Closing 2 Trades (TRIP, YELP, PCLN, TZOO)

By: ispeculatornew
Date posted: 08.07.2017 (8:59 am) | Write a Comment

This morning, I will be closing 2 trades that are currently beyond their stop. One winning and one losing trade:

Jan 4th: Long Tripadvisor (TRIP) vs Short Yelp (YELP):  This trade currently stands at -32.79% on the back of an incredible jump by YELP following its latest earnings and specifically its decision to sell its Eat24 business to Grubhub.

March 16th: Long Priceline (PCLN) vs Short Travelzoo (TZOO):  This one currently stands at +28,59% and its incredible how reliable of a play being long Priceline (PCLN) has been over the past couple of decades. Just stunning and I’d actually bet that will continue.

 

Thoughts From A Busy Tech Day ($APRN, $AMZN, $NFLX)

By: ispeculatornew
Date posted: 07.18.2017 (6:10 am) | Write a Comment

Blue Apron (APRN) was going to face an uphill battle no matter what as part of being the lead player in a rather risky and expensive new business but it’s difficult to imagine a worse timing for the company to go public isn’t it? It did so a few days before Amazon’s (AMZN) announcement that it would buy Whole Foods and now Amazon seems intent on directly competing with APRN after filing for a trademark related to meal delivery. I don’t think the risks are overblown here. I don’t believe APRN can currently survive competition from AMZN so the current move does not seem overblown to me:

Impressive Numbers From Netflix

Netflix was expected to add a bit over 3m subscribers in the last quarter but it did much better than that by adding over 5m (4.14 intl and 1.07 domestic) which is highly encouraging. I will try to write more about it but I personally continue to be a believer in NFLX’s long term business even though its current financials are not great. Netflix should continue to focus on user growth and international expansion.

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Technical Analysis Weekly Overview

By: ispeculatornew
Date posted: 07.17.2017 (3:30 pm) | Write a Comment

As of July 10, 2017, the USD showed a 2-sided trade in the previous week yet still closed higher. The USD index was strong at the beginning of the week reaching its weekly high after the Federal Reserve released minutes of its June meeting. It still managed to get back to positive even after a setback in two days caused by the Friday release of the US Non-Farm Payrolls report.

Major events expected in the coming weeks will provide speculators with an insight into growth or global economy. We expect the Claimant Count Change and unemployment rate in the UK to be published this week. On Wednesday, BoC will release its interest rate and Janet Yellen will give her testimony before the US Congress on Thursday. US CPI will publish its retail sales on Friday. These are some of the events expected to have an impact on global economy and the forex market as well.

Technical analysts show the EUR/USD floor pivot points with a 3rd sup of 1.1198, 2nd Sup of 1.1255, 1st Sup 1.1325 and Pivot 1.1382.

Source: https://www.fxempire.com/forecasts/article/weekly-forex-technical-analysis-july-10-july-14-2017-419873

Looking at the EUR/GBP

Technical analysis shows that the EUR and GBP are once again at a crossroad. The two currencies have been on a 164 pip trading range for quite some time and only broke higher after the surprises of the June 9the election day. On June 12th, the swing highs reached 0.8865 and 0.8858 on Friday. See the chart below for other EUR/GBP swing highs and swing lows in this period.

http://www.forexlive.com/technical-analysis/!/forex-technical-analysis-eurgbp-at-cross-road-again-20170710

The chart shows that the EUR/GBP pair has gone through many ups and downs leaving us at a major cross road. Both EUR and GBP have been banging against significant resistance ranging from 0.8850 to 0.8879 on each day’s chart for the last 10 months. They are banging on a ceiling of 0.8858 and a floor of around 0.8834. Anything lower than the 0.8832 to 0.8834 range could be a reason to beware.

Strength and comparison of other currencies

Overall, the currency strength table shows the EUR being the strongest at the moment while the JPY is the weakest. The last week has brought some key changes with the GBP suffering a 3-point loss and the CHF enjoying a 2-point gain. Other currencies more or less stuck at the same level throughout the week with maximum strength changes of 1 point.

On the basis of Currency Comparison Table and the currency classification for the last 13 weeks, some of the interesting currencies worth going long on include EUR, CHF, and NZD. The 3 currencies are Strong or Neutral options when you look at them from a long-term perspective based on currency classification for the last 13 weeks. The same analysis is still relevant for going short term with the JPY, AUD, GBP, and USD being the best choices. These are Neutral or Weak currencies if you look at them from a long-term point of view. Currencies such as the CAD have a high deviation and less predictable therefore not very interesting to trade.        

