In the last week, 23 cryptocurrencies experienced notable gains against the U.S. dollar, with flare (FLR) and uniswap (UNI) leading the charge. Concurrently, dymension (DYM) and helium (HNT) saw significant declines over the same period. FLR and UNI Lead Gains in a Diverse Week for Cryptos, Despite DYM and HNT Setbacks As of now, the […]
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As bitcoin weaves through its dynamic trading patterns, its valuation on Feb. 16, 2024, reveals pronounced bullish indicators. Floating within a 24-hour trading window of $51,364 to $52,884, the digital currency’s market worth firmly grips the $1.02 trillion mark. Bitcoin The volume of bitcoin’s global trades is cruising at $29.86 billion, showcasing a medium-to-high engagement […]
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Selling your home to downsize can make your retirement more financially stable, but if you have a profit on the sale you might owe capital gains taxes. Fortunately, in many cases those selling their primary residence who are single can exclude $250,000 from capital gains taxes, while married couples filing jointly can exclude $500,000. Employing this exclusion can reduce or eliminate capital gains taxes since earnings are unlikely to go beyond those figures, if at all. Some restrictions do apply, however, so it’s best not to assume your gain will be excluded. There are other strategies that you might be able to use, but these may have significant limitations, uncertainties and risks.
Do you have questions about retirement planning? Speak with a financial advisor today.
Selling your primary residence may result in capital gains taxes, but for many people it doesn’t. To determine whether your gain will get taxed, you must first figure out how much gain qualifies to be excluded. The amount of the gain that can be shielded from taxes depends on the filing status you choose when you submit your income tax return.
Single filers can exclude $250,000 and married couples filing jointly can exclude $500,000 of profits on the sale of a primary home. However, to qualify for these exclusions, the sellers must have owned and lived in the home at least two of the five years prior to selling. Also, you can’t have used the exclusion in the previous two years.
If your gain exceeds the exclusion, the amount of the overage will be taxed as capital gains. The amount of tax depends on how long you have owned the home. If you have owned it for more than a year, you’ll likely qualify for long-term capital gains tax rates of 0%, 15% or 20%. The exact rate depends on your income and other capital gains for the year, and the gain on your home sale gets included when figuring that. In this case, a married couple who makes $550,000 in gains on their home sale would likely be subject to the 15% long-term tax bracket, which starts at $47,025 in 2024.
Here’s how this all could play out, looking at three possible scenarios:
A married couple filing jointly can exclude $500,000 in gains from taxation after the sale. This would leave only $50,000 to be taxed. Because the couple has owned and lived in the home for at least two out of the last five years, long-term capital gains tax rates will apply. The tax bill for the sale alone would be $50,000 at 15%, or $7,500.
If you aren’t eligible for any exclusion, due to not living in the home two of the previous five years or using the exclusion more recently than two years, then the entire $550,000 will be taxed. If the whole gain of $550,000 is taxed at 15%, the bill would be $82,500.
For the sake of an example, let’s assume you were single and meet the criteria for the exclusion. In this scenario, you can exclude $250,000 of the $550,000 gain, which leaves $300,000 taxable. The rate will likely be 15%, as the 20% long-term tax bracket starts at $518,900 for 2024. This will result in 15% taxes owed on the $300,000, or $45,000.
While these guidelines apply to federal capital gains taxes, some states also levy capital gains taxes. States tax capital gains in a variety of ways, so you need to check local laws to get an accurate idea of your tax bill.
You may be able to reduce your taxes, even if none or only part of the gain qualifies for an exclusion. This can be done by making sure you accurately figure your cost basis of the house. To do this, add up all the improvements you made to the property. Now add this figure to the property’s original cost and subtract it from the sale price.
If you have previously not fully accounted for your cost basis, this can reduce the amount of the gain and the subsequent taxes you’ll owe. For instance, if you spent $50,000 on a kitchen renovation and hadn’t included that in your cost basis, accounting for it correctly could reduce your $550,000 gain to $500,000.
Another way to potentially defer taxes is by using the gain to acquire a new residence through a like-kind exchange. This delays tax liability until you sell the replacement home. Many limitations and risks accompany these types of deals, however. For example, if you downsize to a less expensive home, the difference in the sale price of your former residence and the price of the new property could be taxable, among other complications.
A home seller pocketing $550,000 can legally avoid some capital gains taxes through an exemption and other legitimate tax minimization strategies. However, limitations are abound, so consult a financial advisor to understand how these situations work and how to plan for them.
