At least that’s what the website, www.hope.com, tells us. It is the brainchild of Michael J Saylor, the CEO of MicroStrategy (MSTR). These comments are not made to criticize Mr. Saylor or his bold bet on Bitcoin; rather, we’ve just always found hope to be a terrible investment strategy.
Source: www.hope.com
The above is from the landing page for Mr. Saylor’s www.hope.com website and there are a host of videos to choose from to learn about the merits of investing in / owning bitcoin. However, one video struck as particularly concerning as it has the following title: “Gradually Then Suddenly.” Upon seeing it we were reminded of a famous line by Ernest Hemingway that appeared in his 1926 classic, “The Sun Also Rises.” Hemingway’s character Mike Campbell was asked about his money troubles. It goes like this –
“How did you go bankrupt?” Bill asked
“Two ways,” Mike said. “Gradually and then suddenly.”
We sent out a note on November 26 entitled, “Kisses and Fake Breakouts Can Be Deadly” and the Lita Ford late 80s hit, “Kiss Me Deadly,” seemed to fit neatly with the price action for Bitcoin then, and it still does now, too. The cryptocurrency sits right on its 200-day / 40-week moving average which is offering some support, but we believe it won’t hold and expect that Bitcoin will try to make a stand at 40000 before revisiting 30000. Weekly momentum continues to deteriorate from its lower high and there is a double-top vs. the S&P (bottom panel), too.
Other items concern us here, too. For example, Mr. Saylor’s own MSTR (Technical Score – 2) which has failed to hold support at 600 has risk to 400. A roundtrip to 200 isn’t that crazy to us.
Taiwan Semiconductor (TSM) has a poor Technical Score = 1 and momentum is slowly dribbling away. The stock’s low for 2021 is 107.58 but the risk is to 80.
There’s a break waiting to happen for the Russell 2000. It has a Technical Score = 1 and is also a member of the “Kisses and Fake Breakouts Can Be Deadly” club. We’re looking for support at the July 2021 low (2107) to break. Weekly momentum (middle) is bad and not oversold and it continues to weaken relative to the S&P (bottom).
General Electric (GE) has a Technical Score = 1 after getting blocked a la Hakeem Olajuwon at 115 in March, May – June and November. What if GE got to the top of its four-year range, could not break out and now will work back to the bottom of its four-year range at 50?
Mexico (MEXBOL) also has a Technical Score = 1 and we continue to believe it is topping. Like Bitcoin and the RTY, the Mexican Bolsa is in the “Kisses and Fake Breakouts Can Be Deadly” club. It is a sale.
SPDR S&P Retail ETF (XRT) is another with a Technical Score =1 and is also a member of the “Kisses and Fake Breakouts Can Be Deadly” club. Weekly momentum peaked in March / April and has been decelerating since. The now negative price action makes the negative divergence more important. Please see below for the scoring, sorted by market cap, which shows there’s a lot of weakness here.
Source: 22V Research