Changes To Stocks I Follow ($APRN, $YHOO)

By: ispeculatornew
Date posted: 07.10.2017 (3:00 am) | Write a Comment

Today, I’m making a couple of changes to the list of stocks I follow. First off, Yahoo, which I had not been trading for some time given the M&A speculation involved but also the lack of activity. In the end, Yahoo’s purchase by Verizon (VZ) did go through and Yahoo is no longer listed.

On a brighter side, Blue Apron (APRN) recently went through its IPO. It’s fair to say its timing was bad. To give you context, Blue Apron is a meal delivery service where customers sign up, choose what they’d like to eat and then receive everything necessary to make the meal shipped at home. It’s a business that requires scale but the bigger issue is that potential competitors such as Amazon would have a big leg up in such a business. AMZN is able to ship cheaper than anyone thanks to its efficient warehouses and shipping network. There had been hints that AMZN was interested in the food business because of its testing with Amazon Fresh among other initiatives. But just days before APRN started trading, Amazon announced its intention to buy Whole Foods which in many ways could set it on a path to compete, put pressure on Blue Apron.

As is the case in companies that end up competing with ecosystem companies (FAAMG), things will get very tricky as Amazon is able and willing to operate at zero or even negative margins for long periods of time in order to:

-successfully enter a market, especially one where it needs scale like this one
-eliminate competitors

If one of the plans for Bezos decision to acquire Whole Foods includes shipping food, and even curated boxes such as what Blue Apron does, it’s fair to say that APRN will likely not survive. Yes, some players are able to compete with ecosystem plays and one such example might be Spotify but even that one struggles to generate any profits and the big difference is the heavy pressure on costs that shipping meals around the country has generated.

For now, difficult to say how much APRN is worth or how likely it is to survive but I will be holding off trading for now (as I do for most recently turned public companies).

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Is Gold a Good Safe-Haven Investment Now?

By: ispeculatornew
Date posted: 07.09.2017 (8:21 pm) | Write a Comment

Every time speculators get cold feet about equities, people flock to gold as a safe-haven investment. For the week ending Friday, July 7, 2017, markets were thrown for a loop. A large-scale tech stock selloff on the NASDAQ precipitated fears that Wall Street is on the decline. Pundits were saying that years of strong gains must certainly culminate in a market correction, or a dramatic long-term reversal.

The bulls will invariably run out of steam, and the bears will come out to maul markets – they say. But these naysayers are ill advised. The financial markets are not beholden to anyone, let alone speculative sentiment. Sure, a jolt hear or there will upset current trends but ultimately, it’s macroeconomic factors that determine what rises and what falls.

Tech Selloff a Blip on the Radar

Recently, the NASDAQ threw traders for a loop. A major selloff of tech stocks took place before the US Department of Labor released the June NFP data. And what a surprise it was: 220,000+ new jobs were added in the month – welcome news for stakeholders on Wall Street and abroad. Consider that economists were expecting 180,000 new jobs to be added, but the actual figures exceeded forecasts by a huge margin.

President Donald Trump wasted no time gloating about this news on Twitter, and his followers were quick on the uptake. More importantly, markets reacted favorably to the latest NFP data. By the end of the week, the Dow Jones Industrial Average (DJIA) was up 0.4% at 21,414.34.

Even the tech-heavy NASDAQ closed the week at 6,153.08 for a gain of 0.2%. The S&P 500 increased 0.1% to close at 2,425.18 for the week. These figures are especially encouraging since the bigwigs of the trading world were convinced that markets had topped out and were on an inexorable decline.

Trading Experts Weigh in on Market Activity

ECN Capital expert, Charles Wilson Sr. believes that the NFP data will have a profound effect on monetary policy, and equities markets. “Given the bullish sentiment on Wall Street as a result of the strong June NFP data, we are likely to see Fed chair Janet Yellen moving to unwind the $4.5 trillion balance sheet sooner, rather than later. Inflation concerns remain, owing to weakness in crude oil prices, but the Fed is likely to accelerate its monetary tightening. A dual approach in the form of asset sales and rate hikes to the federal funds rate will do the trick.”

A slight increase in hourly wages was also reported during June, up at $26.25, for an increase of 0.2%. This was marginally less than expectations, but nonetheless a positive sign. Over the past year, wages have increased modestly at 2.5%, which is behind the eight ball. As bond markets enjoy higher yields, a risk-off approach to equities markets kicks in. There is a sense that central banks are moving closer towards monetary tightening around the world, and this is keeping traders at bay. As bond prices fall, yields rise. Typically, people buy bonds when equities markets are in trouble, much like gold bullion.

How are Gold Markets Performing?

The current price of the precious metal is $1,212.82 per ounce, up slightly on Friday, 7 July. Over the past 30 days, gold has declined by 6.32%, or $81.50 on the back of strong USD performance and a risk-on approach to equities markets. Since gold is a dollar-denominated commodity, demand rises when the dollar depreciates. According to the US dollar index, which is now at 96.00, the USD is appreciating. Over the past 5 days, the US dollar index has gained 0.39%. This underscores the decline in gold demand.

