Author: Andrew Packer

Cryptocurrencies

The Pomp Letter: The Last Gasp from Wall Street

Posted on by Andrew Packer

The cryptocurrency market is on the move. The overall crypto market has roared back to over $3.5 trillion in value. That’s about the valuation of some of the largest tech stocks today.

But it’s just a fraction of assets such as gold, real estate, or the stock and bond markets. Since cryptocurrencies offer decentralized tools outside of existing systems, there’s some pushback. Wall Street doesn’t care for bitcoin, which competes with fiat money.

Bitcoin was designed as a peer-to-peer digital payment system. But it’s also found investor interest as a store of value.

Bitcoin’s rising price and limited supply suggests far further upside in the years and decades ahead. And growing tools on bitcoin’s blockchain will allow for its use for transferring wealth.

Currently, the biggest impediment to bitcoin’s use as a monetary exchange is its volatility. Simply put, prices move around too much in dollar terms.

But as bitcoin’s price rises in dollar terms, it should become more stable. Prices should continue to rise thanks to higher demand from the issuance of 11 bitcoin ETFs. And bitcoin is weeks away from its halving, when the block reward for mining bitcoin is cut in half.

This may be the last chance for investors to cheaply invest in cryptocurrencies. The shift towards cryptos and away from traditional financial structures offered by Wall Street could lead to one last big rally.

 

To listen to the full article, click here.

Stock market strategies

Elliott Wave Options: Follow Your Trading Plan!

Posted on by Andrew Packer

Trading takes a totally different mindset compared to investing. Investing is based on several factors. That includes looking at a company’s underlying earnings and other fundamentals. And it may include other metrics such as the quality of a CEO or new upcoming product launch.

When it comes to trading, metrics like that take a backseat. What matters most? Price action. A stock trending up may continue to trend higher. A stock about to change course can offer a big trading opportunity.

That’s why traders should look to develop a plan. The plan should be based on a few factors.

The most important is to stick with a comfortable trading strategy. Traders should be willing to experiment with different strategies, but stick with ones that they find works best for them.

Some traders may focus on directional bets, while others look for market spread trades. And some may use metrics like the Elliott Wave. Yet, others may find they prefer using trends like relative strength.

Next, there’s the importance of following through on a trading plan.

Sticking with a plan consistently, and not changing around variables, should lead to consistent results.

When traders have a specific trading plan and follow it through, they should be able to capture the moves they’re looking for. That allows for consistent profits over time.

 

To view the full video on how this strategy can play out, click here.

Stock Picks

Let’s Talk Money!: Top 5 Stocks to Buy for 2024 Returns

Posted on by Andrew Packer

The stock market rallied about 10% in the first quarter of 2024. That’s the kind of return that usually takes a full year to play out. While the market rally has slowed, there are still ample opportunities for investors.

From here, most Wall Street analysts see slightly further gains. Many banks see markets rallying just another 5% or so through the rest of the year. Those estimates are based on corporate earnings.

If companies can grow earnings faster, returns may fare even better. But if earnings slow, markets will stay slow. The tech companies that pulled markets higher will likely lead a slowdown.

Based on analyst estimates, some areas could fare better than others. For instance, casino operator Caesars Entertainment (CZR) trades well below analyst expectations.

The company is expected to see strong earnings growth amid soaring tourism demand. And that could mean that share prices trade far higher, even if the rest of the market slows down.

Analysts are also bullish on solar stocks. These companies have been out of favor with the market for some time. As a result, shares of such companies such as First Solar (FSLR) could also see further upside.

In short, the best market returns for the rest of the year may not be in today’s winning stocks. It may come from more overlooked and out-of-favor names.

 

To see the full list of top stocks to buy now, click here.

Economy

Bigger Pockets: Recession Predictions: Why They’re Often Wrong, and Why the Narrative Continues to Switch

Posted on by Andrew Packer

The past four years have seen the economy make its steepest correction since the Great Depression. That’s thanks to Covid-related lockdowns. And we’ve seen the fastest growth in decades, as economies opened up.

