Author: Andrew Packer

Cryptocurrencies

Bitcoin Magazine: Spot Bitcoin ETFs Saw Largest Inflow In a Month

Posted on by Andrew Packer

2024 has been a strong year for bitcoin. The cryptocurrency hit new all-time highs, and went through its fourth halving cycle. Both point to strong price returns from here. However, prices have been consolidating over the past few months.

That doesn’t mean the party is over. Looking at investment capital, the bitcoin ETFs that were approved earlier this year are seeing a strong inflow. That bodes well for further gains.

Plus, bitcoin tends to struggle a bit in the immediate aftermath of a halving.

However, unlike any other asset, bitcoin are issued every 10 minutes. The rate of issuance can be slightly adjusted based on the bitcoin network’s performance. But the total maximum supply remains fixed.

That means that any change in demand will have no impact on price. And bitcoin’s fixed supply suggests that it will continue to advance in price for decades to come.

However, bitcoin is prone to sharp pullbacks. It doesn’t move in a straight line.

With money continuing to flow into bitcoin investments, a future price increase looks likely. It may take time to play out, and will be prone to pullbacks like the one underway now.

But with more capital flowing into bitcoin, it’s an asset that could soar in the second half of the year. It doesn’t matter if that happens via direct investments or if bought by an ETF on behalf of investors.

 

To read the full article, click here.

Stock market strategies

Elliott Wave Options: Pro Trader Tip: Follow Your Trading Plan and Manage Your Losses!

Posted on by Andrew Packer

The market uptrend has slowed down in recent weeks. For traders, that may mean that it’s time to shift strategies. That could include adjusting your specific trading plan to a more neutral market over the coming weeks.

Part of any investment plan is to contend with losses. While an inevitable part of investing, managing losses is crucial. That keeps investors from blowing up a portfolio, and keeping the capital needed to prosper.

First, traders can avoid losses by having the patience to wait for the right setup. Traders who try to  get into a trade in a shifting market may not get the ideal price. By paying the wrong price going in, traders may make it more difficult to make a profit.

Second, traders should give themselves more time for a trade to play out. With many investors flocking to day trading, adding in an extra day can help reduce or avoid losses.

Next, investors should look to take trades off the table when they aren’t performing as expected. This can keep trading losses to a minimum.

And, once a trade has been closed, traders should look to the next trade with a neutral eye and not look to “catch up” from any short-term loss. Doing so could lead to making riskier trades.

 

To look at a real-world example of managing a loss, click here.

 

Income investing

Ryne Williams: 3 Deeply Discounted Dividend Stocks to Buy In July 2024

Posted on by Andrew Packer

The stock market ended the first half of 2024 near all-time highs. However, most of that was driven by tech stocks, which continued on their massive gains from 2023.

Several sectors significantly underperformed in the first half of 2024. These sectors could take over leadership in the second half of the year, especially if tech takes a breather. Many of these sectors also offer dividend payments, which pays an investor for their patience.

Part of the reason some sectors have languished is that interest rates have remained high.

Expectations for rates to come down have continued to get kicked down the road.

However, rates could start to come down near the end of the year. That could make income-oriented stocks more attractive relative to bonds.

That’s especially true of real estate plays. One such company is VICI Properties (VICI). The REIT has a major stake in a number of properties  in the U.S. and Canada, focused on gaming destinations.

Shares have dropped nearly 10% in the past year. That’s pushed the dividend up to about 6%. The dividend is well covered by income. And VICI has been able to grow its dividend slightly over the past few years. Most REITs lack the ability to significantly grow their dividends.

 

To view the full list of deeply discounted dividend stocks, click here.

Income investing

BlackRock: Abundant Income

Posted on by Andrew Packer

Investors have had to contend with interest rates going from historically low levels of zero percent to a 15-year high in the span of less than 18 months. That led to a bear market for stocks and bonds in 2022, and bonds further weakened in 2023.

However, stocks have been on a tear. And interest rates have now been unchanged for about a year. And the economy is showing signs of slowing down, but still continues to hold up.

