Let’s Fight Again in 30 Days By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - Short wars in world history…
- The trade war begins (and ends, and continues)…
- Gold’s at another new high…
- Bitcoin retakes the dominance trend…
- The rare pockets of altcoin magic…
On July 14, 1969, at 6 p.m., the Salvadoran Air Force made its first attack on Honduran airfields.… Hours later, El Salvador’s army marched across the border, beginning a two-pronged invasion. In response, the Honduran Air Force captured El Salvador’s international airport and key oil facilities. And over the next several days, the two Central American countries fought major battles resulting in thousands of casualties and more than 2,000 civilian fatalities. Then, as quickly as the war started – incited partially by rioting soccer fans in response to a World Cup qualifier match won by Honduras 1-0, and partially by already existing tensions between the two countries… It ended, brought to heel by the Organization of American States, which negotiated a ceasefire. It’s one of the shortest wars in history… Lasting roughly 100 hours. And I couldn’t help but think of all the parallels we can draw between this incident and what we’re seeing in President Donald Trump’s new trade war. As our CEO, Keith Kaplan, will show you later today, it’s difficult, maybe even hopeless to try to keep up with the news cycle lately. After kicking off on Friday with universal tariffs of 25% on Mexico and Canada, 10% on China, and mulled tariffs on the EU, two of those wars have already negotiated ceasefires. Mexico and Canada have both promised to, seemingly, accelerate already existing plans to strengthen border security and take extra steps to stop the flow of synthetic opioid fentanyl across each border. That will satisfy the U.S. for the time being. And that time being is 30 days, when the tariffs are set to come into effect once again. As of this morning, China responded a different way. It’s levying tariffs of 10% mainly on U.S. coal, natural gas, and other items totaling about $14 billion. That’s a drop in the bucket compared to the 10% tariff on $525 billion in goods now in effect from the U.S. side. I mentioned on Monday that China has more leverage on the U.S. than Mexico and Canada does because of the larger trade imbalance in its favor. That’s true, but it’s a relative measure. The truth is, China’s economy can’t stand for broad-based retaliatory tariffs with deflation and an economic slowdown forcing the government to continually fire out “stimulus bazookas” just to keep it afloat. The measures brought out today are meant to simply not do nothing and hold out for a “ceasefire” to come in short order. Time will tell whether that happens. Canada and Mexico were highly successful at doing just that with relatively little cost – for now. Trump may seek greater concessions for the U.S. before the next deadline. But the bigger point to all this is that, just like last week, the tariff spook from over the weekend proved a great buying opportunity for brave traders. The S&P 500 is up more than 1% from Monday’s open. The casualties in this trade war were all the not-so-brave traders who saw the news over the weekend and vowed to go to cash and gleefully wait for the market to crash so they could buy back in at lower prices. As soon as I saw that kind of talk, I knew this week would be much like the last. Stocks would, as they tend to do in bull markets, go up. The week is still young, but I can’t say I’m disappointed in my prediction. | Recommended Link | | | | While AI is all the rage… I believe a new, cutting-edge technology will steal the headlines in 2025. And if you’re in before the crowd, it could mean a big winner for you. I’ve found one stock I think will benefit the most. It could be the #1 Tech Stock of 2025. |  | | And you know what’s up even more? Gold, baby: 
As we discussed Friday, gold’s breach into new high territory is well supported technically speaking. The uptrend is strong, and Monday’s volatile price action saw the yellow metal briefly retest the former all-time high before getting the all-clear for a big Tuesday gain. It’s now up 1.7% from Monday’s open, outpacing the gain of stocks. Clearly, traders are interpreting all this trade activity as inflationary. And so inflationary, they’re willing to buy gold at all-time highs. As we pointed out the last time we talked about gold, the past decade has seen gold actually underperform during periods of high volatility and outperform ahead of those periods. So there’s something to the idea that gold’s gains could end any day now, particularly when the next consumer price index report hits next Wednesday. There’s also the simple fact that gold is reading overbought on its Relative Strength Index. It just crossed above 70 for the first time since November. And back in November, gold followed that by dropping much lower and spending the next couple months consolidating for the current move we’re seeing. That is to say, if you have gains in gold, you might want to consider taking profits here. (And if you have those gains in gold because you read TradeSmith Daily – or you have any other comments you’d like to send our way – write us at feedback@TradeSmithDaily.com.) Bitcoin made a shocking move over the past few days… Back in December, I was beyond convinced that we had entered the traditionally faster, crazier, more speculative second half of the crypto cycle. This half brings about acronym-based trends like initial coin offerings (ICOs), decentralized finance (DeFi), non-fungible tokens (NFTs), and the “metaverse,” which though lacking a credible-sounding acronym, has likewise been largely forgotten. (Unless you count the name change for one of the world’s largest tech firms.) During these periods, obscene amounts of money are made in these fleeting trends for those rare few who play their cards right. (For DeFi alone, the total market cap of these assets went from $3 billion at the start of 2020 to a peak of $185 billion less than two years later.) On the way down, though, these fleeting trends have a brutal tendency to lose 90% or more of their value… if not go to zero. (Sticking on DeFi, arguably the trend with the best staying power, it’s now worth $104 billion and hit a low of $30 billion.) So, it’s time to make money on crazy altcoins, right? That’s what I said, isn’t it? A troubling thought: I might have got that one wrong. Because the so-called “altcoin season” hasn’t materialized. As I showed you recently, the ex-BTC market is stalling out below new highs. Looking outside the top 10, it’s even uglier. And the biggest signal is that bitcoin has retaken the key dominance trend line we’ve been watching: 
Bitcoin dominance is the measure of how much the total cryptocurrency market cap is taken up by bitcoin. This week, it hit a local intraday high of about 64%, the highest level in four years. That’s after losing ground by about 10% back in December, which sure looked a lot like the start of “alt season.” Does that mean you should dump all your alts and go all-in on bitcoin? Well, for your sanity, maybe. But that would mean potentially missing out on a huge momentum trade… Crypto is one of the only places you can see 500% or even 1,000% gains in a matter of months or weeks – not years. The key, as I and many others have learned the hard way, is not to hold onto short-term trends for too long. So… How do you know if a DeFi or metaverse (or perhaps, in this case, a Trump trade) trend has run its course? That’s what Luke Lango, friend of TradeSmith Daily and resident crypto analyst at InvestorPlace, specializes in. In the last crypto super-cycle of 2021, Luke’s Ultimate Crypto portfolio results included one-month gains of 276% on CELO and two-month gains of 605.3% on MANA. (Both of these coins are still well below their 2021 highs… But Luke and his readers don’t mind. They booked their wins.) Now in 2025, Luke is launching a new quant-based crypto-trading algorithm (which he and I will be discussing in Saturday’s Daily). And already he’s found three altcoins that could soar in Trump’s first 100 days. Click here to automatically save your spot when Luke presents his new Great American Crypto Project tomorrow, Feb. 6, at 10 a.m. Eastern. To thank you for your time, Luke will share those three crypto picks at the event, free of charge. To your health and wealth, 
Michael Salvatore
Editor, TradeSmith Daily | 
No comments:
Post a Comment