A financial advisor can help you plan for taxes and retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
SmartAsset’s income tax calculator can shine a revealing light on how much you’ll owe or receive as a refund next time you file taxes.
Photo credit: ©iStock.com/svetikd, ©iStock.com/pcess609
The post We’re Selling Our House and Netting $550k to Downsize for Retirement. How Can We Avoid Capital Gains Taxes? appeared first on SmartReads by SmartAsset.
Bitcoin’s surge past $50,000 catalyzed a broader market upswing, propelling numerous large-cap alternative digital assets such as Ethereum (ETH), Solana (SOL), and others to significant gains.
According to data from CryptoSlate, Ethereum saw a 7% uptick, reaching $2,661, while SOL surged 8% to hit $114. Among the top 10 digital assets, Avalanche’s AVAX spiked 6% to $41, Cardano’s ADA rose by 3.74% to $0.5574, while BNB Coin (BNB) and Ripple’s XRP experienced more modest gains, each climbing by less than 3%.
Market analysts attribute this bullish trend to the buzz surrounding the multiple spot Bitcoin exchange-traded funds (ETFs) in the US. Vetle Lunde, a senior analyst at K33 Research, noted that inflows into these ETFs have remained robust more than a month after their launch.
“Yesterday saw a net inflow of 9,870 BTC, pushing the net U.S. spot ETF flow since launch to 72,312 BTC. The new nine now hold 228,000 BTC,” Lunde added.
During the past day, BTC’s price crossed the $50,000 threshold for the first time since late 2021. The top crypto’s value has risen 4.2% to $50,146 as of press time, extending a positive run that had seen it gain 16% over the past week.
The broader crypto market rally resulted in a significant liquidation totaling over $184 million from more than 56,000 traders, according to Coinglass data.
Short traders, or speculators betting against price increases, bore losses amounting to $134 million, while long traders betting on price increases lost approximately $50 million.
Across assets, Bitcoin led the liquidation charts with a total loss of $69.80 million. Short Bitcoin traders accounted for $55.04 million in losses, while long traders lost $14.76 million. Ethereum followed closely, contributing $39.85 million to the overall liquidation.
Other assets like Solana, LINK, and ORDI also experienced liquidations of $10.14 million, $5.93 million, and $4.81 million, respectively.
Across exchanges, Binance witnessed the highest proportion of liquidations at 43.13%, totaling $79.42 million. Other platforms like OKX and ByBit recorded liquidations of $58.29 million and $18.73 million, respectively.
Notably, the most significant liquidation order occurred on Bitmex for LINKUSD, amounting to $3.14 million.
It’s a question that has been on the minds of many market strategists: What could cause this top-heavy stock market to topple over?
One longtime equity-derivatives strategist has some thoughts. In his latest note to clients, Nomura’s Charlie McElligott discussed two things that could trigger a selloff in the megacap technology stocks that have driven most of the year-to-date advance in the S&P 500.
The most immediate concern for the market-leading tech names would be a potential Nvidia earnings miss, he said. The company is set to report quarterly results on Feb. 21, according to FactSet.
Analysts polled by FactSet expect the chip maker and artificial-intelligence darling to post earnings per share of $4.53 for the final three months of 2023. That’s compared with 88 cents per share from the same quarter a year earlier.
Nvidia shares NVDA have gained 35% since the beginning of 2024, establishing the chip maker as the best-performing stock on the S&P 500, FactSet data show. The second-best performer on the index is Meta Platforms Inc. META, another member of the “Magnificent Seven” group of megacap tech stocks that has driven the bulk of the S&P 500’s advance of 3.7% so far this year, according to FactSet data.
Beyond that, the bigger threat to stocks in 2024 could arrive in the coming months, with economic data showing signs of reflation. According to McElligott, practically the entire investing community has left the prospect of a rebound in inflation for dead.
But as many investors learned last year when ubiquitous recession forecasts failed to materialize, just because few on Wall Street expect something to happen doesn’t mean it won’t.
Instead, McElligott thinks policymakers at the Federal Reserve could allow the U.S. economy to “run hot,” leading to a revival in “animal spirits” and, with them, inflation.
While McElligott doesn’t see much chance of this happening in the immediate future, he thinks it could occur during the coming months, once the favorable year-over-year comparisons for goods prices have faded — leaving economists and investors to contend with stickier services inflation.
Such a revival would likely kick off a “brutal equities thematic reversal,” causing crowded bets on the largest growth stocks to unwind as expectations for higher interest rates and Treasury yields cause a sharp contraction in valuation multiples.
