Bitcoin: complete technical analysis for short and medium term

Bitcoin

Bitcoin surged over 1000% in 2017, along with many cryptocurrencies that had a four digit performance, even through many analysts and investors defined the market as a bubble ready to burst any time. Over the course of 2017 alone we had dozens of those warnings: Jamie Dimon, CEO of JPMorgan Chase, said “Bitcoin is a fraud and is in a valuation bubble that will burst”; Jeremy Grantham, an investor who predicted last two big market crash, said “Bitcoin is a bubble that may crash soon”; the economist Jim Rickards warned Bitcoin “It’s on its way to zero – somewhere between zero and $200”; the billionaire Mark Cuban said in a tweetstorm “I think it’s in a bubble. I just don’t know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble”.

Many people have given their opinions on Bitcoin, as the cryptocurrency market attracted the attention of institutional investors and governments, and we can also find many opposite declarations, some of which claimed “Bitcoin is essentially ‘digital gold’ for millennials, and the cryptocurrency could easily achieve the $100,000 range”.

Bitcoin’s prices are driven by many factors, whose government regulation is one of the most important, and while it’s nearly impossible to predict if and when any important government will regulate Bitcoin, recent consolidation gives us some indication on what to expect in the short and medium term.  

Bitcoin: important indications from the technical analysis

On Bitcoin’s monthly chart we can see a long upper shadow on December candle, when Bitcoin hit an all time high at $20.000 and soon afterwards prices moved down quickly. The long upper shadow tell us the uptrend was exhausted, and now bulls and bears are fighting to determine a fair value, while this pattern is often followed by an opposite trend or consolidation.  

Bitcoin
Bitcoin’s daily chart shows a sideways movement.

As we can see on the daily chart, Bitcoin’s prices are now moving sideways, for the first time in 12 months, in the channel 20.000-12.500. The breakdown of the support at 12.500 will push prices to test the 10.000 level, which should act as a psychological support, but in case of breakdown prices could drop quickly towards 5.000. 

We expect Bitcoin to move sideways in those first months of 2018, while the strong uptrend shouldn’t be resumed anytime soon.

Many structural reforms are increasing economic inequality

Inequality

Generally there is a high consensus that structural reforms boost growth and, after the economic crisis that hit many advanced economies, many governments have been implementing these reforms to accelerate the growth.

In Europe the need for structural reforms is particularly stressed by Germany, which reminds often they are necessary to achieve a strong Europe. European creditors imposed a reform agenda to all peripheral countries – Greece,Italy, Portugal and Spain – and the respect of the terms are mandatory to extend bailouts by the European Union and European Central Bank (ECB), and most of all to avoid higher yields, which equates to higher borrowing costs for the country in crisis.

The correlation between structural reforms and GDP growth is well documented, however few analyzed the effects on wealth distribution. A recent paper published by the International Monetary Fund (IMF) shows evidence of a growth-equity tradeoff for some important reforms. The authors (Jonathan D. Ostry, Andrew Berg, and Siddharth Kothari) collected data across countries to find a relation among growth, inequality, and reforms, using panel regressions and an event-study approach.

IMF’s researchers assembled a comprehensive dataset of reform indices, including financial and real reforms, updating a dataset made by Ostry in 2009, while for inequality they used data from the Standardized World Income Inequality Database developed by Solt.

They find the the growth-equity tradeoffs varies across reforms and the effects are not homogeneous across the countries, however in most cases the structural reforms increase the inequality.

Financial reforms and capital account liberalization lead to both growth and inequality increase, but the effects on inequality are greater. In particular, the growth benefit from liberalizing capital account restrictions seems to very limited, but there is a clear increase in inequality.

Network reforms don’t increase growth and in countries with a high level of corruption they lead extractive monopolies. In general, the effects of network reforms are negative for wealth distribution and they increase inequality.

Institutional reforms, aimed at strengthening the impartiality of and
adherence to the legal system, don’t have any tradeoff effects and they are good for both growth and distribution.