It’s understandable that investors are jittery. We’re still working through the inflation from the pandemic-era spending designed to smooth out the economy. And that’s made it easy to predict a recession when the data shows we’re not in one yet.

In early 2023, a majority of economists expected a recession within the next 12 months. That prediction has been proven wrong. And we’ve seen that the economy can absorb significantly higher interest rates.

Where does the economy stand now? Things still look strong. One sign is the labor market.

Despite some headlines about big layoffs at large tech companies, things look good. The overall unemployment rate is 3.9%, up just 0.3% compared to a year ago.

Many smaller companies are hiring, and even big tech companies are hiring employees for AI projects.

With the labor market faring reasonably well, the economy is faring well.

Plus, while inflation hasn’t been fully tamed, it’s close to 3% rather than the Fed’s target of 2%. That’s down significantly from a peak near 10%.

While rate cuts are being delayed, the Fed has ended talk of raising interest rates further.

That points to the market continuing to trend higher in the months ahead, despite any pullbacks along the way.

 

To read the full analysis, click here.

Income investing

FX Evolution: RISK-OFF Is Coming According to the Debt Markets?

Posted on by Andrew Packer

While most investors may be focused on the stock market, its returns are often driven by the returns of the bond market. That’s because the bond market is based on interest rates. And today’s interest rates are near their highest level in 15 years.

As a result, high interest rates offer solid cash returns. And that competes with stocks. It also means a higher cost of capital for companies to borrow.

Big companies have a huge advantage in capital markets. They can borrow if they want to, not if they need to. Meanwhile, smaller companies don’t have that luxury.

Currently, yields in the debt market have started to tick up. That’s reflecting the latest economic data. Inflation remains sticky. So the Federal Reserve needs to keep interest rates high.

The higher and longer interest rates stay high, the longer higher debt costs will impact companies. Some smaller companies may not be able to get the financing they need to survive.

In other words, with the higher-for-longer narrative finally sinking in, markets may slow down. This could even be a risk-off event, with a market pullback in the 5-10% range.

That would take some of the froth out of the current market. And it would set up a healthy pullback. Investors could then look for opportunities for the next leg higher.

 

To watch the full analysis, click here.

Cryptocurrencies

What Bitcoin Did: Michael Saylor’s Bitcoin Moonshot Revisited

Posted on by Andrew Packer

The new bitcoin bull market started last year. But this year, bitcoin has benefitted from the approval and start of 11 ETFs. Bitcoin ETFs allow investors to profit from bitcoin’s rising price easily with an existing investment portfolio.

Plus, bitcoin has already hit new all-time highs. Prices are expected to rise further following bitcoin’s halving in April. Typically, new all-time highs occur after a halving, not before. That could make 2024 a strong year for crypto.

Investors have plenty of ways to play this rally. The simplest is simply to buy and hold, or “hodl,” in crypto terms.

There are more advanced ways to profit from the rise of bitcoin. One company is showing a unique way to leverage bitcoin’s upside for even bigger profits.

That company is MicroStrategy (MSTR). The company has become the largest corporate holder of bitcoin. Today, they now own 1% of the entire supply of bitcoin that will ever exist.

To get there, the company has sold debt to investors. Its largest debt was paid off, even as the company sat on big losses during the last crypto bear market.

Today, MicroStrategy is issuing convertible shares. Investors get a low yield. But if bitcoin prices soar, the value of MicroStrategy’s shares will soar. That makes converting attractive.

The current strategy increases the amount of bitcoin per share over time.

 

To find out the full details on this strategy, click here.

Stock market strategies

Tastylive: 0DTE’s: How to Maximize Profits

Posted on by Andrew Packer

The past two years have seen an explosion in options trading. That’s partly due to the rise of individual investors. But it’s also thanks to the rise of daily options trades for market indices. These options allow traders to start and end the day in cash, making a daily profit (or loss).

Options that expire the same day a trade is made is known as a zero-day to expire option, or 0DTE. Some days, 0DTEs can make up half of options trading.

