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Freeport-McMoRan's Breakout Hits The Target

Posted on January 31, 2018January 31, 2018 by Aibek Burabayev

Last February I called for a long position in Freeport-McMoRan Inc. (NYSE:FCX) amid temporary weakness within a consolidation phase. Later on in March when the expected weakness reached support I posted an alert for you to catch the opportunity and set the target area with a $19.78-26.30 range. At the start of this month, the initial target at the $19.78 level was hit, producing a 55% profit for the year. My congratulations are to all who took the longs!

I also mentioned Southern Copper Corporation (NYSE:SCCO) for those who prefer larger market cap companies. That trade produced a good profit of almost 39% in the same period. However, it doesn’t compare to the 55% profit from FCX even though it set the new record high at the $50.90 breaking above the previous long-term top ($49.82).

Below are the poll results where you voted for these two stocks last March. Continue reading "Freeport-McMoRan's Breakout Hits The Target" →

Will Facebook Finally Break Through $200?

Posted on January 30, 2018January 29, 2018 by Noah Kiedrowski

Introduction

Facebook Inc. (NASDAQ:FB) is on tap to report Q4 FY2017 earnings along with its full-year FY2017 numbers. Facebook recently breached the $189 level as earnings approached, however it recently sold off from these highs following news that Facebook would overhaul its news feed in favor of “meaningful social interactions” versus “relevant content.” I think this news was timely with the upcoming earnings announcement as Facebook will once again deliver phenomenal growth numbers across the business with beats on both top and bottom lines. Once the growth trajectory is affirmed with EPS moving in lock-step, the stock only becomes cheaper, and thus this pull-back could be a rare buying opportunity before the stock breaking through the $200 barrier. Facebook ended 2017 with a monster return of 53%, however, considering its growth the stock remains relatively cheap with a P/E of 34.8 and PEG of 1.23 implying an annual EPS growth rate of 28.3%. Once the newly designed news feed launches in conjunction with earnings later this month, I think the stock could break through the $200 level imminently. I feel that Facebook represents value even after this massive run through 2017 and I maintain my long thesis with a price target of $230 by the end of 2018.

News Feed Overhaul

Facebook announced major changes are coming to its news feed to prioritize “meaningful social interactions” on the social media’s news feed as opposed “relevant content.” With this reformatting, users will start seeing less public content from businesses or publishers and more posts from their friends. Mark Zuckerburg expects that the time people spend on the social media network will decrease as a result however it will be “more valuable.” Facebook sold-off on the news as investors and analysts regarded this as an overall negative impact on earnings. Facebook sold-off over 5% on the news or $10 per share as analysts weighed in on the new roll-out. Overwhelmingly, analysts remain positive on shares of Facebook with JP Morgan’s Doug Anmuth maintaining his overweight rating and a $230 target price. I feel that the news feed overhaul will be negligible to earnings, especially over the long term. This sell-off is an excellent opportunity to enter the stock before what will likely be a fantastic earnings announcement. Continue reading "Will Facebook Finally Break Through $200?" →

Farewell Janet, Welcome Jay

Posted on January 29, 2018January 28, 2018 by George Yacik

After four years as Federal Reserve chair, Janet Yellen makes her swansong at this week’s monetary policy meeting (no disrespect to Ms. Yellen, but it seems like a lot longer, doesn’t it?), at which time she will likely welcome her successor, Jerome Powell, who was finally confirmed by the Senate. Her term officially ends on February 3, at which time she has said she would also step down from the Fed’s Board of Governors, where she was entitled to remain for another six years.

While most observers believe Powell won’t deviate too far from the dovish, don’t-rock-the-boat policies of his predecessor, I think he’s likely to be a little more hawkish in raising interest rates, if for no other reason than to skim some of the froth from the stock market. Another quarter-point increase in the federal funds rate at next week’s meeting would be a good signal about what to expect from the Powell Fed going forward.

I’m still not entirely sold that inflation won’t at some point in the future rear its ugly head once again, mandating a more aggressive interest rate-raising policy, but the bond market – based on still relatively low long-term Treasury bond rates – apparently has yet to be convinced. Still, inflation, whether just boiling under the surface or several years down the road, isn’t the only reason the Fed needs to be more hawkish. Taking some air out of asset bubbles – whether they be in old-fashioned equities or yet-to-be-tested cybercurrencies – that has primarily been the result of the Fed’s overly accommodative monetary policies is a good enough reason to do so. Continue reading "Farewell Janet, Welcome Jay" →

Global Oil Stocks to Build in 2018

Posted on January 25, 2018January 24, 2018 by Robert Boslego

OPEC released its Monthly Oil Market Report (MOMR) for January, and its projections for 2018 imply a 29 million barrel global stock build, in contrast to 140 million barrel draw it estimated for 2017. As a result, it will not clear the glut, which OPEC estimates to be at 133 million barrels, at the end of November, based on the “latest five-year average.”

In 2017, OPEC production averaged about 32.5 million barrels per day (mbd), adjusting for the change in OPEC membership (i.e., with Indonesia’s 740,000 b/d).

In 2018, I have assumed OPEC production averages 33.2 mmbd, which is OPEC’s forecast (December) of its 2018 production. However, OPEC production averaged 32.416 mmbd in December.

OPEC projections imply that global stocks will build much more quickly in the first half of 2018 than they did during the same period in 2017. And the stock draws in the second half of 2018 are expected to be smaller than they were in 2017. Continue reading "Global Oil Stocks to Build in 2018" →

Did You Own Any Of The Worst ETFs of 2017

Posted on January 23, 2018March 24, 2021 by Matt Thalman

2017 was a good year for investors as the S&P 500 increased 19.42%, but unfortunately, not all investors saw their investments grow in value during the year. Investors who had purchased some different Exchange Traded Funds saw their investments nearly disappear during what will be referred to as an “up” year for investors and the stock market.

What is not surprising though is that seven of the nine most prominent ETF losers of 2017 had something to do with investing in the Volatility Index. The worst performer was the ProShares Ultra VIX Short-Term Futures ETF (UVXY), falling 93.96%. This fund provides 2X exposure to short-term, first and second month, VIX futures. The UVXY is a fund essentially will offer investors a way to make money if the VIX itself increases. Furthermore, because this fund is leveraged 2X, if the VIX increases by 10%, UVXY investors will make 20%. But, due to the fund's exposure, it has high carrying costs, meaning investors who hold the fund for more than one day will lose money due to those roll costs.

Therefore, the UVXY needs both the market to be volatile regularly for investors to make any money, even over a small period of time. In 2018 its unlikely UVXY will lose as much as it did in 2017 because the end of 2016 was highly volatile following the election of President Trump. Continue reading "Did You Own Any Of The Worst ETFs of 2017" →

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