The overall result of the paper is in favour of structural reforms, as the net value of their implementation is positive, but the results need to be interpreted with caution. The authors stressed that “specific reform packages, in order to gain support and deliver enduring broad-based benefits, need to be designed with distributional consequences in mind”. The paper wants to serve as a warning for the policy makers to design the reforms with distributional effects in mind, especially in those countries where inequality is already high.

EUR/USD is testing a critical resistance: inverse head and shoulders on daily chart

The Euro-Dollar pair (EUR/USD) is testing a critical level, as prices have being rejected by a resistance placed at 1,2085. This resistance is also the neckline of an Inverse head and shoulders, that we’ve drawn on the daily chart above. The chart pattern usually suggests a breakup followed by an uptrend continuation, however the breakup may be preceded by a pullback on November high, around 1,197.

The breakup would launch the EUR/USD pair toward 1,22 and then 1,25. The Euro is strengthening against the US dollar (and sterling) since Trump election (and Brexit forum), when the single currency was around 1,040 and some investors speculated on EUR/USD parity. A strong euro may create a dilemma for the European Central Bank, which is expect to wind down the quantitative easing programme this year if the euro zone continues to grow strongly.

Investors will focus their attention on next Italian general election, which will be held on 4 March. Italians will go to the polls to vote the next Prime Minister, and the result may introduce new uncertainty in Europe.

 

 

Iran protests: corruption and economic issues are devouring the country

The wave of protests in Iran began on December 28, during a demonstration in Mashhad, Iran’s second-largest city, against the President Hassan Rouhani. The protests quickly escalated across the country in all major cities, including Tehran, Kermanshah, Isfahan, Hamedan, Rasht, Qom, Sari, with Iranian people calling for the religious establishment to step down. In Mashhad people called for the “death of the dictator” (Ali Khamenei), which is a serious matter for an Islamic country where the supreme leader holds complete authority.

People have taken to the streets for six consecutive days and Iranian security forces struggle to contain the largest protest since 2009 presidential election, when Iranians protested against Mahmoud Ahmadinejad’s reelection. The death toll have risen to 21 people nationwide on Tuesday, as reported  by state television, while clashes with police have intensified. All major news are being reported by state-controlled media and is difficult to confirm those reports independently.

On Saturday the government temporarily blocked many social networks, including Telegram and Instagram, which had been used by people to organize some of the anti-government protests. In the same day President Hassan Rouhan said “Iranians had the right to criticize but must not cause unrest”.

Why Iranians are protesting

The main factors fuelling the protests seem to be economic. Unemployment in Iran is at 12.4% and many university graduates struggle to find a job, while those who find one get paid sporadically. Poverty has increased since 2014 due to a decline social assistance in real terms, and between 44.5 percent and 55 percent of Iran’s urban population is living below the poverty line, showed the report “Measurement and Economic Analysis of Urban Poverty”.

Furthermore, inflation keeps rising and in November rose on 9.6 percent year-on-year, recording the highest inflation rate since July 2017, while most citizens must take on several jobs in order to survive.

Iran is the second largest economy of MENA region after Saudi Arabia, and in 2016 the Iranian economy bounced back at an estimated 6.4 percent, benefiting from the removal of oil sanctions and a recovery in exports. However, most people are not benefiting from the sanctions removal as the government is implementing a series of structural reforms to fight its debt problems.

Rouhani’s opponents often accused his administration of having ignored the poorest, and during the election campaign they promised to create millions of jobs and triple monthly cash payments to low-income families.

The corruption is killing the country

In Iran there’s a powerful system of political patronage and nepotism that pervades all sectors – including the judicial system, the police, the public sectors – and is killing the country. Rich people are often spared prosecution or fare well in trials, while public funds often find their way into few individual’s hands.

In the last six years there were four major financial corruption cases for approximately $17 billion: the 2011 Iranian embezzlement scandal; the Babak Zanjani case; the National Copper Company case.

 

Attacks and violence on the rise: 2017 is a brutal year for many children

Syrian children

Around 27 million of children in war zones have been forced out of school. UNICEF released an alarming report which shows a surge of attacks and violence against children in war zones in 2017, while all the groups in conflicts ignored  international laws designed to protect the most vulnerable.

