Heading into the Holidays

Ok, so we are heading into the holidays, and it is important to remember a lot of things that those of us who have been around the markets for far too long forget to tell you. The first thing, of course, is that the markets are going to be difficult. This will continue to be something that I will pound into everyone’s head because most retail traders have a major issue. This, of course, is that they are taught so many bad and wrong things about technical analysis.

What I mean by this is that many of you will be attracted to specific candlestick patterns, indicators, or whatever. While this can be useful, it isn’t everything. What I mean by this is that although there are technical setups, it is important to think about the reasons they may happen. Markets don’t move for no reason. This is especially dangerous in the holiday season, as there are fewer participants involved. Anyone who has made a lot of money this year won’t be looking to gamble at the end of the calendar.

This is a time of year that you need to reflect on and start looking into your weak spots. This is where you make the money next year.

Jerome Powell is an idiot.

I am not sure why I am dumb enough to listen to FOMC press conferences, and quite frankly, I wish they would stop having them. The jist of what he pulled on Wednesday is to try to explain to Americans that “what people are experiencing is higher prices, but that’s not necessarily inflation.” Exactly what does this clown think inflation is? Yes, it might have slowed down, but the reality is that things are still a lot more expensive than they used to be.

Because of this and the fact that the “dot plot” suggested fewer rate cuts in 2025 than what was once thought—a theme we have seen all 2024—and as a result traders have had to readjust their thinking when it comes to the US dollar, interest rates, and just about everything else. For example, Lenar, one of the largest home builders in the USA, stated they have over a year worth of inventory just waiting for buyers. The higher interest rates have been a major issue here, and of course the higher pricing of almost everything.

It is because of this that the USD will remain King Dollar for a while. All one has to do is look around, and with the interest rates in the US climbing, there is no reason why most traders will look to buy euros, for example, as the EU has a sluggish outlook and has a plethora of political issues at the moment. Because of this, I believe the EUR/USD could very well find parity (1.00) again. I am not going to say we cannot rally from time to time, but I recognize that the market will more likely than not remain “fade the rallies.”

Bitcoin is still a cult, don’t worry. There will still be buyers.

So, a little bit of an admission here. I don’t actually think Bitcoin will ever truly be what the true believers think. However, I don’t really care one way or another. It is simply an asset that I trade from time to time, like gold, pounds, corn, etc. At the end of the day, it is all measured in US dollars (or whatever currency your account is in) when you close the position. I don’t really get too worried about anything other than whether or not it goes higher or lower.

As Bitcoin is tricky to short, I generally look for buying opportunities. I think we are getting somewhat close to one again; however, I would also point out that the price action is going to be a bit more difficult going forward. I think 2025 is a bit choppier than most think. This is partially because of the USD, but also because of the interest rate situation. The market has a huge run-up, and to be honest, I saw signs of a potential short-term top about a week or two ago. When you start hearing “they just don’t understand Bitcoin” or perhaps “have fun staying poor, bro.” you know we are getting a little overdone. This happens every cycle. I believe that the Federal Reserve and the bond market will be a major problem for BTC this next few months.

I think that you still have to participate in BTC, but in increments. I do not think the “maxis” are going to have a great 2025. I could be wrong, but the market looks tired. I think a 20% drop is possible, but the timing is always a bit difficult. I will be buying that dip. If you are really into Bitcoin, be prepared to look for value propositions due to sharp drops.

There is still work to be done.

It is the holidays. Enjoy yourself. This is a time of year that shouldn’t be overly market-focused. However, when you do have some time to put towards your trading, I would suggest doing a little backtesting on systems and perhaps learning a little bit about fundamentals. Also, I suggest reading “Reminiscences of a Stock Operator.” A quick search brings up a ton of links to free electronic versions.

Trade well,

Chris