Tag Archives: Long Ideas

Litecoin Spikes 30%, Retreats: A Technical Look

Litecoin (CRYPTO: LTC) saw a large spike of over 30% earlier Monday morning, but has since fallen in the wake of a fake report stating that Walmart Inc. (NYSE:WMT) had partnered with the cryptocurrency and would start accepting payments in Litecoin. Charlie Lee, the creator of Litecoin, as well a spokesperson from Walmart, said the press release in question was fake. 

Litecoin was trading near-flat at $181.89 early Monday evening. 

Related Link: Walmart Confirms No Partnership With Litecoin: What Happened And Why They Had To Shut Down The Rumor

Litecoin Daily Chart Analysis
Litecoin continues to stay above the higher low trendline despite trading red on the day. It continues to form what technical traders call an ascending triangle pattern. The $200 level has been an area Litecoin’s price has been unable to hold above for long. The higher low trendline has been an area where the price has been able to find support and stay above; it may continue to hold in the future. The crypto trades above the 50-day moving average (green), but below the 200-day moving average (blue), indicating the crypto is likely in a period of consolidation. The crypto may find support near the 50-day moving average, while the 200-day moving average could hold as resistance. The Relative Strength Index (RSI) has been moving sideways above the middle line the past few weeks and now sits at 50. This means the buying and selling pressure is equal and the stock is likely not seeing much movement.

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What’s Next For Litecoin?

Bullish traders are looking to see Litecoin hold above the higher low trendline until it breaks above the $200 resistance level. A break above the $200 level with some consolidation could let Litecoin continue on its bullish run and move upward.

Bearish traders would like to see Litecoin break below the higher low trendline and start to fall lower. Bears are looking to see the price fall below the 50-day moving average for sentiment to turn more bearish, as it also breaks the uptrend. 

A Corporate Bond ETF For Conservative ETFs

Investment-grade corporate bonds and related exchange traded funds are options to consider for fixed income investors looking for higher yields and potentially better total returns than what's offered by Treasuries and traditional diversified bond funds.

The Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ: VCIT) is a cost-effective avenue for accessing investment-grade corporate debt. VCIT's annual expense ratio is just 0.07 percent, or $7 on a $10,000 position, making it cheaper than 91 percent of rival funds, according to Vanguard data.

“This exchange-traded fund provides market-cap-weighted exposure to investment-grade U.S. corporate bonds with between five and 10 years until maturity,” said Morningstar in a Wednesday note.

“It is one of the lowest-cost options in the corporate-bond Morningstar Category and has tightly tracked the Bloomberg Barclays U.S. 5-10 Year Corporate Bond Index. While there's plenty to like here, it's important to note that this fund has heavy exposure to the financial services sector, which could be a source of risk. It earns a Morningstar analyst rating of Silver.”

What Happened

Last year, investors added $8.06 billion to VCIT, good for one of the best asset-gathering tallies among all fixed-income ETFs. The inflow came even as the Federal Reserve boosted interest rates three times. The Fed raised interest rates in March, but VCIT has seen nearly $410 million in year-to-date inflows.

VCIT is down more than 4 percent year-to-date, pushing its yield to 3.34 percent — a healthy margin above 10-year Treasuries.

Why It's Important

VCIT has an average duration of 6.4 years and an average effective maturity of 7.5 years. Over 92 percent of the fund's nearly 1,750 holdings are rated A or Baa. Additionally, the ETF's exposure to bonds issued by financial services companies is rising.

“Roughly one-third of the portfolio is invested in the financials sector. Its average sector exposure was less than one-fourth of the portfolio from 2010 to 2016, according to Morningstar data. Any negative developments in this sector could hurt the fund's performance,” the research firm said.

“This concentration is mostly driven by large U.S. banks, which have issued a record amount of debt since 2010 to take advantage of low rates and meet the strict post-crisis capital requirements.”

What's Next

Further interest rate hikes, which are expected, could prompt bond investors to depart high-yield corporate debt. Some of those investors could transition to investment-grade fare such as VCIT. The key is VCIT's ability to endure rate hikes — and how high Treasury yields move.

Related Links:

Evaluating International Multi-Factor ETFs

Help For Small-Cap ETFs