Bitcoin Prices and Emerging Market Stocks Tank - Now What?

he short and sweet on the markets at the moment: It could be worse, way worse.
The flip side of that coin: It could be about to get much worse in the very short-term if investors begin taking cues from plunging emerging market stocks and bitcoin prices.
The MSCI Emerging Market Index dropped for a seventh day, extending its decline since a peak in January to more than 20%. Yes, that means bear market. The index now trades on its lowest price-to-earnings ratio since early 2016, according to Bloomberg data.

Bitcoin prices tanked as much as 9.8% on Thursday following news Goldman Sachs (GS) won't be setting up a crypto trading desk (of course it wasn't going to do this, let's get real). Over the past week, bitcoin prices have dropped from $6,800 to roughly $6,300. Some experts are calling for $5,000 in the not-too-distant future.

At that point, the S&P 500 could be 5% lower from its highs.

Data Dump

Good news and bad news for Facebook (FB) investors.

The good news is that Sheryl Sandberg sounded engaged with Facebook's operations during her testimony in front of lawmakers Wednesday. The market didn't like what she had to say, neither did politicians, but with concerns on her standing inside Facebook swirling it's good to see that the experienced leader is working to address the social platform's many issues. The bad news here is that Sandberg's testimony sent Facebook shares down to a key technical point.

Closing at $167.18, the stock is about to test the July 30 lows of $166.56. If that important level doesn't hold, Facebook's stock could tank to the mid-March lows near $150.

"A break below the July lows will be particularly concerning because experience tells us that whenever a stock falls 20% or more over just 1-3 days, it usually involves some "forced selling" (margin calls, etc)," said Miller Tabak strategist Matt Maley. "These kinds of severe declines over just a few days usually leads the stock to get 'washed out.' This, in turn, usually signals a bottom for the stock that lasts for a long time (6 months or more). This is why we believe that the July lows ($170-$171) is a VERY important level for FB, and any 'meaningful' break below those July lows (a small break will not be enough) could/should lead to another significant leg lower in the stock."

Source: The Street

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