Wealthpress

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• Stock Market Recap: Friday, Jan. 22, 2021
• SPACS Are All the Rage. Here’s What I Look For in a SPAC Investment
• Buy or Burn? Should You Invest in Gold in 2021?
• Tik-Tok… Beware of a Bond Bomb

Stock Market Recap: Friday, Jan. 22, 2021 Posted: 22 Jan 2021 01:57 PM PST Wall Street was weak throughout as disappointing earnings and profit taking weighed on sentiment — and more in Friday's stock market recap.  The major indexes rebounded off the opening lows following better-than-expected economic news, especially from the housing market — which remains on fire. Headwinds from low inventories and high prices are however limiting an even stronger pace of sales. A final-hour rally helped Tech and the small caps, with the mixed finish still producing gains for the week and all of the major indexes. The peak of the fourth-quarter earnings season and 13 Dow components report numbers next week. Stock Market Recap  The Russell 2000 jumped 1.1% after closing on its session high of 2,168. The Nasdaq edged up 0.1% with the late-day peak and fresh all-time high reaching 13,567. The Dow fell 0.6% following the opening pullback to 30,908. The S&P 500 was lower by 0.3% with the morning low reaching 3,830. For the week, the Nasdaq soared 4.2%, the Russell 2000 rallied 2.1%, the S&P 500 rose 1.9% and the Dow gained 0.6%. Real Estate and Utilities led sector strength after adding 0.3% and 0.1%, respectively. Financials were the weakest sector after falling 0.7%. Stock Market Movers Shares of GameStop Corp. (NYSE: GME) zoomed 51% following a trading halt as short-sellers continue to get hammered. The short interest in GameStop reached 138% of the shares available for trading last week, and continues to drive the stock up for its massive short squeeze. The company recently stated holiday sales were down 3.1%. But shares still rose 100% last week and were primed for a short squeeze, in which short sellers faced with high borrowing costs and accumulating losses are forced to buy shares to cover their bearish bet. Stock Market Outlook  The percentage of Nasdaq 100 stocks trading above the 50-day moving average closed at 73.52%, down 2.95%. Near-term and upper support at 75%-72.50% was breached and failed to hold. A move below the latter would indicate a retest towards 70%-67.5%. Resistance is at 77.5%-80%. The percentage of S&P 500 stocks trading above the 200-day moving average settled at 89.28%, up 0.2%. Key resistance at 90% was challenged but held. A close above this level would signal strength towards 92.5% and the overbought high from early December. Support is at 87.50%-85%. Global Economy From the global stock market recap, European markets closed lower across the board as new business activity in the eurozone fell to a two-month low. The Belgium20 dropped 0.7% while the Stoxx 600 and France's CAC 40 gave back 0.6%. The UK's FTSE 100 was down 0.3% and Germany’s DAX 30 dipped 0.2%.  Eurozone's Markit's flash composite PMI dropped to 47.5 January from 49.1 in December. Asian markets settled lower as parts of Hong Kong will reportedly soon go into lockdown. Hong Kong’s Hang Seng sank 1.6% and South Korea's Kospi lost 0.6%. China’s Shanghai and Japan's Nikkei fell 0.4% while Australia's S&P/ASX 200 was off 0.3%. U.S. Economy Markit preliminary manufacturing PMI jumped 2 points to 59.1 in January, a new record high, after edging up 0.4 ticks to 57.1 in December. New orders improved to 59.5 versus 56.5 previously. The preliminary services PMI climbed 2.7 points to 58 in January following the 3.6 point drop to 54.8 in December. The input-price index climbed to 66 from 64.7, and is the highest ever. The preliminary January composite index also bounced 2.7 points to 57.5 after falling 3.3 points to 55.3 last month. Input prices also increased for an eighth straight month to a record peak at 66 from 64.8 in December while the employment component dipped to the lowest level since July. Existing Home Sales rebounded 0.7% to 6,760,000 in December, versus forecasts for 6,550,000, and follows the -2.2% decline to 6,710,000 in November. Single-family sales were up 0.7% to 6,030,000 versus the -2.3% drop to a November rate of 5,990,000. Condo/coop sales rose 1.4% to 730,000 versus the -1.4% decline to 720,000 previously. The months’ supply of homes dropped to a new record low of 1.9 from 2.3 in November. The median sales price slipped to $309,800 after falling to $310,900 in November. Stock Market Sentiment The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) rebounded after testing an intraday peak of $152.01. Near-term and lower resistance at $152-$152.50 was cleared but held. A close above the latter would signal a retest