attack]( I don’t know what’s funnier: these tribesmen showing up the world’s allegedly most potent military or the media trying to pin it on Iran to draw the US into World War III to save Israel’s (turkey) bacon. And if I’m writing about Yemen, what does Russia have to do with it? Strap yourself in; we’re going for a wild ride. The Houthis and the Wider Middle East Paging Lloyd Austin… Paging Lloyd Austin. The US SecDef managed to get a four-day stay in a hospital without President Biden knowing anything about it. But then again, if President Biden were in the hospital for four days, he wouldn’t know it. The USG is rudderless, leaderless, and listless amid a possible world war into which the bureaucratic Deep State, sitting safely behind their desks, is riding pell-mell. NATO — the US, really — is getting its ass kicked in Ukraine. Russia is grinding down, ever so slowly, what’s left of the Ukrainian army (and its male population). And what happens next? Hamas gets drugged up and commits atrocities in southern Israel that would make Attila the Hun blush. This tragic mistake — Hamas doesn’t think it was a mistake, of course — allows Israel to open the throttle on the Palestinian population. Or so they thought… The court of public opinion stepped in. Ludicrous Ivy League graduates called for not just Israeli but for Jewish blood. Their fellow students’ blood, no less! But this isn’t isolated. Other than the notable exception of India, the Global South sides with the Palestinians. And many in the West, not just spoiled brat Harvard students, also side with them. The US and Israel look increasingly isolated. That wasn’t how this was supposed to go. But it seems that the only place you can find a “coalition of the willing” is on the back of a milk carton. And then, out of absolutely nowhere, the Houthis - as in, and pronounced like, “Who these?” — start firing rockets at any ships carrying anything to Israel, blocking the Bab Al-Mandeb strait and choking off the Suez Canal. Next, shipping companies, at the behest of their London maritime insurers like Lloyd’s, canceled Suez routes, sailing around the Cape of Good Hope like a moonwalking Vasco da Gama. Egypt reels from the lost revenue, nearly 2% of its GDP. Prices rocket for shipping, the extra time, and the extra fuel. Inflation grins down on us like Arnold in The Terminator, saying, “I’ll be back.” Now, the US has to send in carriers to scare off the camel riders. Does that work? Nope. Just reread today’s headline. We really must be thankful China doesn’t want to invade Taiwan. Because the Emperor isn’t just naked. He’s playing naked Twister without having showered for weeks. Russia is Unbeatable in Europe Reader, I’d like to welcome you to the new Europe. The US is no longer the master of a collection of vassal states here. Russia now holds all the cards. Europe could never really afford US liquified natural gas (LNG) at 4x the cost of Russian pipelined gas. The sanctions the EU mindlessly imposed on Russia are the direct cause of Germany’s deindustrialization and Italy’s nearly quadrupled energy costs. Other European countries similarly suffer. Sure, it’s nothing compared to Ukrainian lives, you may think. But this war was unnecessary — and unwinnable — from the beginning. I wonder if Boris Johnson feels guilty for stopping a peace treaty between Russia and Ukraine in 2022. And this stupid war hasn’t just cost Europe money. It cost America its empire. Once the USG seizes the $300 billion of Russia’s currently frozen assets, its prestige and reputation for honesty and fairness will also be gone. As reported by [The Duran]( negotiations between Russia and the West involve Russia's demand for the four regions of Ukraine and solid protections for Russian speakers. Putin will likely insist on the presence of Russian troops in Ukraine, leading to a potential future without a Ukrainian state and a disastrous outcome for Ukraine. In other words, the Russians are playing hardball, while the US just wants to save face. Putin is Europe’s new master now. Start the Uranium Enrichment! Take a bow, Rick Rule. He was long uranium and uranium stocks long before this announcement. But he saw it coming. As seen in [Reuters]( The U.S. is seeking bids from contractors to help establish a domestic supply of a uranium fuel enriched to higher levels for use in a next generation of reactors, a fuel currently only available in commercial levels from Russia, the Department of Energy said on Tuesday. I’m sorry. From where? Russia. Did you say “Russia?” Yes. Yes, I did. Again, from [Reuters]( "It's a chicken-or-egg sort of process," Jon Carmack, the department's deputy assistant secretary for nuclear fuel cycle, said in an interview. Carmack said the government needs to invest enough money to show initial demand for producers, so they will build capacity, apply for licenses and get HALEU plant design and construction projects underway. Do you mean to tell me that the US was dependent on Russia for its enriched uranium? Yes. If you read this [Rude Awakening piece]( from nearly two… friggin’... years… ago, you knew all about this. Hilariously, according to [The Wall Street Journal]( in an article from 2022 cited in the Rude above, The U.S. has met Russia’s assault on Ukraine with economic penalties targeting Russia’s financial sector and a ban on oil imports into the U.S., but so far, uranium has avoided sanctions.The U.S. relied on Russia and its allies Kazakhstan and Uzbekistan for about 46% of its needs in 2020, according to the U.S. Energy Information Administration. Your country is run by smooth-brained dipsticks who majored in basket weaving. But Try to Stay Upbeat Yes, the world is going to hell in a handbasket. But don’t sell stocks, gold, or crypto right now. Really? Here’s where we get positive. You can be right. Or you can get rich. Choose the latter. Sure, Seanie. But how? One fantastic way to start is to learn how to trade from a genuine pro. My colleague, Greg Guenthner, is an expert trader and chartist. He can teach you how to read a chart and interpret it. Matt Insley, our fearless leader here at Paradigm Press, interviewed Greg, or “Gunner,” as we call him, about crypto and AI stocks. You can watch the video on the [Paradigm Profits]( YouTube channel by clicking below… And make sure you’re subscribed by [clicking here](. It’s amazing. I even wrote it up in the [Rude]( yesterday. Gunner covered Bitcoin and Bitcoin miners like MARA, RIOT, CLSK, and HUT. He then turned to AI stocks, discussing industry rockstar NVDA, SMCI, ANET, AMD, and my favorite, PLTR. He went over all the charts step-by-step. I can’t encourage you to [watch the video]( enough. If you decide you “got the Mott’s” to be a sound, competent trader, then head here [to sit for a 2-minute assessment](. (Sean: I just took the test. It literally takes under two minutes.) Gunner’s looking for 50 newbies he can raise to trader status. Maybe that’s you. Maybe not. There’s only one way to find out. You got the Mott’s? Or what? Accept the challenge. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your The Daily Reckoning subscription, you can ensure its arrival in your mailbox by [whitelisting The Daily Reckoning.](