I confess I am really enjoying the mayhem prevailing within the madcap world of crypto-currencies. And no wonder, when you have one of the thousands of virtual coins out there explode from 25 cents in early December to $3.25 (a gain of 1200% in a month), it certainly stirs up the juices of greed and fear (that is Ripple).
This is truly the new Wild West of finance! And to complete the picture there are gun-slingers (the Asians), good guys and bad guys and opinions are poles apart on which is which. For instance, last week on seekingalpha.com, the top three headlines were;
Ripple: Avoid at all Costs
Ripple’s Potential Future as the New Bitcoin
Forget Bitcoin, Think Ethereum
It’s enough to get the head of an old man spinning! However, I have been able to keep on top of the price movements of BTC and Ether by using my trusted Tramline techniques that work so well on more conventional markets. And the fact the the crypto-currency charts look exactly the same as any publicly-traded market such as the Dow or the euro is a fine demonstration that Elliott wave analysis is universal.
And for a perfect demonstration why the most prominent figures in finance are excellent contrary indicators, we have Jamie Dimon, the CEO of Morgan Stanley, now this week confessing he was wrong calling Bitcoin a fraud and that it was in a bubble that will burst. Note that he said that in September when BTC was trading around the $4k area.
If you believed him, you would have missed out on a magnificent five-fold move to the $20k mark made on 17 December! Ouch.
So now he has finally come around to loving BTC – just as the price is sliding (it is off by $6k as I write). The timing is immaculate. What a complete amateur! He is doing what most amateurs do: he hates them at the lows and loves them at the highs – the complete reverse of the correct approach, of course.
Meanwhile, my bull call in Ethereum is proving very profitable with latest quote at $1360 – a four-fold increase on my initial buy entry. As Churchill almost said: “Some chicken, some fraud!”
So why is Ether zooming north while BTC languishes well under its 17 December high? Actually, the clue is in the different wave patterns that I identified last month. Bitcoin showed a clean five down/three up to the Fibonacci 62% region, while Ether only traced out a three down (which is corrective to the main uptrend).
What are they putting in that Ether?
With Ether trading over $1300, those guys sniffing it are getting a manic rush – in stark contract to the historic use of ether as an anesthetic in the early 19th Century! Far from being put to sleep, Ether is stirring up the greed and fear juices big-time!
By my count, we are in wave 3 of 5
This updates the chart from last time. When wave 3 terminates, we should see a fourth wave down and then a final surge in wave 5 which would cap the bull run, at least for some time.
Are stocks making their final surge to The Top?
I am tracking the Dow for VIP Traders Club members almost on an hourly basis as I sense a major turn approaches. But here is an index I believe will perform at least as well as the US majors – the Japan Nikkei 225. Here is the monthly (not weekly) chart showing a superb five up from the 2009 lows
Those with very long memories will recall the hyper-inflationary 1980s when Japan shares were objects of intense speculation. The Nikkei almost hit the 40,000 level but the bubble then burst and sent the index down hard. And now the index has rallied to the 23,000 area, which is a Fibonacci 62% retrace of the decline. That level is always going to be a major hurdle for the index to cross.
And with a clean five up from 2009, and a nice five up in wave 5, I am starting to look for a major turn – here is the daily
The latest surge is a clean five up with wave 4 taking the typical shape of a triangle. That means wave 5, when it completes, will turn back down to the apex of the triangle – which should be the first step of a major decline. Watch this space.
US Treasuries are following my roadmap to a T
I have been bearish on US Treasuries for some time and this week, the 30-yr T-Bond has fallen very hard – and right to major support at the 150 region. I will expand on this next time.
I have long believed that US interest rates will advance far stronger and faster than the majority can envision. The Fed will be forced to boost Fed Funds several times this year 0 and this will weigh on stocks.
VIP Traders Club members are already engaged in a multi-month shorting campaign.