towards $153.50-$154. Support remains at $151.50-$151 followed by $150.50-$150. Volatility Index The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a three-session losing streak after trading to a morning high of 23.73. Prior and lower resistance at 23.50-24 and the 50-day moving average were breached but levels that held. Support is at 21.50-21 followed by 20.50-20. Stock Market Analysis The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) had its three-session winning streak snapped following the pullback to $309.09. Near-term and upper support at $309.50-$309 was tripped but held. A close below the latter would signal further weakness towards the $308-$307.50. Resistance is at $311-$311.50 followed by $312.50-$313 with Thursday's all-time peak at $312.71. RSI is back in a downtrend with key support at 60 holding. A close below this level would suggest weakness towards 55-50 with the former holding since early November. Resistance is at 65-70. Sector The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) was down for the second time in three sessions with the intraday low reaching $417.13. Current and upper support at $417.50-$417 was breached and failed to hold. A close below the latter would suggest additional risk towards $415.50-$415. Resistance $422.50-$423 followed by $426-$426.50 with Thursday's all-time record high at $426.25. RSI is showing signs of rolling over with key support at 70 failing to hold. Continued closes below this level would signal additional weakness towards 65-60. Resistance is at 75-80 with the latter representing overbought levels from earlier this month. Check back after the closing bell for the most important news and numbers in the WealthPress stock market recap.  The post Stock Market Recap: Friday, Jan. 22, 2021 appeared first on Wealthpress.

SPACS Are All the Rage. Here’s What I Look For in a SPAC Investment Posted: 22 Jan 2021 12:46 PM PST Special Purpose Acquisition Companies, or SPACs as they're most often referred to, have been all the rage in the investing community. In fact, 2020 was a record year for them, as more than 200 SPAC sponsors issued initial public offerings — four times as many as 2019. So I get asked all the time what I look for in a SPAC investment.  There are more details in my video below, but a SPAC is basically a pool of money in search of an acquisition deal.  SPACs allow ordinary investors to get access to small, high-growth companies. But like everything else in the stock market, there are big risks… and the potential for big rewards!  There are two important factors in what I look for in a SPAC investment that can potentially put the odds in our favor… What I Look for in a SPAC Investment WealthPress’ Jeff Yastine There are dozens upon dozens of SPACs out there that you can invest in. Some go on to become huge winners… and some are total flops — oftentimes there's a huge amount of volatility either way. So how do you know what to look for in a SPAC investment? Now, this may sound strange, but more often than not, SPAC sponsors don't even say what company they're going to acquire… or even where they're shopping. Like everything else, this can work out to be a good or bad thing. A lot of it depends on the SPAC sponsor, be it some big investment banker, a celebrity, a political type, a business person of high stature — or low stature.    In fact, the No. 1 thing I look for in a SPAC investment is the credibility of the dealmaker sponsoring it.  Check out my short video and let's go into further detail on what I look for in a SPAC investment. Have you bought into a SPAC before? Maybe you've considered it but haven't taken the plunge yet? Let us know in the comments.  And as always, send your investing questions to jeff@yastine.com. Be sure to subscribe to my new YouTube channel. You can also follow me on  Twitter and Facebook. P.S. Create a Kingdom with Your Potential 2021 Profits Just in case you haven't noticed yet, the markets can be heavily influenced by the richest people in the world. They can pour millions of dollars into seemingly random stocks, sending share prices to the moon. Take Peloton for example… A lot of people wanted nothing to do with this stock when it dropped to $18… But then investor extraordinaire George Soros came swooping in and bought 2.7 million shares — and it shot to almost $140 per share! These billionaire Kingmakers can completely change the outlook of a stock… And those who manage to get in before the billionaires drive the price up could cash in BIG. Luckily, trading genius Adam Sarhan seems to have figured out how to make that happen. Get the Details Here The post SPACS Are All the Rage. Here's What I Look For in a SPAC Investment appeared first on Wealthpress.