With the growth of this tool have come matching strategies. Learning how to optimize profits from this strategy can turbo-charge your investing profits.

Typically, options trading includes a time component. Traders who expect a company to beat earnings in a week can buy an option with enough time for a post-earnings rally.

But for 0DTE options, strategies such as strangles and spreads are better. These strategies involve using multiple options at the same time to limit risk but still capture the market’s daily move.

As with any options trade, investors should look to take profits on a quick move.

And over time, there’s little difference in taking a small loss versus letting a losing trade expire. Legging positions also helps reduce risk and improve the total win rate.

 

To view the full results of using a 0DTE strategy, click here.

International Investing

A Wealth of Common Sense: Finding a Bottom in China

Posted on by Andrew Packer

International investing is a popular strategy. By investing internationally, there’s the possibility of increased growth. And it helps reduce the risk of simply investing in one’s home country.

For U.S. investors, China has sometimes offered massive opportunities. Over the past few decades, the country has posted massive GDP growth. Its large population has become increasingly wealthy. That’s allowed for the importation of popular consumer goods. But more recently, China has been out of favor.

That’s because its growth has slowed. And the country’s rising consumer class has slowed down significantly.

Plus, there could be lower growth ahead as global manufacturers look to diversify operations elsewhere.

The past few years has resulted in poor performance for Chinese stocks. The contrarian investor may want to be looking at China now. And over the long haul, that may not be a bad idea.

China is the world’s second-largest economy. Investors may want to look at some oversold opportunities there.

The country’s recent real estate woes suggest that it may be going through growing pains. Other countries on a rapid growth path have experienced the same.

And buying markets when they’re significantly lower and out of favor could pay off for patient investors. Investors may want to look at the top Chinese companies now. If the market takes off, the big names will perform just as well as more speculative names.

 

To listen to the full podcast, click here.

Stock market

David Lin: How the Mother of All Market Rallies Would End

Posted on by Andrew Packer

The strong market rally is like a rubber band being pulled. Eventually, there’s likely to be a snap back. And technical indicators can give an idea as to how much and how quickly markets can pull back.

One indicator is a Fibonacci retracement. Retracements are simply pullbacks that give back part of a recent market rally. Typically, a minor pullback will lead to a 37% retracement. From that level, stocks may find a base to move forward again.

If that level of retracement isn’t enough, the next stop is 50%. Again, that’s just 50% of a recent rally. If the market is up 10% over a few months, a 50% retracement still leaves the index up 5%.

But it also means investors are more cautious and looking for other opportunities going forward.

In the short-term, stocks remain in a long-term uptrend. That trend looks likely to continue.

However, there may be a strong pullback once the next one happens. That would reflect the strength of the current market rally.

Plus, depending on where money is flowing in the market can indicate a selloff is coming. If money is going out of tech and into defensive stocks, there may be a decline ahead.

 

To watch the full interview, click here.

Stock market

Game of Trades: Institutions are ALL IN

Posted on by Andrew Packer

The stock market rally going on since November feels like it’s run too far, for too long. Stocks tend to perform weakly in February and March, but this year, that didn’t happen. Instead, stocks have continued to tick higher.

Meanwhile, another data point suggests that there’s more room for the rally to run. Institutional investors, also known as the “big money” have gone all-in the stock market right now.

They’re not fully leveraged yet, but they are at a level historically bullish for investors.

That’s an impressive feat, as interest rates remain at a 15-year high. That high rate makes keeping money on the sideline in cash competitive.

Until the leverage trend reverses, it’s likely that the market will continue to rally.

Average investors are increasingly bullish as well. That’s a further sign of market strength. However, as this trend peaks, it could be a sign that markets are ready for a pullback.

The reverse is also true. When investors are pessimistic about the market and leverage is low, valuations are likely low. That makes for a strong time to invest in the stock market.

Time will tell if the current bullish sign has more room to run. Such runs can often last as long as 12-18 months once sentiment gets bullish.

 

To view the full analysis, click here.