Software & Bitcoin To Begin Another Plunge Lower
Good snowy, blizzardy morning!
With options expiring last Friday we have two very strong crosscurrents today with one pointing to sharply higher prices and one pointing to much lower prices. Both of these studies last two days. I think a rally can be sold today in the short-term.
Software and Bitcoin have been in the news so much lately. A few weeks ago, I added to some software positions that had shrunk in position size from their 1.25% half size. That was clearly early, meaning wrong. The software ETF is below and it looks like it has started the final decline into a tradeable bottom. I would expect the group to flush below $76 in the next few days.
Overall, lots and lots of time will be needed to repair this sector. It’s damage should lead to dead money or sideways action for at least 6-9 months. The theme should be selling rallies and tactically buying dips. At the same time, differentiation will begin with some stocks starting to outperform.
The other asset that has completely collapsed again has been Bitcoin. When I forecast that the bear market would lead to 50-70% downside, I certainly did not think it would be in Q1 2026. Similar to software, Bitcoin looks like it is about to begin another plunge to new lows where we can look for a tradeable rally. Below is the most popular ETF, IBIT.
In the stock market, down looks like the open. Ya know what hasn’t worked this year? Buying rallies and selling declines. And here we are again. The S&P 500 had a nice rally on Friday. Lots of folks opined that there would be follow through early this week. We will see if the bulls have any energy to thwart the bears this morning.
On Friday we bought WOOD and more BRK.B. We sold SMR.
