Hi everyone, and welcome to another of our fabulous Trades der Woche blogs!
Just when you thought last week’s couldn’t be beaten for drama… well, just you wait!
However, before we get stuck in, here’s news of a very important event coming up on February 23 at 6 pm UK time, when Keith will be holding another of his most-excellent Facebook LIVE Q&A sessions – the chance for YOU to ask him anything investing and trading related and get the answer you’ve been looking for!
So please take the opportunity to join us there for that. All you need to do is join our Facebook group and become a part of the Community so you can start learning how to become profitable with cryptos and stocks.
Okay, so let’s get diving into our latest goody bag full of stock and crypto and market news!
ChargePoint Holdings Inc.,
Here we keep moving the stop-loss down. So it’s down to 3.5%, and we might just continue to move it lower. We have locked in some profits there.
Stuart Information Services Corporation.
We have got repeated profit on this one where the stop-loss has now moved to break even.
Stock Market News
The question everyone wants to know is – Will we see another fall of 50% because the stock stakes were hammered?
So in regards to the stock market, we are seeing a lot of volatility which is more on the bearish side. We are seeing many stock companies having a really heavy share price. Regarding the overall US economy, we were looking at one of the main pieces of news last week, which was job creation in the US. It’s the first time since December 2020, they have failed to meet the analysts’ predictions. That’s also the first time they didn’t create enough jobs wherein the analysts believed they would. Maybe now we’ve hit that ceiling regarding economy, growth and recovery.
In regard to institutions – which of course, remember, the institutions are the ones that run the market – they’re the ones that buy the assets and puts it on to their balance sheets, they’re the ones that drive the price up and down. Institutions are looking at four main driving forces which could affect the market over the next few months:
1) Increase in interest rates: The increase in interest rates causes the economy to slow down its growth. So more people save and not spend. Again, it becomes a bit more expensive as well regarding loans and debts.
2) Increase in inflation: This stops people from spending on the economy.
3) Tightening of monetary policies: This means that the money is not flowing into the institutions, using the stimulus packages as hard as it was.
4) Decrease in the economy’s growth: The overall economy has now hit the peak of the recovery after the 2020 pandemic.
So, institutions are analysing these forces carefully. Another question that arises is – What are they going to do with their money now? Are they going to take it out of the equities and put it into commodities? Or are they going to hold the dollar as cash, and, as you can see, the dollar has been increasing over the last few weeks. It is more held as a dollar than as fiscal equities or commodities going into the market.
One of the biggest areas or sectors of growth in the pandemic period was the tech companies. We are now seeing these companies were massively, massively overvalued because this is where all the stimulus money was being pumped in to hold up the overall market. We are now seeing that a lot of tech companies are dropping in price after being hit very hard.
One of them you may have noticed over the last week or so was Facebook/Meta. Now if we look at Meta, we’ve got a 41% drop after close of Monday’s market. A lot of people are panicking. What are we going to do? Let’s jump out of the window… NO. It is time to be smart. Meta itself is a fundamentally strong company, it is one we are definitely looking to get into.
Many people ask questions on why Meta was hit so hard. One of the main reasons is that it decreased revenue growth for the first time in a long period.
We also saw competition from TikTok. The younger generation is starting to utilise TikTok rather than Facebook. Besides this, there was a decrease in ad revenue and a decrease in daily users in the US. That was the first time they’ve seen a dip in daily users. All of this has contributed to a drop in Facebook.
Now, with Facebook fundamentally strong, we do believe that with the incorporation of the Metaverse, it’s still going to have a lot of room to move on the upside.
Overall, the market update is that the institutions have been fairly sceptical on where their money is going. Tech companies are falling. So, if you are an investor and you’re looking for new opportunities, have a look at the fundamentally stronger tech companies to see if there are any you can get into.
Keith, for example, recently got into Meta. Dennis is considering doing so soon.
Even with Facebook, they are still a giant company and making billions in revenue. It’s not as if they are going to vanish.
You need to ask yourself if it’s down 41%, but have they lost 41% of their business? And the answer is no, the market always overreacts, but we are going to get into the VCA strategy, which we are using for this.
One thing you need to ask yourself is – yes, it’s down 41% but have they lost 41% of their business? And the answer is NO.