“Children are being targeted and exposed to attacks and brutal violence in their homes, schools and playgrounds,” said Manuel Fontaine, UNICEF Director of Emergency Programmes. “As these attacks continue year after year, we cannot become numb. Such brutality cannot be the new normal.”

Children have been abused by extremist groups in every possible way, including abduction, enslavement, child marriages, raping. Furthermore, the children are being used as weapons of war on the battlefields, often as human shields or suicide bombers.

Those children are located in major conflicts in Africa and Middle East, and often in these countries is difficult to access to food or other basic needs, and many child are suffering malnutrition.

In 2016 the United Nations documented assaults on hundred of schools and universities, which are being used as barracks, centers of interrogation, weapons depots by troops in conflict countries. In 2015 a document known as Safe Schools Declaration, developed with the help of foreign ministries, defence and education officials and the International Committee of the Red Cross, was presented in an international conference in Oslo with the objective to help victims of those attacks. Many countries signed the document, although important  U.N. Security Council’s members as USA, China, UK and Russia refused to cooperate.

In early December, the ACAPS released a report containing alarming prediction for many humanitarian crisis going on, and “violence and insecurity are likely to deteriorate in Afghanistan, Democratic Republic of Congo, Libya, Ethiopia, Mali, Somalia and Syria next year“.

In Yemen, where there’s a devastating civil war on since 2015, the United Nations recorder over 13.000 casualties, with 1.300 children among the dead. In a recent report, Save the Children “highlights how the targeting of medical facilities and personnel in 2015 and 2016 has had devastating impacts on children’s health”. The country is experiencing the worst cholera outbreak of modern history, with a million cases expected by the end of 2017 and at least 600,000 children likely to be affected. 

The poorest countries by GDP are pristine paradises everyone should visit

Almost all poorest countries in world by GDP have something in common: they are paradise islands located far away from modern civilization. Statistics Times made a list of countries projected by GDP, and at the last positions we find isolated islands and archipelagos with untouched landscapes and primitive economies.

Most of these islands are former British colonies located in the Central Pacific Ocean and, as many other Pacific island nations, rising sea level presents a major environmental threat. Fishing and agriculture are critical to these economies, which have a low annual growth and need foreign aids in order to survive.

Tuvalu, Kiribati, the Marshall Islands, the Federal States of Micronesia, São Tomé and Príncipe, Tonga, Dominica, whose nominal GDP are less than $600 million, are all pristine paradises everyone should visit once in life. The uninhabited atoll islets surrounding their lagoons are a unique attraction to visitors, who can enjoy sightseeing, picnicking, and swimming in beautiful conservation area.

Tuvalu, Inaba. Credit: INABA Tomoaki/cc-by-sa-2.0

 

Caption: The central pacific island of Tarawa in Kiribati. Credit: Government of Kiribati/ Creative Commons Attribution 3.0

These islands are poorly served by flights and public transport are almost nonexistence, although there is internet connection, few tv stations, general hospitals in case of emergency, and of course many restaurants offering a variety of local and foreign dishes. Nevertheless, tourists don’t visit these islands often due to high travel costs, and tourism remains a low source of income (a flight to Tuvalu can cost up to $4.000 per person).

Those isolated countries have poor natural resources, and this is also the main reason the natural landscapes are untouched. Nauru, the only island we haven’t listed here, was very rich of phosphate and mining activities literally devastated this small country in the Micronesia region. During the 1960s the country enjoyed one of the highest per-capita income of any sovereign state in the world, but the phosphate finished in few years and mining seriously damaged the island’s environment. Nauru later become a corrupted country and an illegal money laundering centre, home of refugees and immigration detention facilities operated by the Australian government.

Bitcoin’s Friday bloodbath proves cryptocurrency is a risky business

On December 22 Bitcoin, as many other cryptocurrencies, had the most significant drop since 2015: the prices plunged below $11.000 and then they stabilized around $14.000. This kind of correction was inevitable for many analysts, after Bitcoin’s price doubled two times over two months and hit a record high of $19,857 (one year ago Bitcoin’s value was around $1.000).