McElligott noted that consumer-price inflation has fallen to 1.9%, according to the last six months’ annualized readings from the core personal-consumption expenditures price index. The PCE index is the Fed’s preferred inflation gauge, and the central bank’s official target calls for inflation to return to 2% on a year-over-year basis.
But there’s still plenty of room for things to “get weird” later, McElligott pointed out.
Nvidia shares were weighing on the S&P 500 and Nasdaq Composite Tuesday, as the chip maker saw its shares slide 3.5% — leaving the company’s shares on track for their largest drop since October, Dow Jones Market Data show. However, weakness in the chip maker’s stock was being offset by strong gains in materials, real-estate and healthcare stocks, FactSet data show.
The S&P 500 SPX was flat as a result, while the Nasdaq Composite COMP was down 0.3% at 15,556 points, and the Dow Jones Industrial Average DJIA was up 60 points, or 0.2%, at 38,445.
According to strategists at LPL Financial, just four stocks — Nvidia, Meta, Microsoft Corp. MSFT and Amazon.com Inc. AMZN — have driven nearly 75% of the S&P 500’s total return in 2024.
The Dow Jones Industrial Average made a meager gain despite negative economic news. Bitcoin was sharply off highs as ETFs started trading, while fund manager Cathie Wood bought a diving stock. Meanwhile, Microsoft (MSFT) closed with a lower market cap than Apple (AAPL) despite briefly surpassing its old rival.
X
A trio of stocks moved higher toward entries. DoubleVerify (DV), Cadre (CDRE) and Tradeweb Markets (TW) all made progress.
Stocks managed to battle back from early pressure caused by some negative economic data. The Consumer Price Index rose 0.3% in December, higher than the 0.2% monthly increase expected by economists.
The 3.4% year-over-year increase was also above views. Core CPI, which strips out volatile food and energy prices, also popped 0.3% on the previous month, while the annual increase came in at 3.9%. Both were hotter than estimates.
Meanwhile, initial unemployment claims fell by 1,000 to 202,000, according to Labor Department data. They had been expected to rise to 209,000, according to Econoday. This is the lowest level since October.
Rising inflation and ongoing strength in the labor market are negatives as investors look for the Federal Reserve to start cutting interest rates.
“The last Fed minutes unscored that the path toward price stability remains uncertain, and today’s CPI report suggests that the Fed’s initial rate cut may be later than the market is hoping for,” LPL Financial Chief Global Strategist Quincy Krosby said in a note to clients.
Also Thursday, the U.S. budget deficit came in just below $510 billion from October 2023 through December 2023, the first quarter of the fiscal year. Total government debt topped the $34 trillion level for the first time.
The Nasdaq composite fought its way out of the red to close nominally higher, though it was essentially flat. Magnificent Seven stock Tesla (TSLA) was among the laggards as it closed the day down 2.9%.
The S&P 500 fell 0.1% but closed well off session lows. Netflix (NFLX) was a star in the benchmark index as it popped 2.9%. It is trading in a buy zone above a 482.70 entry, according to MarketSmith analysis. Netflix is discussed in today’s IBD Stocks to Watch.
S&P 500 sectors were mostly negative. Technology and energy fared best in the stock market today. Real estate and utilities lagged the most.
Small caps were bitten by the bears, with the Russell 2000 falling 0.8%. Growth stocks fared better, the Innovator IBD 50 ETF (FFTY) reversing higher to close up 0.1%.
Treasury yields were lower. The 10-year Treasury note fell 4 basis points to 3.99% while the 30-year dipped 1 basis point to 4.19%. The 5-year yield fell 8 points to 3.9% while the 2-year dived 11 basis points to 4.27%.
The Dow Jones Industrial Average rallied out of negative territory to turn in a gain of 15 points. It was essentially flat.
Microsoft stock briefly overtook index rival Apple in terms of market capitalization. It was up 0.5%. AAPL was down fractionally.
MSFT briefly cleared a flat base with a buy point of 384.30, according to MarketSmith analysis. This is a second-stage base, which means it is more likely to net good gains.
Salesforce (CRM) fared best on the Dow Jones today with a 2.7% gain after an analyst upgrade.
Boeing (BA) fell 2.3% after Transportation Secretary Pete Buttigieg said 737 Max 9 planes won’t fly until they are considered safe following the Alaska Airlines door plug emergency.
Verizon Communications (VZ) fell the most in the Dow though, due to a dip of 3%.
Bitcoin fell nearly 6% from its 24-hour highs after it briefly cleared the $49,000 per token level. It was trading for just over $46,000, according to CoinDesk.
