The Daily Breakdown takes a closer look at Bitcoin, examining the recent dip. Tesla falls after disappointing Q1 delivery results.
Wednesday’s TLDR
- Bitcoin continues to search for support.
- Tesla’s Q1 deliveries badly miss expectations.
- Health insurance stock wounded by Medicare decision.
What’s happening?
uesday was an interesting session, as the S&P 500 finished the day near session highs. However, the index closed lower on the day by more than 0.7% — its worst one-day fall in almost a month.
For now, it remains just a minor dip amid a massively bullish trend. But it’s clear that investors are wondering when a more noticeable pullback will materialize.
To be clear, we remain optimistic, but realistic at this juncture.
Amid bullish trends like the one we’re in now, I like to look at a pullback as the “dip that refreshes.” Rallies take energy, and one way to “refresh” a bit of that energy is to pull back — giving buyers a chance to reload their positions and put more cash to work.
Today, we’ll get a look at ISM and PMI data, as well as the ADP employment report — the latter of which is a prelude to Friday’s big jobs number.
If these reports come in strong, that’s a good sign for the economy. However, it will likely stir the pot when it comes to interest rates and increase the chatter of delaying the first rate cut from June (which is the current consensus) to July.
I try not to put too much stock in any one individual economic report, and as we talked about earlier this week, Friday’s monthly jobs report remains the key focus.
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The setup — Bitcoin
Bitcoin and other cryptocurrencies haven’t had an easy run as of late. However, bulls are hoping that this is just a breather before the next leg higher.
Given how well Bitcoin has still performed this year — up 56.4% year to date — it’s easy to see why bulls are optimistic.
It helps that US stocks are near all-time highs, while the crypto market looks to events like Bitcoin’s halving and the potential for more ETFs and ETNs to come online in different countries (and potentially, for different cryptocurrencies).
That said, Bitcoin has been taking a much-needed rest.
After an enormous rally, Bitcoin has been consolidating in a large but tightening range. Known as a “wedge,” this pattern is defined by a series of higher lows and lower highs (illustrated on the chart with arrows).
I want to see if Bitcoin will test down into the 50-day moving average, in the low-$60,000 range. If it does, it could be a potential support zone for bulls.
If support fails, more selling pressure could ensue and Bitcoin may need more time before resuming its potential move higher.
Ultimately, bulls want to see Bitcoin clear the $70,000 to $71,000 area, which was recently resistance. If it can clear this zone, it opens the door for a potential rally back to all-time highs.
What Wall Street is watching
BTC — Bitcoin’s value dropped over $5,000 in 24 hours, falling more than 6% to $65,150 as Treasury yields rise and the US dollar strengthens. This marks an 11% decrease from its all-time high on March 14.
BABA — Alibaba executed its largest quarterly share buyback in Q1 2024, repurchasing 524 million shares for $4.8 billion. This follows the board’s decision to boost the buyback program by $25 billion through March 2027. The e-commerce giant’s total buyback for the fiscal year was 1.25 billion shares, totaling $12.5 billion.
HUM — Health insurance stocks took a big hit on Tuesday after the Centers for Medicare & Medicaid Services set a lower-than-expected reimbursement rate for healthcare plans for 2025. Humana has notable exposure to Medicare, and thus, the stock was hit exceptionally hard. CVS and UnitedHealth Group were also among stocks that were hit hard.
TSLA —Tesla stock avoided making new 52-week lows, but still fell hard on Tuesday after the firm announced disappointing Q1 delivery results. The automaker delivered 386,810 vehicles in the quarter, badly missing consensus expectations of 449,080, according to Bloomberg.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.