Bitcoin: Upside Targets Achieved, Now What?

If anyone has managed to follow our work on the topic of Bitcoin, we can only lay claim to the October 7, 2014 call for “Speculators to Unite” when the cryptocurrency was priced at $334.09.  At the time, we said the following:

“…bitcoin is worth the plunge.  Based on the revised price peak of $1,147.25, bitcoin has a conservative upside target price of $723.34 and an extreme upside target of $1,446.68.”

Since October 7, 2014, we have issued revised upside targets and downside targets that have been generally within the range of expectation.  Our last published upside target for Bitcoin was $6,260.91 as seen in the September 5, 2017 posting titled “Bitcoin: Setting the Stage.”  The graphical representation of the price of Bitcoin since October 7, 2014 is staggering and worth a refresher view.

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At this point, as Bitcoin sits within 7% of the last published target, we cannot take seriously the updated target that has been generated ($7,166.29) based on our Speed Resistance Line calculations.  We are throwing in the towel on taking the $7,166.29 figure, and any future upside targets that go uncorrected to the tune of –50% or more, as something we can feel confident is worth the speculation.

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Bull Market Ranking

For anyone who claims that the current bull market is a Federal Reserve induced binge based on manipulated monetary policy, this market still has to exceed the bull market that followed the decline of 1852 before the non-central bank era bull markets could be legitimately ignored.  For those willing to look at the history of stock market recoveries, we present the top ten market recoveries from 1835 to 2017.

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J.M. Smucker Altimeter

It might surprise readers to know that we find fundamental analysis very useful.  Leading up to the fundamental analysis is the technical analysis that is necessary to guide our overall perspective of a given stock.  In the case of J.M. Smucker (SJM), the stock appeared on our watch list in June 2017 as the price reached a level which led us to pay a little more attention.  One fundamental that we like to track is the Altimeter which is best analyzed using a chart.

The Altimeter was first described by Edson Gould in Barron's on February 21, 1968. Gould asserted that the relationship between the price and the dividends paid on that stock, or index, tell investors of under or overvaluation.  It is important to make the distinction between Gould’s Altimeter analysis and his Speed Resistance Line [SRL] analysis.  Altimeters are based on the dividend payment relative to the stock price while the SRL is based strictly on the price movement.

In the case of J.M. Smucker, the Altimeter appears clear with little need for interpretation.

The Intelligent Investor: 5-Year DJIA

Chapter 7 of The Intelligent Investor by Benjamin Graham offers up a “Portfolio Policy for the Enterprising Investors: The Positive Side.”  In this chapter, there is mention of “The Relatively Unpopular Large Company” which is essentially a Dogs of the Dow investment strategy.  Unlike the Dogs of the Dow, this approach does not focus on the highest yielding stocks in the Dow Jones Industrial Average.

The distinction of this strategy is the fact that it is based on the selection of the ten Dow Jones Industrial Average stocks with the lowest price to earnings (p/e) ratio.  This group is contrasted with the performance of the 10 highest p/e ratio stocks and the entire index.  The performance measures the price change over 5-year periods from 1937-1969 as shown below with our own 1-year comparison from November 4, 2016 to October 10, 2017.

Walgreens Altimeter

Below is the Altimeter for Walgreens Boots Alliance (WBA) with fair value (FV) overvalued and undervalued targets.