Moreover, other altcoins had even better performance compared to Bitcoin:  Ethereum is up over 7.000 percent and Litecoin is up 5.400 percent. Those huge performances have attracted mainstream attention and people and financial institutions are jumping in the crypto-market more and more every day. However, Friday bloodbath should be a first warning to all people who are not familiar with cryptocurrencies , or any other investments, and turned to Bitcoin for an easy source of earnings.

Forbes’ Jessie Damiani indicated 6 possible explanations why the Bitcoin prices dropped so low, while some see the drop as fallout from long-unresolved problems with Bitcoin’s infrastructure.

The drop is probably not the Bitcoin’s bubble burst invoked by many analysts over the year, but Bitcoin’s extreme volatility proves this market is risky almost as any penny stocks out there.

 

5 interesting penny stocks to watch for 2018

Hemisphere Media Group Inc. (NASDAQ: HMTV )

Founded in 2013, Hemisphere Media Group is a leading U.S. Spanish-language media company serving the U.S. Hispanic and Latin American markets. The Hemisphere Media Group is the only public company with a focus on Hispanic people living in the US and it also serves many Latina American countries.

Pay-TV subscribers in Latin America, not including Brazil,  grew by 44% from 2012 to 2016, and are projected to grow an additional 15 million
from 53 million in 2016 to 69 million by 2021 representing projected growth of over 28%, while the U.S. census bureau estimates that the Hispanic population  in the United States will grow to 70 million by 2025. The network has over 50 million subscribers and the management estimate that user base will continue to grow.

Advertising revenues and retransmission/subscriber fees are the main sources of revenues and it is important to monitor these two variables, as they have an impact on the stock price.

Technically, HMTV is in a sideline channel and in November it hits a low at $11, a lever which played as support in the last three years.

HMTV stock on a daily chart. Credit: Yahoo finance

 Accelerize Inc. (OTCBB: ACLZ)

Accelerize Inc. a technology company that operates in the cloud business and offers software solutions for businesses interested in expanding their online advertising spend. Accelerize is primarily focused on Enterprise process
apps and in 2016 its Global SaaS software reached $106b revenues, with an increase of 21% over the 2015. In a nine-months period ended September 30 the revenues increased from $17.883.105 to $18.016.552 while the cost of every single voice (Cost of Revenues; Sales and Marketing Expenses;  General and Administrative Expenses;  and other expenses) increased about 30%.

The company has an history of losses and has a substantial amount of indebtedness, while the management estimates the Costs of Revenues will continue to increase in the next months. If the management will be able to secure the company’s line of credits and to lift the company’s cost structure is highly probable that the stock price will climb over 1$ again.

Accelerize’s stock is sitting on its all time low from more than 2 year and the prices are moving in a sideline channel range of 0,55-0,25.

ACLZ
ACLZ chart on a daily timeframe. Credit: YahooFinanceChart

Netlist Inc. (NASDAQ:NLST)

Founded in 2000 by Jayesh Bhakta, Chun Ki Hong, and Christopher Lopes, Netlist’s main business is memory subsystems designed for datacenter server, high performance computing and communications markets.

The company has introduced over the years many disruptive products and in 2015 signed an a strategic partnership with Samsung  to produce a new class of NVDIMM-P (NV-P) memory solutions. 

Netlist incurred over a nine-months period ending in September 30 a net loss of $10.3 million and the company has an accumulated deficit of $154.913 million. The management believes the Company’s existing cash balance,
together with cash provided by the Company’s operations, will be enough to t to meet the Company’s anticipated cash needs for at least the next 12 months, but if the funds will be inadequate the Company will have to significantly modify its business model and/or reduce or cease its operations.

The stock is near its all time low and usually a rebound may occurs from this level.

NLST
NLST monthly chart on the long period.
Credit:YahooFinanceChart

NII Holdings Inc. (NASDAQ:SIEB)

Founded in 1995, NII Holdings is a provider of wireless communication services that operates mainly in Brazil. The group, once listed in the Fortune 500, went through bankruptcy in 2014, and in the same year reached an agreement with its major stakeholders on terms on a Chapter 11 reorganization plan.