Late Wednesday, the Securities and Exchange Commission approved a slew of spot bitcoin ETFs. Action was mixed among these funds Thursday.
The well-established Grayscale Bitcoin Trust (GBTC) surged early but closed well off highs for the day. It finished up 0.5%. BlackRock’s spot bitcoin ETF, the iShares Bitcoin Trust (IBIT) closed the session down 4.7%.
Another noteworthy fund is ARK 21Shares Bitcoin ETF (ARKB), Ark Invest’s offering in the space. But the ETF, part of Wood’s Ark Invest family, finished the day down 6.8%.
Other bitcoin stocks were getting hammered. Coinbase (COIN) fell 6.7%, Riot Platforms (RIOT) plunged 15.8% and Marathon Digital (MARA) dived nearly 15.8%.
Meanwhile Wood made an investment decision that failed to immediately pay off. On Wednesday her firm bought more than 5,000 shares of Unity Software (U) for the ARK Innovation ETF (ARKK). It ended Thursday down 2.4% and is now down 20% from its Dec. 27 high of 43.54.
Futures Fall Amid Big Earnings; Tesla Cuts Prices
While stocks were getting pressured, a few stocks near entries impressed by moving higher.
Enterprise software firm DoubleVerify is nearing a cup-with-handle entry of 38. It closed the day up 2.4%.
Cadre is nearing a flat-base entry of 33.62. The safety and survivability products firm rose 4.2%. Overall performance is excellent, netting it a perfect IBD Composite Rating of 99.
Tradeweb Markets is closing in on a flat-base buy point of 97.18 after it rose 1.3%. The relative strength line is making progress. The financial services play has top-notch earnings, reflected in its EPS Rating of 96 out of 99.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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Selling your longtime home and downsizing in retirement is a common practice for people entering their golden years. While profits from a home sale are considered capital gains, the IRS typically allows you to exclude part of the profit – if not all of it – from your taxes.
But what if you sold your home and pocketed as much as $640,000? You could still end up owing a hefty capital gains tax bill on the sale depending on if you’re married or not. Then again, you still may be able to avoid taxation by using other investment losses to offset your gain or delay taxes with a like-kind exchange. But if you need additional help managing your capital gains tax bill, consider speaking with a financial advisor.
When an investment appreciates and sells for more than its original purchase price, the profit gets taxed. This applies to assets like stocks, bonds, collectibles and real estate, including your personal residence.
For assets that are owned for more than a year, the IRS applies long-term capital gains rates of 0%, 15% or 20%. The precise capital gains tax that will be applied depends on the taxpayer’s income, but capital gains taxes are generally lower than the ordinary income tax rates. Many U.S. states also tax capital gains, levying rates they use for ordinary income.
Gains on personal home sales are treated differently, however. You can exclude some or all of the gain from taxation if you lived in the home for at least two of the last five years (cumulatively). And when you’re getting ready to make a large financial decision, like selling your home to downsize, talk it over with a financial advisor who can help you understand how the move will impact your larger financial plan.
If you net $640,000 from the sale of your longtime home, your capital gains tax bill will depend on a couple of factors:
Filing status. This affects how much of the gain you can exclude. If you’re married and filing jointly, you can exclude up to $500,000 in home sale profits. This would leave $140,000 of the $640,000 subject to taxes. If you’re filing as an individual, you can exclude up to $250,000. In this case, $390,000 would be subject to taxes.
Income. Capital gains tax rates for most people are 0%, 15% and 20% based on their income.
Assuming you pay 15% on capital gains, you’ll owe $21,000 ($140,000*0.15) in federal taxes after applying the exclusion if you’re married and filing jointly. If your filing status is single, you’ll owe $58,500 in capital gains tax ($390,000*0.15). But remember, a financial advisor can help you plan for capital gains taxes and find ways to potentially mitigate them.
You have limited options for avoiding capital gains tax after applying the principal residence exclusion. However, there are some available techniques, including:
Accurately calculating your cost basis. The cost basis is the purchase price of your home plus eligible improvements. You subtract the cost basis from the amount you sell the home to get the taxable gain. Including the expense of adding on a room or other improvement in your cost basis could significantly reduce your taxable gain.
Offsetting investment gains with losses. You can reduce taxable capital gains by harvesting investment losses. For instance, if you sold a stock for $40,000 less than you paid for it, the loss would offset $40,000 of your home sale profit. In that case, you would reduce the taxable gain on your home sale from $21,000 to $15,000 (assuming you’re married and file jointly).