Today’s investors have a tremendous opportunity to earn a high yield on their cash. And by and large, they’ve done so. There’s an extra $1.2 trillion in annual interest payments thanks to today’s high rates.

Those who have stayed on the sidelines may have missed out on the stock market rally. However, they’re far from hurting.

In fact, households as a whole have become net creditors for the first time in 30 years.

Plus, businesses with low-rate fixed debt are now seeing their interest income exceed their interest expenses. Nearly seven out of ten companies report that interest rates have no impact on their spending plans.

With interest rates potentially headed lower later in the year, now would be the time to lock in relatively high rates. Longer-dated bonds could even prove a big winner, as lower rates tend to move longer-dated bond prices the most.

 

To read the full analysis on today’s income opportunities, click here.

Economy

The Maverick of Wall Street: Consumer Stocks Are Crashing As Credit Card Delinquencies Hit the Highest Level Since 2008

Posted on by Andrew Packer

Consumer spending remains the lion’s share of the U.S. economy. The past few years have seen some big shifts in consumer spending trends. During the pandemic, consumers were flush with cash from staying at home. But they spent money on electronics to work at home. And on home goods.

That trend shifted towards spending more on travel and tourism as the pandemic ended. And the excess savings have started to dwindle down. Now, signs point to a further slowdown.

The excess cash from the pandemic era is gone. Credit card balances are on the rise. That suggests that consumers are financing their current lifestyle with borrowing.

Now, credit card delinquencies are trending higher. And companies are reporting that they are unable to pass on further price hikes to consumers.

The result? Any continued inflation will hit the corporate bottom line.

Consumer stocks have already started to show some weakness going into the second half of the year.  That weakness could accelerate should earnings indicate a big slowdown.

In any event, today’s investors may want to get more defensive following the big rally in stocks. But consumer defensive stocks may not be the best place to invest this time around.

Instead, defensive stocks such as utilities might offer the best return relative to today’s risks of a slowing consumer.

 

To watch the full analysis, click here.

 

Stock market strategies

Tastylive: Stay Profitable During Low Volatility with This Strategy

Posted on by Andrew Packer

Traders need markets to move to have profitable trades. Using tools such as options can take a smaller market swing and turn it into a profitable trade.

However, one component of option pricing is related to market volatility. With market volatility at four-year lows, that makes it more challenging for investors to profit. With the right tools and strategies, however, traders can still make reasonable profits while waiting for higher-volatility ones.

Less volatility means fewer opportunities, especially for directional bets. Buying a call option ahead of a stock’s surge higher is a great way to leverage a return. However, when volatility is low, stocks are less likely to soar like that.

Stocks are also unlikely to see a big dive. That means just buying a put option can also struggle in a low-volatility environment.

One strategy to make money in such an environment is with a strangle. This is a trade that uses multiple options. And it can benefit from the underlying stock staying within a certain range.

Even if a stock breaks out of its range, one part of the option trade will still show a profit. That helps reduce the total possible loss.

The strategy can also be used for a market index as a whole. That’s also where zero-day options can be used to book profits on a regular basis.

 

To look at the best way to profit while trading in a low-volatility environment, click here.

Commodities

Heresy Financial: Rumors of the Dollar’s Demise Have Been Greatly Exaggerated

Posted on by Andrew Packer

The past few weeks have seen a number of rumors about the role of the U.S. dollar in international trading. Russia announced it was ending dollar (and Euro) trading on its stock exchange.

There was talk of Saudi Arabia ending global oil trading in dollars as well. That rumor has been false. However, Saudi Arabia has allowed oil to trade in other currencies besides the dollar over the years. Either way, these rumors point to a major potential global change.

Meanwhile, the U.S. dollar currently acts as the world’s reserve currency. For most around the world, the dollar is much less inflationary than their home currency. And it’s the most common currency for settling payments in global trade.

Some nations are working to expand the acceptance of their own currency. Or engaging in more bilateral trade, bypassing the use of the dollar.

Meanwhile, the less the dollar is used or accepted globally, the more danger that poses for everyday Americans.