In 2017 revenues were impacted by pressure on competitive forces and the wind down of iDEN business: on a nine-months period ended in September 30, the revenues dropped from $736.6 million to $680.7 million.

The company is still sitting on an big debt and it still failing to generate enough operating cash flows and earnings to cover annual interest expenses and there are risks of a new bankruptcy.

The stock is at its all time low and at the moment there are no signs of rebound. For this reason we recommend to wait next quarter and see if NII’s financial situation starts to recover.

NIHD
NIHD monthly chart. Credit: YahooFinanceChart

Repros Therapeutics Inc. 

Founded in  1987 as Zonagen, Repros Therapeutics is a US-based pharmaceutical company focused on the development of oral small molecule drugs to address hormonal and reproductive system disorders.

Proellex, a drug designed to treat symptoms linked to uterine fibroids and endometriosis, is still in Phase II development and the Food and Drug Administration (FDA) has put the drug under partial clinical hold.

Enclomiphene, another drug in Repros’ pipeline, is it not likely to receive a positive response to its marketing application by the European Medicines Agency’s advisory group.

Repros Therapeutics has been recently acquired by Allergan, but the deal is under investigation by Monteverde & Associates PC.

The company’s stock is on its all time low and much will depend on the product’s pipeline approval and on the future plans of Allergan.

RPRX monthly chart. Credit: YahooFinanceChart

 

War with Islamic State may be over but ISIS fighters are still an issue

IRPGF in Raqqa city

On 9 December, the Iraqi Prime Minister Haider al-Abadi declared victory over the Islamic State (also known as ISIS and ISIL), after three years of intense fighting. “Our forces fully control the Iraqi-Syrian border, and thus we can announce the end of the war against Daesh,” said Mr. Abadi.

Two days later was Vladimir Putin to declare victory against both ISIS and Western-backed rebels. “In just over two years, Russia’s armed forces and the Syrian Army have defeated the most battle-hardened group of international terrorists”, said Putin during his visit to Russia’s Hmeymim air base in Syria.

In October a U.S.-backed Syrian force declared victory over ISIS in Raqqa, former capital of the Islamist group, declaring the city free of any extremist presence.

ISIS territory reached its height in 2014, when the group controlled several major cities in Iraq, 9 provinces in Syria and between 100,000 km and 110,000 km of territory in total. By 2017, ISIS has lost control in Iraq and of its major strongholds, and now the Islamist group occupies only a strip of land in Syria, while Islamist fighters try to resist in Libya, Yemen, Algeria, Nigeria, Philippines, North Caucasus, Gaza and in the Sinai province.

ISIS has proved to be incapable to maintain a degree of operational capability in its territory and with the defeat of Raqqa and other major cities, the militants have no longer a stable home to stay. The victory over the self-declared caliphate, however, leaves many open questions on ISIS militants and on hundreds foreign fighters and sympathisers, who abandoned the Islamic State months before it started to crumble.

Around 40,000 people travelled from around the world to take up arms for the ISIS group as it occupied territory in Syria, and it’s unclear how many survived the battles and how many are still fighting. Analysts and experts around the world are trying to estimate how many have survived, but the numbers are uncertain.

“The issue is: how many have died? How many are still there and willing to fight? How many have gone elsewhere to fight?” said Seth Jones, director of the International Security and Defense Policy Center at the Rand Corporation.

Escape routers are still open and during the last battles many Islamist fighters were able to blend in with civilian refugees or bribe their way to sneak into Turkey.

Jean-Yves Le Drian, France’s Minister of Europe and Foreign Affairs, said that about 500 are still in the Iraq-Syria theatre, while France officials affirmed that 250 already returned to France. 

Many fighter have no other choice but to still fight for the caliphate in Iraq and Syria, while other militants may join other extremist groups and/or relocate in other war zones. The only thing sure is that those militants have gained battle experience, have nothing to lose and it’s unknown where, when and how they will attack.

Russia and Iraq may have declared victory over Islamic State, but ISIS ideology and franchises are still alive and, as  and  write on Foreign Affair, there’s a possibility that ISIS could rise again.