Buy or Burn? Should You Invest in Gold in 2021? Posted: 22 Jan 2021 12:40 PM PST Hey, guys, we've got a deep analysis today of something I've been admittedly bullish on. That something is gold, and I want to take a look at whether or not you should invest in gold in 2021. Gold has been a hot topic the past few years, and especially so during this coronavirus pandemic. If you recall, WealthPress Head Trader Roger Scott and I were very high on gold as one of our safest plays in 2020. Is that still the case? Is it still safe to invest in gold in 2021? In the short term, I'm going to say no. I do think that gold will come around, but it could be in for a very rocky few months. A New Game Plan for Investing in Gold in 2021 Last year, gold was one of the few things we felt we could count on. In the summer, it made a huge jump. Traders were in defensive situations and, in an attempt to keep the economy afloat, the Federal Reserve began printing huge sums of money.  Right now, that money printing is continuing and the Fed is expanding their balance sheet. The last time we saw such a big expansion was in 2006, leading up to the Great Financial Crisis… Looking back at those charts, I could see gold breaking down to a level below $1,800 or even $1,500… Even today, we're below the 200-day moving average. Except, people are looking at investing in gold in 2021 as another way to protect their assets while we wait and see what happens.  I'm not so sure that's the way to play it. I do think that gold will bounce back and I've always been a long-term gold kind of guy, but maybe not in the short term right now… Check out my video below as we take a deep dive into whether or not you should invest in gold in 2021. I also provide you with some alternative strategies to protect yourself this year. Feel free to email me your trading questions at jeff@joyofthetrade.com and make sure to subscribe to my YouTube channel. P.S. Let's face it: There's a lot going on in our country right now. In the political landscape alone there's been a lot happening. Meanwhile, unemployment numbers are still high and the coronavirus continues to ravage many parts of the nation.  It's enough to make any investor nervous.  So, we'd like to help you through this uncertain time by giving you a trading strategy that works regardless of which direction the market's headed.  Considering the current political, social and economic climate, it couldn't come at a better time.  Here's how you can add this trading strategy to your arsenal today. The post Buy or Burn? Should You Invest in Gold in 2021? appeared first on Wealthpress.

Tik-Tok… Beware of a Bond Bomb Posted: 22 Jan 2021 10:58 AM PST A bull market can make an average or even rookie investor feel smarter than a Wall Street or Bay Street vet. First time investors are throwing darts at a board blindfolded and coming up with big winners. They're putting their "Stimmy's" (stimulus checks) to work in Robin Hood… getting free stock for signing up and watching their "stonks" rise. The thrill of big gains in stocks is juicing the loins of a whole new generation of traders and investors. If TikTok is any indicator… There has been an explosive growth in accounts picking stocks and predicting which will rise. A couple even went viral with a video showing a "sure-fire" way to make money: "Here's my strategy in a nutshell: I see a stock going up and I buy it and I just watch it until it stops going up and then I sell it. And I do that over and over and it pays for our old lifestyle." More evidence of how the hype from these TikTok investors is influencing the markets can be seen in how small caps have been performing relative to the rest of the market in the last three months: Big wins on penny stocks are the dream of any wannabe investor. And that surge of interest and capital has led to irrational exuberance in buying small-cap junior companies. Let's just say that if it were that easy, you probably wouldn't be reading this right now. Because this website wouldn't need to exist. The Wall of Worry… One of the key concerns for me that I believe could be a catalyst for a market correction is in the bond market. Over the next five years, a significant portion of the lowest investment grade-rated bonds (Triple B) along with the High-Yield or "Junk" bonds (bonds rated below Triple B) will mature. Companies will have to either repay the capital, or issue new debt to replace the existing debt. The only way this will be mitigated is if the U.S. Federal Reserve continues to expand its asset purchase program. It may have no other choice but to do so. That's what Japan has done over the last 15 years. It's also what we've seen happen in the natural resource industry as well. I've previously talked about "Extend & Pretend", first in the oil patch, and later on in the gold mining sector… Back then, I called exactly what happened to the oil companies. Where the worst ones went bankrupt but most managed to delay by refinancing their debt. If we expect that to be the case again here… We will have short windows of volatility and sharp corrections until the Fed moves quickly enough to backstop the bond market. Then our game plan will be to do