Using a like-kind exchange. Using a technique called a 1031 exchange, you may be able to use the entire proceeds from your home sale to purchase another residence without having to immediately pay taxes on the gain. While tax rules limit 1031 exchanges to investment properties, you may be able to do an exchange on your home if you move out and rent it to someone else for at least two years. This converts it into an investment property in the eyes of the IRS. At that point, you can do a like-kind exchange for another property. After renting this new property out for a year or so, you may then be able to move into it and use it as your personal residence.
And if you need advice regarding a 1031 exchange or the other strategies listed here, consider speaking with a financial advisor.
These techniques can only be used in certain situations. For instance, special rules may apply if you inherited the home. Other limitations could also apply, including:
You may only be able to avoid taxes on a portion of your gains. Unless your gain is less than the allowable exclusion or you have sufficient offsetting losses, part of your gain may still be taxed.
A like-kind exchange only delays taxes. When you eventually sell the property you exchanged for, that sale will trigger taxes.
Not all properties qualify for exclusion. The capital gains exclusion for primary residences doesn’t apply to vacation homes or investment properties.
There are residency period conditions. Living in the home for less than two of the previous five years means you can’t use the exclusion. You may have to provide tax returns, utility bills and other documentation to show you lived there for the required time.
Homeowner who meets IRS conditions can exclude up to $500,000 in profits from the sale of their primary home from taxes ($250,000 if they’re single). However, a gain that exceeds the IRS exclusion limits will be subject to long-term capital gains taxes if the home was owned for more than a year. In that scenario, you could use tax-loss harvesting to offset part of the gain and lower your tax bill or a like-kind exchange to defer the taxes until a later date.
Develop a strategy for protecting gains realized on your home sale from taxes by consulting a financial planner. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Use SmartAsset’s Capital Gains Tax Calculator to estimate how much you could owe in tax on the sale of assets like stocks and real estate.
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The post I’m Selling My House and Netting $640k to Downsize for Retirement. How Can I Avoid Capital Gains Taxes? appeared first on SmartReads by SmartAsset.
Fallout from the pandemic made the last two years particularly tumultuous for investors. The S&P 500 (^GSPC 1.41%) tumbled 19% in 2022, dragged down by runaway inflation, rapid interest rate hikes, and recession fears. That was its worst annual performance since the global financial crisis in 2008.
Yet, the recession many economists predicted for 2023 never materialized, and the S&P 500 rebounded 24% during the year, propelled higher by cooling inflation, excitement around artificial intelligence, and the anticipation of rate cuts. The benchmark index ended the year with nine consecutive weeks of gains, its longest win streak since 2004.
The stage is now set for another exciting year. Here are three not-so-wild stock market predictions for 2024.
My first prediction is the S&P 500 will increase by 10% in 2024, a more modest performance than its 24% gain in 2023 but a good year nonetheless. I base that prediction on two pieces of information.
First, Wall Street analysts expect S&P 500 revenue and earnings growth to accelerate in 2024. That could energize investors and move the index higher. Indeed, analysts believe that will happen. The S&P 500 has a median 12-month price target of 5,090, which implies about 8% upside from its current level.
Second, the Federal Reserve has hinted that its rate-hiking campaign is finished, and its latest projections imply three 25-basis-point cuts in 2024. Lower rates boost spending and economic growth, and investors tend to get excited by those prospects. As a result, the S&P 500 returned an average of 17.6% during the 12-month period following the last six hike cycles, according to JPMorgan Chase.
To add context, the Federal Reserve last raised its benchmark rate in July 2023, and since then, the S&P 500 has advanced 3.6%. That leaves potential upside of 14% through July 2024.
Between the 8% upside based on the analysts’ median target price and the 14% upside implied by the end of the Fed rate hikes, I chose 10% specifically because it aligns with the average annual return of the S&P 500 for the last 30 years. In other words, I expect the S&P 500 to have an average year.
My second prediction is the technology sector will outperform the broader S&P 500, propelled higher by strong momentum across artificial intelligence (AI) and cybersecurity stocks. I base that prediction on three pieces of information.
First, the technology sector was the best-performing of all 11 market sectors over the last year, the last five years, and the last decade. In fact, the technology sector increased 465% over the last 10 years, nearly tripling the 160% return of the second-best-performing sector (consumer discretionary), as shown in the chart below.
Data by YCharts.
The technology sector has also outperformed the S&P 500 in nine of the last 10 years, meaning recent history implies a 90% chance that the technology sector will beat the market once again in 2024.