That’s because less global demand for dollars could mean the full impact of inflation is felt at home. Without the dollar spread around the world, the costs of America’s soaring budget deficits could mean more pain.

So is the dollar dying? No. Is the dollar being gradually phased out as a global standard of trade? Yes.

 

To view the full explanation of how the dollar isn’t dying, click here.

Stock market

The Big Picture: Bull Market Signposts: What Happens Before S&P 500 Peaks?

Posted on by Andrew Packer

Markets often climb on a wall of worry. Because bull markets tend to start during times of heavy pessimism, many investors miss the early part of a rally. As stocks continue to rise, fears of a big drop keep investors out.

It’s only during the manic peak that investors tend to once again get all-in. And that’s the worst possible time to invest. That’s why understanding signs of a peaking market are crucial for investors to monitor.

What should investors look for? One sign is sentiment. Today’s investors are somewhat wary about today’s stock market. Especially since the recent rally has been driven by just a few tech stocks.

That’s reminiscent of the 1990s tech bubble. However, it’s only when investors have thrown caution to the wind that it’s time to be wary.

The other factor is valuation. Market valuations are slightly above average. And some tech stocks are trading at extremes.

But market darling Nvidia (NVDA), despite its massive gains, isn’t overpriced. In fact, its share price rally has been less than its earnings growth over the past two years.

If anything, the likelihood of a major market decline soon is low. However, even in a long-term uptrend, some occasional setbacks and soaring volatility can and will happen.

 

To read the full analysis on market peaking trends, click here.

 

Stock market

Game of Trades: It’s Coming. (Imminent Market Volatility)

Posted on by Andrew Packer

Since the market’s latest rally started in November, there have been only a few small pullbacks. Those declines haven’t even managed to lead to a 5% pullback, much less a healthier 10% one. And the Nasdaq has now nearly gone a record amount of time without a 2% down day.

These signs indicate complacency in markets. That’s also supported by today’s low market volatility, which has been rather subdued. It wouldn’t take much of a crisis, real or perceived, to see volatility spike.

Typically, the volatility index trades between 15-20. It may go a bit higher, perhaps to 30, in a market selloff.

Volatility spikes over 50 tend to occur every few years. The last big jump occurred in 2020 during the Covid crash.

Volatility is technically a two-way street. Stocks can get more volatile as they rally. However, because a market crash usually starts when volatility is low, it’s often the sign of a pullback.

With market volatility now at a four-year low, the price to hedge market risk is also low. It will soar when a selloff actually starts.

Meanwhile, deteriorating consumer spending and jobs data suggest the economy is slowing. That’s good for bringing down inflation. But it could also mean companies start to miss on earnings. That could kick off a market pullback and lead to a volatility spike.

 

To look at how a volatility spike could unfold and how to prepare, click here.

Economy

David Lin: Roaring 20’s Is Back: S&P to 8,000 Says Economist Who Called Rally

Posted on by Andrew Packer

While bear markets tend to last for 18 months on average, bull markets tend to last for years. Both 2020 and 2022 saw bear markets. It’s unusual to have two big market declines so close together.

But it could also mean that stocks are on track for further gains through the rest of the decade. That means that investors should use small 10% pullbacks as a buying opportunity in the years ahead.

As with the bull market of the 1920s and 1990s, technology will lead the way. Instead of radio or the internet, AI is still in its early stages, and companies haven’t even started to see the financial benefits yet. That suggests that the next few years could see the S&P 500 hit 8,000.

From today’s prices near 5,500, that’s another 45% rally over the next few years. Given how markets return 10% annually on average, that’s not a huge prediction.

But it’s also a sign that the trend in AI stocks remains sustainable. AI-related companies, particularly big-tech ones, have far outpaced the market.

In order for stocks to safely make new highs, other sectors will need to join in the market rally in the years ahead.

Given AI’s potential to revolutionize and improve productivity and profits across nearly every sector, such a move is possible.

 

To listen to the full interview on how the S&P 500 will rally to 8,000, click here.