Daniel X. Bustamante – Co-Founder and Lead Coach
Last week was interesting on Wall Street. We kicked off earnings season paired with one of the most anticipated listings this year in the Coinbase listing.
Let’s start with Coinbase and discuss this company and the general market environment surrounding crypto markets. First, most called this an IPO, it was technically a direct listing. You can read about the difference in them here.
Now most people were pretty hot on this listing and it traded to $429.54 before getting pummeled lower on the trading day. The interesting thing is that this is almost a proxy for the rest of the market and Bitcoin as we saw Tesla shares (who own $1.5B worth) drop lower in trading on Wednesday.
There were some other interesting players in the Coinbase listing. Kathie Wood and ARK brought up over $200 million of Coinbase as well this week. It’s a big move for the fund and I would agree with most of the positions that she has taken on.
We’re in an era now where blockchain has and will continue to take over. I was listening to a great podcast last week with Raoul Paul. He was discussing the new online education space for kids and this concept of the metaverse. It was certainly interesting and the perspective they shared made a lot of sense to me.
Personally, I finally decided to get into Crypto trading more actively and opened a Binance account last week. I have made some small trades on Coinbase over the years but after diving into the crypto world more and tracking the volatility it’s something I just cannot ignore any further.
So, if you’re reading this and have never traded and feel that it’s ‘too late’ it never is. I am likely 5-7 years ‘late’ to crypto trading but adapting to markets is key to producing returns. Again, it’s not that I have a passion for crypto as some do. I just see the volatility in the coins that are traded and the potential for upside on them is just incredible.
I’d almost equate this crypto market to mid-cap stocks in the early 2000’s and late 2008-2010 where you could find a stock and see it go 5-10x. As of recent time in markets, at least for me, that concept is far and few. So, my hope after my analysis is to find that type of return in the Crypto markets.
Let’s pivot a bit to bank earnings. Last week we saw the market kick off earnings in the banks with Goldman Sachs, JP Morgan, and Wells Fargo. All of the banks beat earnings impressively. Goldman attributed the revenue toward increased Investment Banking activities as well as trading activity.
Usually, I pay attention to what the banks do. Last week in our Guided Trade Sessions (you can get a 2-week trial here), we knew that the week would be a quiet trading week due to the earnings. Typically, the markets want to see what the banks report. It can become somewhat of a thermometer for the rest of the market.
The fact that the banks beat I don’t think was a big surprise to anyone, certainly not me. However, the fact that the stocks all barely moved on the reports was interesting to note.
That could be from the lack of volume in equities and the decrease in call volume activity as of late. Maybe that money has moved into Crypto and NFT markets. Your guess is as good as mine.
So while the banks just stepped up to the plate to report earnings we are now awaiting major tech names like:
- NFLX – 4.21
- AAPL – 4.28
- AMZN – 4.29
- FB – 4.28
This anticipation could weigh on markets. We are likely see some more chop/sideways market action until these earnings are released. Normally, I like to trade stock earnings. We even have an on-demand course called Earnings Options where I discuss strategies to trade these particular events. As of now, there are a few that I have my eye on for this earnings season and in this low volatility market, they may be my go-to’s.
This week, we’ll have our eye on the major stock indices. We’ve reached all-time highs on the Dow and S&P500 but my anticipation is a whole lot of sideways market.
Thanks for reading.
Daniel X. Bustamante