Second, a recent survey from Morgan Stanley found that AI was the second-largest IT budget priority in the third quarter of 2023, up from third in the second quarter. That trend will likely gain momentum in 2024. Experts like Microsoft founder Bill Gates and veteran analyst Dan Ives see AI as the most revolutionary technology in decades, and the AI market is forecasted to grow at 37% annually through 2030.
Third, the same Morgan Stanley survey identified cybersecurity as the largest IT budget priority in the third quarter of 2023, up from No. 2 in the second quarter. Digital transformation projects are driving cloud migration and connected device proliferation, making cybersecurity increasingly imperative. That trend is poised to gain momentum in 2024, given the upcoming presidential election. The market is forecasted to grow at 12.3% annually through 2030.
Companies that blend both elements could see their share prices soar in 2024 and beyond. One that comes to mind is CrowdStrike (CRWD 5.58%), a recognized market leader in endpoint security, cloud security, and threat intelligence. And that success is due in part to superior AI.
Indeed, consultancy Frost & Sullivan recently wrote, “CrowdStrike leads the industry with regards to the application of artificial intelligence and machine learning to endpoint security, as well as providing unparalleled prevention of malware and malware-free attacks.”
Apple (AAPL 2.42%) is worth $2.8 trillion as of this writing, and Microsoft (MSFT 1.89%) is worth $2.7 trillion. Both businesses have been wildly successful during the past decade, but my third prediction is that Microsoft will surpass Apple as the most valuable public company by the end of 2024. Here’s why.
Apple is a wonderful business. It is the second-largest smartphone manufacturer in the world, and its installed base of more than 2 billion devices is driving strong growth in its high-margin services segment. But the stock appears overvalued. Wall Street expects Apple to grow earnings at 9.1% over the next three to five years, and the stock currently trades at 29.6 times earnings. That gives it a price/earnings-to-growth ratio (PEG ratio) of 3.2, well above the five-year average of 2.3.
Meanwhile, Microsoft has more robust growth prospects. It is the market leader in enterprise software and operates the second-largest cloud computing platform. Better yet, Microsoft is leaning into generative AI across both business segments, tapping into explosive demand.
To that end, Wall Street expects Microsoft to grow earnings at 14.6% annually over the long term. Compared to its current valuation of 35.6 times earnings, that gives it a cheaper PEG ratio of 2.4, and that multiple is identical to the five-year average.
To be clear, I predict the market will reassess its valuation of both companies such that Microsoft lands on top. That does not necessarily mean Apple will lose value.
Worldcoin (WLD), the brainchild of OpenAI CEO Sam Altman, has experienced a significant level of positive traction in the past month. Notably, Worldcoin gained by over 50% in mid-December to attain an all-time high of $4.6. Although the token soon fell from these heights trading at $3.35 on December 25, it appears that WLD may be gathering momentum for another bullish breakout.
According to data from CoinMarketCap, Worldcoin has gained by 9.68% in the last seven days, signifying a steady rise in buying pressure from investors in the WLD market.
Using data from IntoTheBlock, popular crypto analyst Ali Martinez has given more insight into this bullish trend. On December 30, he shared via X that the number of WLD whales in possession of 10,000 to 100,000 WLD rose by 16.33% in the last week. Interestingly, this price increase and network growth occurred a few days after Worldcoin announced its expansion into the crypto-friendly nation of Singapore.
#Worldcoin | The number of #WLD whales holding between 10,000 and 100,000 $WLD has increased by 16.33% over the past week! pic.twitter.com/ps9xzcMtVd
— Ali (@ali_charts) December 30, 2023
In a blog post on December 27, the crypto project stated that it had successfully set up physical screening locations in the Asian nation allowing interested users to undergo the World ID verification process and join its growing network.
Beyond Singapore, Worldcoin also shared that it has registered an increased presence in several nations in the last month. These include Spain, Germany, Chile, and Japan. Notably, in Argentina, the crypto project recorded a national record of over 10,000 World ID verifications in a single day. Apparently, these multiple strides appear to have increased investor confidence in Worldcoin, as indicated in the price action stated above.
Based on recent developments surrounding Worldcoin, the token seems poised for a major boost in adoption which could translate into a price rise over the next few weeks. Aside from its expansion into new nations, the launch of the World ID 2.0 in mid-December, which introduced integrations with various Apps such as Reddit, Shopify, and Telegram, is also regarded as a positive development by the project’s growing number of users.
Interestingly, Martinez predicts that WLD could soon experience an 80% rally based on chart indicators alone. If this projection proves true, the altcoin could trade as high as $6.30.
However, despite all these indications, it must be noted that Worldcoin remains under heavy regulatory scrutiny in some nations due to privacy concerns in regard to user data.