However, for the year to date, the US dollar index is down 6.23% – a good sign for gold bugs. Mr. Charles Wilson Sr. believes that there is still a significant market for gold, possibly in different forms. These include ETFs, gold mining stocks and Gold IRA options. Presently, gold is languishing with steep losses. Increasing treasury yields and a stronger USD are hampering gold demand, but this also makes it a value-driven deal for long-term investors.

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Closing 1 Trade ($AMZN, $ETSY)

By: ispeculatornew
Date posted: 06.23.2017 (6:19 am) | Write a Comment

As much as Amazon has been in the news, Etsy has been on quite a streak and my short position has not done well in recent weeks so I will be closing the trade on this morning’s open. I do remain very skeptical about ETSY’s longer term prospects but it does look like it will be able to have a shot in competing against the likes of Amazon so it will be interesting to follow. As is always the case, you can see my 2017 (and previous years) long & short tech stocks here:

http://www.intelligentspeculator.net/livetrades

 

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New Trade: Long Paypal (PYPL) & Short IAC Interactive (IAC)

By: ispeculatornew
Date posted: 06.21.2017 (5:53 am) | Write a Comment

Today I am opening my 12th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
IACIAC/InterActiveCorp102.9636.9824.3261.09-2.824.523.511.138/2/201739.233.7833.02
PYPLPayPal Holdings Inc52.5244.0524.9334.117.244.3312.231.187/20/20178.96N/AN/A

Revenue growth for IAC has come down quite a bit and I do think that PYPL will be able to keep up its current growth in the short to medium term.

 

Long Paypal (PYPL)

Paypal is a very interesting story right now. Not only does its main business participate in the growth of ecommerce and online payments but it also owns Venmo, an incredibly popular P2P payment solution. Paypal has been in the news a lot recently as the big ecosystem players continue to take stabs at its main business. Just recently, Apple announced it would be possible to do P2P payments through Apple Pay using iMessage which does sound like a big threat. I do think it is and I continue to believe Paypal will struggle to remain dominant against these much bigger players. The threat does seem a bit overblown at this point though and I do think PYPL will continue to do well in the short to medium term. Why? Because online payments are a very fast growing business and more than one player will do well so I think PYPL is very well positioned.

 

Next earnings: July 20th 2017


Short IAC Interactive (IAC)

IAC Interactive continues to be an interesting stock to follow but to me the main story remains that IAC has struggled to come up with the next big thing which has translated into slower revenue growth. The stock did see solid acceleration and that has been mainly caused by improved profits but as you can imagine, that will be more difficult to sustain without better top line growth.

 

Next earnings: August 2nd 2017

Disclaimer: Prior to opening this trade, I do not hold a position in PYPL or IAC
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How will Deregulation Affect the Financial Sector?

By: ispeculatornew
Date posted: 06.20.2017 (6:46 am) | Write a Comment

President Donald J. Trump has been mired in controversy since he was sworn into office. His agenda has been hamstrung by obstructionist Democrats and more than a handful of skeptical Republicans. His ambitious objectives such as building a border wall, imposing tariffs on foreign countries, repealing and replacing Obamacare, and deregulation have been stopped dead in their tracks, or have they?

While the media focuses its attention on drawing parallels between the Trump campaign and Russian election interference, the Trump White House has been quietly going about passing legislation to undo the Obama-era doctrine of extensive government involvement in most every aspect of corporate America.

Foremost among the changes sought out by Trump and the Treasury Department is the redrafting of Dodd-Frank. This comprehensive piece of legislation was passed in 2010 as a response to the global financial crisis that developed after Lehman Brothers collapsed. This set into motion a cataclysmic series of events that wiped out trillions of dollars from global markets and threatened to spiral into a global depression.

Obama and his team sought out legislation to prevent banks from over lending, by requiring them to meet with minimum stress test requirements. In early June 2017, landmark legislation was passed by the House of Representatives to radically transform the manner in which the financial system operates in the United States. The banking system remains the structural bedrock of the US economic engine. Too many changes and lackadaisical regulations may seriously undermine the performance and the credibility of the US financial system.

Banks and Financial Institutions Abuzz with Trifecta of Policies

Banks are strong when they promote lending, investment and saving – those are the 3 tenets of economic growth and prosperity. Back in the 1930s, the Glass-Steagall law was passed which recognized the separation between investment banks and commercial banks. That has since eroded, and the law was repealed in 1999. Banks have turned the corner when it comes to liquidity and credibility since the passage of Dodd-Frank in 2010. The stringent regulatory requirements inherent in the legislation ensure that banks will not over lend and are capable of withstanding significant stresses in the economy.

