DeGroote MarketWatch

DeGroote Marketwatch is a student-generated weekly report on the financial markets.

Trader in Residence has concluded for the semester.

Week of July 14, 2017

Canadian stocks were lower but U.S. stocks finished flat on the week as positive data from the June’s jobs report couldn’t overcome geopolitical and monetary-policy jitters and lower oil prices. Last week had a little something for everyone when it came to influential economic data. Two of the most powerful forces for the markets over the past few years – jobs and central banks – were in the spotlight, while global politics also continued to fill the headlines. These events, along with corporate earnings growth, will likely drive the stock market returns for the foreseeable future. Though there may be noisy headlines, you should focus on your long-term financial goals and the things you can control. None of us can control the headlines, but you can control how you react to them. We think it’s better to follow time-tested investment principles, such as owning a well-diversified portfolio that contains quality investments, to help you reach your long-term financial goals.

Reviewing the Blueprints for the Market

If we think ...

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Volatile Times Ahead for Bitcoin, Goldman Says

Sheba Jafari, a vice president in the securities division of Goldman Sachs, predicts Bitcoin could be in for a new set of major highs. The analyst projects that the leading digital currency might make gains to propel it to new record heights, even after it has nearly tripled in price so far in 2017.

Jafari suggested in her report, covered by CNBC, that Bitcoin might rise as high as $3,915 per coin. As of this writing, Bitcoin stands at just over $2,570 per coin. A new record price close to $4,000 would constitute gains of about 50% over the current price. However, Jafari suggested just weeks ago that Bitcoin might be nearing the end of its stratospheric rise. Here are some arguments for each potential path forward.

Signs of a 5th Wave

In her most recent report, Jafari indicated that “the market is in wave [four] of a sequence that started in the late-’10/early-’11 lows.” Jafari continued by indicating that Goldman is “eventually expecting one more leg higher; a 5th wave. From current levels, this has a minimum target that goes out to 3,212 (if equal to the length of wave I). There’s potential to extend as far as 3,915 (if 1.618 times the length of wave I). It just might take time to get there.”

Following this reasoning, Bitcoin may eventually surpass its previous record of $3,025.47 per coin, achieved on June 11, 2017. Since then, Bitcoin has traded in a range of roughly $2,100 to $3,000, although it has not been able to surpass the levels of early last month. Should a 5th wave take effect, as Jafari suggests, it’s possible that the prices could finally climb above that threshold.

Cautioning against this prediction, though, Jafari added that “fourth waves tend to be messy/complex,” indicating that Bitcoin might continue to trade within the current range, and could potentially fall below $1,900 before making a recovery.

June 12th Note Suggested “Near-Term Top”

In a note just after the June 11 record-breaking day for Bitcoin, Jafari suggested that “due to popular demand,” she was “wary of a near-term top ahead of $3,134” for the popular cryptocurrency. She suggested that traders should “consider re-establishing bullish exposure between $2,330 and no lower than $1,915.”

There are a lot of possible price levels and trajectories swirling around in these and other analytic reports about Bitcoin. It seems possible that the currency could soar to new heights or fall precipitously before regaining. However, the fact that Goldman and other big players on Wall Street have been focusing efforts on Bitcoin suggests that cryptocurrencies in general may be poised to break down the barriers that previously separated them from the mainstream financial world.

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World Market Performance

IndexLevelChangeCAD % Change
INDU-DOW JONES INDUS. AVG21,206.29+ 126.01+ 0.77%
SPX-S&P 5002,439.07+ 23.25+ 1.13%
NDX-NASDAQ 100 STOCK6305.80 95.61 –
SPTSX-S&P/TSX COMPOSITE15,442.75+ 25.82+ 0.17%
UKX-FTSE 1007,547.630.00+ 0.86%
DAX-GERMAN STOCK12,822.94+ 220.76+2.77%
NKY-NIKKEI 22520,177.28+ 490.44+ 3.49%
HSI-HONG KONG HONG SENG25,924.05+ 284.78+ 1.31%
Currency Returns US$1.3494+ 0.0048+ 0.36%
INDICES Level ChangeCADCADCADCAD
S&P/TSX15,027.16– 155.03– 1.02%– 1.70%+ 6.32%+ 5.20%
S&P 5002,425.18+ 1.77– 0.93%+ 3.58%+ 14.41%+ 17.71%
DJIA21,414.34+ 64.71– 0.70%+ 3.61%+ 18.43%+ 16.18%
FTSE 1007,350.92+ 38.20– 1.41%+ 2.73%+ 11.21%+ 6.41%
CAC 405,145.16+ 24.48– 0.57%+ 9.44%+ 27.50%+ 13.74%
DAX12,388.68+ 63.56– 0.53%+ 11.60%+ 34.22%+ 17.77%
Nikkei19,929.09– 104.34– 2.98%+ 1.96%+ 13.97%+ 14.25%
Hang Seng25,340.85– 423.73– 2.68%+ 9.33%+ 20.31%+ 9.90%

Market at a Glance *

* Click image to see full size version

Economic Calendar

Date  ReleaseActualConsensusPrior
MonMemorial Day
ECB President Draghi’s SpeechUK
TueCurrent Account (Q1)
-14.05B
-12.00B-11.78B
RBNZ Governor Wheeler Speech
`WedGross Domestic Product Annualized (QoQ) (Q1)3.7%3.9%2.7%
Real Retail Sales (YoY)
ThurBOE Interest Rate Decision
Fed’s Beige Book –
FriG7 Meeting
USD CPI (YoY)

 

DeGroote MarketWatch is a weekly financial newsletter prepared primarily by students. It is designed to inform and educate the community. It is an educational tool. The DeGroote School of Business is not responsible for the consequences of actions taken based on DeGroote MarketWatch.
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