Worldcoin operations have been actively suspended in Kenya and are under investigation in Germany and the United Kingdom. In fact, the crypto project recently halted its orb verification service in Brazil, France, and India although citing a “limited time access” on the screening orbs provided in these markets.
At the time of writing, WLD trades around $3.73 with a 3.90% gain on the last day. In tandem, The token’s daily trading volume increased by 83.12% and is valued at $197.52 million.
WLD trading at $3.75 on the daily chart | Source: WLDUSDT chart on Tradingview.com
Featured image from iStock, chart from Tradingview
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
The stock market, as measured by the S&P 500 Index
SPX,
has continued to move higher over the past week — ignoring the one big down day (70 points) and putting that in the rearview mirror. SPX has made new 2023 highs, and the all-time highs just above 4800 are within shouting distance.
It seems inevitable that SPX will achieve new all-time highs early in the new year (if not before). The advance has been swift, not leaving much in the way of support. The last time there was any backing and filling (which creates support) was just below 4600, in late November and early December. In theory, a pullback towards that area would still leave the SPX chart interpretation as “bullish.” However, a break below the December lows at 4550 would have far more negative ramifications.
This week, SPX rose back above its 4σ “modified Bollinger Band” (mBB) again. That cancels out the previous “classic” mBB sell signal, and the whole process of potentially setting up a sell signal must begin again. We do not trade the “classic” sell signals. Rather, we wait for further confirmation in the form of a McMillan Volatility Band (MVB) sell signal.
In December we have had two “classic” sell signals so far, but neither one became an MVB sell signal. Both were eventually stopped out when SPX rose back above the +4σ Band. So, now we await a third “classic” sell signal, and we will have to see if it can become a full-fledged MVB sell signal. That “classic” sell signal will occur when SPX closes below its +3σ Band. That would occur on a close below 4758. The +3σ Band moves daily, so that price of the “classic” sell signal will change tomorrow and on subsequent days. Eventually, the “classic” sell signal will occur. After it does, we will outline the parameters for potentially taking a bearish position if the MVB does indeed follow.
Equity-only put-call ratios have both made new relative lows. That means they remain bullish on the stock market. The standard ratio has been steadily declining. The weighted ratio had a brief rise, during which the computer analysis programs were warning of a sell signal, but action this week has pushed the weighted ratio to a new relative low as well. So, these ratios will remain on buy signals until they roll over and begin to trend upward.
Breadth has been extremely strong over the past week, and the breadth oscillators remain on buy signals. They are in overbought territory. In fact, the “stocks only” breadth oscillator traded at a new all-time high this week. The NYSE breadth oscillator is nowhere near an all-time high. It would probably take three days of negative breadth to roll these breadth oscillators over to sell signals.
In a related matter, cumulative volume breadth (CVB) continues to make new all-time highs as well. That portends well for stocks, and we are holding a long position because of it. CVB is the running daily sum of volume on advancing issues, minus volume on declining issues. The companion indicator — cumulative breadth, which is the running daily sum of the number of advancing issues, minus the number of declining issues — is nowhere near its all-time high, set in November 2021. So, volume has been the key to the rise in the last 15 months, more so than the number of issues rising.
The number of New Highs on the NYSE continues to dominate the number of new lows. That keeps this indicator bullish. This buy signal will be stopped out if, on the NYSE, New Lows outnumber New Highs for two consecutive days.
VIX
VIX
VX00,
continues to hover at low levels. Yes, there was a minor advance last week, when stocks sold off sharply in one day, but that is no longer a factor. The trend of VIX buy signal remains in place. It would be stopped out if VIX were to close above its declining 200-day Moving Average. In addition, we would be concerned if VIX were to return to “spiking” mode (a close at least 3.00 points higher over an 3-day or shorter time period). That hasn’t happened, either.
The construct of volatility derivatives remains bullish in its outlook for stocks, since the term structures of the VIX futures and of the CBOE Volatility Indices continue to slope upward. We continue to watch the front-month Jan VIX futures versus the Feb VIX futures to see if an inversion (Jan trading above Feb) takes place. If that were to happen, it would be a negative warning sign, but it doesn’t appear to be a problem at this time.
While we are on the subject of volatility, realized volatility is coming into play. The 20-day historical volatility (HV20) of SPX had dropped almost to 7% recently; it has begun to rise, though, and if it closes above 10%, that is a sell signal for the stock market. This indicator is rarely used, and it is usually an early warning sign of trouble. So, we are keeping an eye on this as well.
