COVID-19 - Adding Speculative Positions

Posted on by The INO.com Team

Now is as good time as any to put on some speculation plays because this COVID-19 black swan event may be a once in a lifetime opportunity. This COVID-19 induced sell-off has been the worst since the Great Depression in terms of breadth and velocity of the sell-off. This health crisis has crushed stocks and decimated entire industries such as airlines, casinos, travel, leisure, and retail with others in the crosshairs.

The broader indices have shed approximately a third of their market capitalization into April. Some individual stocks directly related to the COVID-19 pandemic have lost ~50% to well over 80% of their market capitalization. Investors have been presented with a unique opportunity to start speculating on some of these names as sharp rebound candidates. Throughout this market sell-off, I have begun to speculate on a variety of names with small amounts of capital. Let's not confuse speculation for investment; thus, these trades are purely speculative for a sharp potential recovery. These names have been battered to levels not seen since the Financial Crisis. Names such as Expedia (EXPE), Wynn Resorts (WYNN), Capri Holdings (CPRI), MGM Resorts (MGM), American Insurance Group (AIG), The Gap (GPS), Square (SQ), Lowes (LOW), HP Inc. (HPQ), Walgreens (WBA), Yelp (YELP), Yum Brands (YUM), General Electric (GE), Ulta Beauty (ULTA), Royal Caribbean (RCL), Boeing (BA), Hasbro (HAS) and Twitter (TWTR) are some speculative names that have sold off ~50%-85%.

Evaporated Market Capitalization

The COVID-19 pandemic has destroyed entire industries and many individual stocks. Anything related to travel, leisure, retail, industrials, and discretionary spending has been cut by 50% or more. Companies are being tested like no other time in history where the entire economy is at a standstill under the COVID-19 coast is clear. Amid this economic wreckage, speculation can potentially Continue reading "COVID-19 - Adding Speculative Positions" →

Can This Bear Market Rally Last?

Posted on by The INO.com Team

The question I keep asking myself is this, how long will this bear market rally last, and yes, I still think this is a bear market rally. There are zero reasons that the market was up for the week and especially for how much it was up. The DOW and S&P 500 both gained a whopping +12 on the week with the S&P 500 having its biggest one-week gain since 1974 when it gained +14%. The NASDAQ brought up the rear with a +10% gain, having it's best week since 2009. But why?

Two reasons really, the Fed and a flattening curve of the Coronavirus pandemic.

This week the Fed announced as a large number of programs, including loans geared towards small and medium-sized businesses, that will total up to $2.3 trillion. They also gave more details on its plans to buy investment-grade and junk bonds going forward.

As for the Coronavirus, the number of new daily confirmed cases has dropped globally. In the U.S. New York state has also reported a decline in its virus-related hospitalization rate, which led the markets and trader sentiment to believe that we are turning the corner, but are we? Continue reading "Can This Bear Market Rally Last?" →

Socialism's Dry Run

Posted on by George Yacik

Is it any wonder why many millennials gravitate toward socialism? As children, many of them watched their parents lose their homes after the 2008 financial crisis and real estate crash. Then they entered college and are now stuck with tens of thousands of dollars in student loans that prevent them from getting a car loan or a mortgage. Now they're in the middle of an even bigger global financial crisis, one that may leave 30% or more of the workforce unemployed, either temporarily or perhaps for several years.

Thankfully, the government and the Federal Reserve have stepped in with a mammoth rescue effort that will hopefully tide many people over until the economy rebounds. So that means for a period of time, either several months or perhaps years, the government will be keeping many people afloat. We'll get a feeling for what socialism will be like, meaning lots of people are not working and the government paying their bills. How long this state of affairs can last without some kind of societal impact is anybody's guess.

The immediate consensus when this crisis started was that the economy would rebound nicely in a "V-shaped" recovery in a couple of months, but that idea seems to have lost some of its steam. Now there's a growing belief that many parts of the economy will take a very long time to recover, and many industries, such as restaurants, air travel, sports and entertainment, and tourism, may return only as mere shadows of their former selves. How long will it really take for people to get comfortable again in large crowds in close proximity to others? Continue reading "Socialism's Dry Run" →

Crude Oil Eyes $10

Posted on by Aibek Burabayev

In February, I shared with you a "Buy Setup" for crude oil futures with a 1:6 risk/reward ratio. The trigger was set at $52.25, stop below $48.70, and the target was at $73.55. I always appreciate your kind support, as most of you liked that setup.

Oil Poll Results

I also asked you if you thought that crude oil had bottomed? Continue reading "Crude Oil Eyes $10" →

What Do We Call This Market?

Posted on by The INO.com Team

With back to back rallies to start the week, we have now rallied 23% from the March 23rd lows of 2,191.86 (for the S&P 500). Is this the start of a new bull market, or is this just a bear market rally within the broader confines of the bear market? Keep in mind that we are still roughly -20% lower off the all-time high for the S&P 500, which puts us solidly in the middle of the range.

All three major indexes triggered new green weekly Trade Triangles indicating that the overall market has moved into a sidelines trend or sideways momentum as the figures above would suggest. So where do we go from here?

Honestly, I don't have a clue, and I don't think anyone else does either, but we do have the Trade Triangles to guide the way. My inclination, if I had to guess, would be that we'll continue to see high volatility as Coronavirus news will drive this market for good or bad.

Here are a couple of things to consider: Continue reading "What Do We Call This Market?" →