These measures also enhance client protection and ensure that a modicum of solvency, respectability and structural strength remains intact. Any failure in the performance of the economy or the bank should not adversely affect the economic system overall. There are now calls for the stress tests to be revisited, amended, and updated to meet current market conditions. We see evidence of renewed interest in bank stocks according to  Lionexo options trading experts. The financial sector is buzzing with the multi-pronged approach to revamping it in the form of Fed rate hikes, deregulation, and decreased taxation.

What Sort of Legislation Would Be Beneficial to the US Banking Sector?

Banks will be well served by determining issues like share buybacks and increasing dividends once the stress test results have been acquired. Banks are also currently limited in the amount that they can invest for the own profit/loss portfolio. Fortunately, the global community has toiled long and hard to create a standard to prevent a return to the conditions that precipitated the global financial crisis.

Unfortunately, US regulatory agencies have dismissed global standards as insufficient and have gone further to impose strict limitations and performance criteria on US banks. This has negative ramifications and could result in the US financial system being defunct. The CEO of Morgan Stanley (MS), James P. Gorman, believes that the US financial sector should take the time to digest the current rules and double down on what the economy requires to generate job growth, investment, and increased savings.

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Closing 1 Trade ($AAPL, $IAC)

By: ispeculatornew
Date posted: 05.05.2017 (5:28 am) | Write a Comment

It’s been a good year and the portfolio does still have a 10.61% return so far this year but this morning I will be closing my first losing trade of the year, as the trade from February 10th long Apple (AAPL) and short IAC Interactive (IAC) turned bad when IAC exploded higher. As is always the case, you can see my 2017 (and previous years) long & short tech stocks here:

http://www.intelligentspeculator.net/livetrades

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If Le Pen Wins, Here’s What Assets You Should Keep an Eye On…

By: ispeculatornew
Date posted: 05.05.2017 (5:21 am) | Write a Comment

The U.S. equity market has been up over 1%, the week of the release of the first round of the French Presidential election results. Now, the SPDR S&P 500 ETF (NYSEARCA: SPY) was up 1.49%, the iShares Russell 2000 ETF (NYSEARCA: IWM) was up 1.35% and the SPDR Dow Jones Industrial Average ETF (DIA) was up 1.87%, the week of the French Presidential election first round results. Now, this was primarily due to Macron’s slight lead, and traders and investors began to put risk back on the table. That said, safe havens have been down significantly after risk-on sentiment was back. Although traders and investors have shifted away from safe haven assets, the results of the final round of the French Presidential election on May 7, 2017 could surprise the markets, if Le Pen wins. Now, there are some exchange-traded funds (ETFs) that investors might want to keep an eye on ahead in an event of a Le Pen win.

Gold-Related ETFs

The SPDR Gold Shares (NYSEARCA: GLD) was down just over 1% on the week, as of April 28, 2017. The SPDR Gold Shares aims to provide investors with investment results corresponding to the price of gold bullion. Since gold is seen as a safe haven asset, in the event of a Le Pen win, there should be an increase in political risk, and in turn, gold prices should rise. This should drive GLD higher, if Le Pen wins.

According to trader Jason Bond, “Another asset traders might to keep an eye on is the Market Vectors Gold Miners ETF (NYSEARCA: GDX), which I’m currently long. Now, this a long-term play and I think the price of gold should rise in an event of a Le Pen win, and this should trickle down into GDX.”

Source: TradingView

If you look at the performance of GLD and GDX on the hourly chart shown above, these two ETFs trade in tandem, and could both benefit in an event of a Le Pen win.

Euro-Related ETFs

The euro could experience a high degree of volatility before, and after, the final round of the French President election. Now, the Guggeinheim CurrencyShares Euro Trust (NYSEARCA: FXE) aims to track the price of the euro, and if Le Pen wins, this ETF should fall significantly. We’ve seen FXE rise 1.75% over the past week, after Macron led the first round of the French Presidential election.

“Traders who are highly risk tolerant may want to keep an eye on the ProShares UltraShort Euro, in the event of a Le Pen win. I’m currently long this inverse leveraged ETF, and believe the euro could fall ahead of the final round of the election,” one trader stated.

The ProShares Ultrashort Euro (NYSEARCA: EUO) aims to provide daily investment results correspond to two times the inverse of the daily performance of the USD price of the euro. Consequently, this is considered a highly risk ETF.

Here’s how EUO and FXE performed recently, on the hourly chart:

Source: TradingView

The Bottom Line

The final round of the French Presidential election is coming up, and in the event that Le Pen wins, gold-related ETFs could see a rise, while the euro could fall. Consequently, GLD, GDX, EUO and FXE should be in focus both before and after the election.

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