The seasonally bullish Santa Claus rally continues through the second trading day of the new year. It is the third and final bullish seasonal that follows Thanksgiving. This year has been one of the stronger ones for that seasonality. We will exit positions based on that, at the close of the second trading day of 2024.
In summary, we continue to maintain a “core” bullish position because of the positive SPX chart. We will trade other confirmed signals around that. We are rolling calls up as they become fairly deep in-the-money — a strategy which brings in credits and reduces downside risk while still allowing for further upside gains.
New Recommendation: Esperion Therapeutics (ESPR): This stock has moved higher after building a base for about eight months. Both option and stock volume patterns are strong.
Buy 10 ESPR
ESPR,
Feb (16th) 3 calls in line with the market.
ESPR: 3.06 Feb (16th) 3 call: 0.60 bid, offered at 0.70
If bought, stop out on a close below 2.25.
New recommendation: Walt Disney (DIS) Puts: There is a new put-call ratio sell signal in DIS
DIS,
and with the stock breaking down below 91, there is technical confirmation as well.
Buy 2 DIS June (21st) 90 puts in line with the market.
DIS: 90.65 June (21st) 90 puts: 5.40 bid, offered at 5.50
We will hold these puts as long as the weighted put-call ratio of DIS is on a sell signal.
New recommendation: Potential MVB sell signal: This recommendation was not filled last week, and now SPX has risen back above the +4σ Band. So, the entire process of having to set up a sell signal must begin again.
All stops are mental closing stops unless otherwise noted.
We are using a “standard” rolling procedure for our SPY spreads: in any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread or roll down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed.
Long 1 expiring SPY
SPY
Dec (29th) 472 call: A spread was bought in line with the CBOE equity-only put-call ratio buy signal. It has been rolled up several times, with December 14th being the most recent, when SPY first traded at 472. Roll to the SPY Jan (19th) at-the-money call. We are holding without a stop for now.
Long 2 ES
ES,
Jan (19th) 60 calls: We will hold this position as long as the weighted put-call ratio chart for ES remains on a buy signal.
Long 4 expiring XLP
XLP
Dec (29th) 70 calls: Roll to the Jan (19th) 72 calls. The stop remains at 70.00.
Long 1 expiring SPY Dec (29th) 473 call: This position was initially a long straddle. It was rolled up, and the puts were sold. The calls were rolled up again on December 14th. Continue to roll the call up if it becomes 8 points ITM. Roll to the SPY Jan (19th) at-the-money call. This is, in essence, our “core” bullish position.
Long 5 AVPT
AVPT,
Jan (19th) 8 calls: The stop remains at 8.10.
Long 2 TECH
TECH,
Jan (19th) 70 calls: We will hold as long as the weighted put-call ratio is on a buy signal.
Long 2 IWM
IWM
Jan (19th) 196 calls: This is our post-Thanksgiving seasonal position. We will hold without a stop, since this is a rather long seasonal bullish period extending through the first two trading days of 2024 (the last part of which begins at Thursday’s close). We have rolled the call up three times, most recently on December 14th. Roll up again if the call becomes six points in-the-money (i.e., at 202).
Long 1 SPY Feb (16th) 457 call and short 1 SPY Feb (16th) 477 call: This spread is based on the “New Highs vs. New Lows” buy signal. We will stop out of this position if New Lows on the NYSE exceed New Highs for two consecutive trading days. Otherwise, there is no price stop based on SPX. Roll this spread up 20 points on each side to the Feb (16th) 477-497 call bull spread.
Long 4 UNM
UNM,
Mar (15th) 45 calls: We will hold this position as long as the weighted put-call ratio of UNM remains on a buy signal.
Long 2 SPY Jan (5th) 172 calls: This is our position to trade the Santa Claus rally. Roll the position up if the calls become at least six points in-the-money at any time. Sell the entire position at the close of trading on the second trading day of 2024 — Wednesday, January 3rd.
Long 1 SPY Feb (16th) 480 call: This call was bought in line with the Cumulative Volume Breadth (CVB) buy signal. The entire premium is at risk here, since there really isn’t a stop-out for this trade.
All stops are mental closing stops unless otherwise noted.
Send questions to: lmcmillan@optionstrategist.com.
Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of the best-selling book, Options as a Strategic Investment. www.optionstrategist.com
©McMillan Analysis Corporation is registered with the SEC as an investment advisor and with the CFTC as a commodity trading advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. The officers or directors of McMillan Analysis Corporation, or accounts managed by such persons may have positions in the securities recommended in the advisory.