exactly what we did in March 2020, which played out exceptionally well for me and my subscribers. However, this time, I promise to try not to be too cheap! Bond Whispers The Russell 3000 Index is an index composed of the 3,000 largest publicly listed U.S. companies. It is one of the most all-encompassing indexes and includes companies with trillion-dollar market caps all the way down to $200 million market caps. This provides a solid barometer of the required refinancing of corporate debt in the U.S. Below is a chart which shows total debt by maturity year for companies in the Russell 3000 Index. There is a wall of debt maturing in the next few years. And here we can see the High-Yield debt maturing in the coming years… The combined corporate "debt wall" could be a catalyst for a future major market correction. You can see that the previous years shaded in grey are half the size of the upcoming maturities. Where it gets interesting is that on average, companies in the Russell 3000 today have far more debt relative to earnings than historical levels. This debt wall isn't the only thing that's on my radar, however… The Buffet Indicator is Sounding an Alarm… Warren Buffett has gone on a money-making spree in 2020. Backing big winners like Snowflake Inc. (NYSE: SNOW) and trimming positions for a profit, Buffett knows quite well that it's not a gain until you sell. Last week we detailed how Buffett's right-hand man for half a century, Charlie Munger, said that stocks will all but remain flat for the coming years. Two of the most famous investors in history might have had their simple Buffett Indicator to give them a warning. For those of you who aren't aware, the Buffett Indicator is simply the total market cap of all U.S. stocks, divided by U.S. national GDP. In other words, it shows the historical valuation of the markets relative to the strength of the economy those companies are built on: Of course, the Buffett indicator alone doesn't tell the whole story. Given the zero, or even negative-interest-rate environments we find ourselves in, it only makes sense that people would look for their returns on the stock markets instead. Still, it's undeniable that there continues to be a significant disconnect between the hype in the stock markets and the state of the economy right now. How to Protect Yourself in a Correction Between the unfounded optimism in the small caps… The oncoming Debt Wall of Worry… The Buffett indicator and other signals… An eventual market correction seems more and more likely with each passing day. You need to prepare for that risk. I showed in last week's article, gold stocks have sold off during past market corrections. And it'll happen again when the overall markets sell off. Oil stocks will also get hit. So, we need to think about protecting ourselves against these declines. The Volatility Index (VIX) is a useful tool, which we can use to "buy protection". The Volatility Index is a forward-looking index which is derived from S&P 500 option pricing. As market turmoil increases, the Volatility Index increases. And then as the turmoil subsides, the VIX decreases. Below is a chart which shows the VIX since 2005. You'll see the largest spikes were in the 2008 Financial Crisis and then in March as the Pandemic took hold. Now, you can't buy the VIX itself. But there are investment products which reflect, in the broadest sense, the same type of movement. These can provide the protection we're looking for. The most well-known and actively traded instrument which reflects the VIX is the Exchange Traded Note 'VXX'. The VXX is an investment product created by Barclay's, a major European financial institution. We need to be particularly careful on timing VXX for several reasons: As the market goes higher, the VXX will trend lower. Due to its construction, the VXX mathematically could go to zero if there's never any future volatility – though this is highly unlikely. Also, this type of hedge is for ACTIVE traders only. You can miss your payoff if you're even one day late. I don't recommend going this route for almost all of our readers, except perhaps the ones who glued to their screen 24/7 as active traders. Life is too short to bother with that, IMO. However, for those who are active traders, why would you buy something that could mathematically go to zero? Using a small percentage of a total overall portfolio… VXX has the capability to offset a substantial portion of unrealized & realized losses that could occur if we had another sharp correction. For the rest of you who aren't active day traders, however, you can take a look at how I'm planning to protect myself and my subscribers by signing up for my newsletter, Katusa's Resource Opportunities. You'll be able to see exactly what I'm holding in my own portfolio and what I paid for each position. Most importantly you'll see how I just laid out scenarios to protect your portfolio for as much as 30% downside risk with a 1% cost. You'll see how I'm planning to not just survive, but profit when this market sentiment bubble pops. Regards, Marin The post Tik-Tok… Beware of a Bond Bomb appeared first on Wealthpress.

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