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3 Things Under the Radar This Week

Investing.com - Here are three things that fell under the radar this week

1. Bitcoin Bulls Squirm as Popular Indicator Flashes 'Sell'

Some blame the bitcoin whales. Others blame constant bashing by lawmakers. But bitcoin’s plunge this week could be traced to fear about lines on a chart signaling it may be time to run for the exits.

Bitcoin’s weekly moving average convergence divergence (MACD) histogram – used to determine whether a bullish or bearish move is strengthening or weakening – fell below zero, signaling the start of a downward trend for the first time since February.

But the MACD, the difference between a 26-day and 12-day exponential moving average of closing prices, is not without its faults.

Like all moving averages, the MACD is a lagging indicator. Some learned this the hard way.

During its previous bull run from around January 2015, bitcoin recorded several pullbacks that coincided with the MACD flagging bearish trends, but that turned out to be nothing more than a bear trap, as the popular crypto surged to $20,000 at the end of 2017.

With the MACD flashing 'sell' once again, cries of “bear trap” are not without merit as bitcoin is still holding onto its bull run, with gains of more than 150% since the start of the year.

Still, the squiggly lines on a chart that signal buy or sell have earned their place in the crypto market, in which fundamental reasons for wild swings are sorely lacking.

Underscoring the dearth of fundamental reasons for moves in the crypto market, it is not uncommon for even the most prominent bitcoin watchers to point fingers at BTC whales – big-time traders with huge bitcoin holdings that, when deployed, can cause ripples.

Days before bitcoin moved above $5,000 in April earlier this year, Fundstrat Global Advisors head of research, Thomas Lee, attributed the climb to the return of “old whales.”

“Bitcoin had a rough 2018 and for much of 2019, it’s been steadily climbing and from what we can gather, it’s because there have been positive things taking place,” Lee said. “You know a lot of the old whale wallets are buying bitcoin so it’s been slow accumulation.”

2. Markets Still Struggling to Match Last Year

Here's a thought that should give pause: Despite this year's gains (16.7% for the S&P 500, 13.2% for the Dow and 19.7% for the Nasdaq), the stock market overall is actually below the peaks of the fall of 2018.

So, though the major indexes are only 3% or so below peaks reached in July, the S&P 500 is also off 3% from its 2018 peak, while the Dow is off 2% and the Nasdaq is down 2.3%.

That's how ugly the late 2018 slump really was. Traders saw a loss of 20.2% for the S&P 500 from its peak in September, 19.4% for the Dow from its peak in early October and nearly 24% for the Nasdaq from its peak in late August. Moreover, the peaks this summer only modestly passed last year's highs before falling back.

Other pieces of the market aren't doing so well, at least on a relative basis. The Dow Jones Transportation index is trading 12.6% below its peak in September 2018. The Russell 2000 index is off 14% from its 2018 peak reached on August 31.

The NASDAQ Biotechnology index is still down 16% from its 2018 peak on Oct. 1. There's an irony in that number. Forty-three health care companies have gone public this year, the most of any sector, according to Renaissance Capital data.

The Philadelphia Oil Service index is off nearly 60% from its 52-week high. That probably has a lot to do with crude oil falling more than 17% since peaking in April. Bankruptcies are rising among oil-and-gas production companies, The Wall Street Journal reported Friday. The problem is too much debt.

Now autumn is coming, often the most volatile time of the year. And the problems that have caused the current malaise – U.S.-China trade tensions, slowing business investment, slowing European economies and the probability of a messy U.K. departure from the EU – haven't gone way.

3. Germany’s Trade Problems Aren’t About Tariffs Worries

The stock market has been at the mercy of trade headlines for a while. The primary issue is, of course, China and the U.S., but President Donald Trump has also targeted other trade partners.

Just on Friday, he complained about the European Union’s currency advantage and took the opportunity to rail against his own central bank at the same time.

In the EU, its economic engine, Germany, is in trouble. German second-quarter GDP came in at 0.1% earlier this month and exports are struggling.

But for all the tariff saber-rattling, the problem may be closer to home: Brexit.

German exports to the U.S. rose from April to June, but sales to the U.K. tanked, according to a Reuters report.

Exports to the U.K. fell nearly 15% compared to the same period a year ago, Reuters reported, citing trade figures form the Federal Statistics Office. That was compared to a jump of 6% in the first quarter when a Brexit deal still seemed possible.

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