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Strategists at Bank of America see Wall Street’s ways force asset sales

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(Bloomberg) — Mounting losses on Wall Street are now adding to a forced liquidation of assets, according to strategists at Bank of America Corp.

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The NYSE Composite Index, which includes US stocks, depository receipts and REITs, broke multiple technical support levels including its 200-week moving average, the 14,000 mark, as well as the 2018 and 2020 highs. Now, accumulated losses could force funds to sell more of assets to collect cash, accelerating selling, according to Bank of America.

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Read: S&P 500 chiefs for the quarterly event last seen in early 2009

Strategic analysts led by Michael Hartnett wrote in a note Thursday that “Wall Street’s best gauge” is collapsing, maintaining a bearish tactical view until panic selling forces central bank intervention.

Stocks are falling again on Friday, with the S&P 500 heading for a third consecutive quarter of losses for the first time since 2009 and the Nasdaq 100 stock index for the first time in 20 years. Investors are preparing for more pain. Stocks have been tumbling amid concerns that the Federal Reserve will push the economy into recession while tightening policy, affecting earnings in the process.

“Markets stop panicking when central banks start to panic,” Hartnett said, adding that he expects the S&P 500 to fall to 3,333, which could force a “political panic” around the November G20 meeting. He expects stocks to rally after that, but says the US market won’t touch a “significant drop” until the first quarter of next year, when the recession and credit shock lead to peak yields, the dollar and Fed hawks.

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Bank of America strategists said they are “biting” the S&P 500 at 3300 — about 9% down from the last close, “nibble” at 3600 and “gorge” at 3000. Hartnett and his team added that the 20% drop is below average. ​The 200-day moving average has been a good entry point back into equities for the past 100 years.

(Updates with Friday trading in the fourth paragraph.)

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.