There is one thing to look at before we move on to the new opportunities and that is NASDAQ, together with the other industries. We never broke the lowest point. So until we do that, we’re still bullish. We believe we will recover, but it still doesn’t look good. The best you can do is get into fundamentally strong companies; being down by 17-18% from the highest is a correction. We might have seen the correction already.
A good example of that was definitely during Corona, where the stock lowers. It struck, and the markets fell down to 30%. It goes up down, up down, which we can never decide until the event changes direction. Also, the last couple of weeks have been a bit messy. So we just need to be a bit patient here and wait to see what happens.
API Group Corporation
We are currently not lost on this one. We like the reversal candles, and, hopefully, we get a big move to the upside today. Let’s hope it doesn’t go all the way down, but the stop-loss was firmly below the lows there. So you have the opportunity to get in at a lower price than we did because we went in on the reversal candle when it started to go up. This was on Feb 1. That being said, you can now enter with the buffalo strategy on the information we have here.
Northwest Bancshares Inc.
This one is looking very interesting. We have some bullish candles here. So we have a nice risk-reward ratio on this one. We have an order in on this one as well, and hopefully that triggers us in today.
Albireo Pharma Inc.
It’s a pharmaceutical company which has a great trend. We always like when we get these expansions where the lows are getting lower and the highs are lower too. It is looking like a very promising opportunity, but the only thing we wanted to consider here is one place in the stop-loss. It might be worth putting the stop-loss above the high-level mark because that might be an area the market will target. We, on the other hand, are on a better level here. We wouldn’t say that this level is on the aggressive side but more on the riskier side. That’s why we always follow the strategy which gave us the stop-loss of 1%. Just be aware of that area up there as well.
So, those are the buffalos, and it doesn’t matter which way the market goes because we will always follow the strategies, which gives us the profits.
Oh boy, crypto has reversed a bit. We saw it went down and touched the 33,000 mark. And now it’s reversed higher. It has reversed up to 44,000 in a couple of days, and that’s quite a big movement. It is around 33% up from the lows. We do like this move because we have broken this downward trend that was traded. So this downward trending resistance went all the way from November to Feb 4, where the market really rallied higher. But the level we need to watch before we can move higher is the 44,400 mark. We need to have a solid breakout above that before taking any additional action on this. We’re also adding top positions in a small-cap or adding them in the CCA strategy. So we think we’re locked and loaded for a move up.
Harmony is a cryptocurrency we have been looking at. We took massive profits on this back in October. It’s currently down on 40%. It can be a great entry point with a small-cap strategy if you’re not in it. They came out with a lot of news here. What they have been doing is building a foundation in terms of scalability and decentralisation. They have very low gas fees and have a platform now which has a huge potential for NFTs as well. It’s definitely a competitor to some of the other blockchains.
It was down by 70% from the high and is currently down by 62%. It is a great entry point. Polkadot is a blockchain that consumes the least amount of electricity. We think that’s awesome, and that’s definitely an argument for mass adoption because it’s a very sustainable project. The rest of the companies like Solana, Algorand, Avalanche and Tezos are very energy efficient. So, those are the companies and blockchains we’re looking at investing in as well.
We have entered another position on Kadena at 84%. It doesn’t look like it because it would run up so much. So we’re down quite a bit.
We did get in again with the strategy. It is down by a massive 86% from the highest. Well, the strategy is to keep adding to them as they go down. If you are starting to invest in this one now, use the small-cap strategy on this one as well.
We added to the positions. We’ve got some profits on this one already. So we’re up around 30% on Crypto.com.
Crypto Market News
Not adding any new ones, but worth looking over positions, it’s about consolidation in the markets. A lot of these positions we’re in, and some went down. So you have a good opportunity to get into companies such as Theta, which is down by 80% as well.
$800 million worth of bitcoin being moved from exchanges to wallets, and that generally means that people are holding. The long-term holders have increased by over 10% in the last couple of months, which means some people are holding and other people are buying. It may be because they’re afraid of inflation, or they want to hedge against the market.
In regards to the crypto market, we are seeing a recovery of bitcoin. We do want to start trading above the 44,000 mark to give us an indication of something being bullish.
For Keith when it comes to cryptocurrency, there are three main pillars he considers: Decentralisation, Security and Scalability.
No real blockchain offers all free at the same time. That’s why we’ve got some Layer 2 projects like Polkadot or Harmony who can help blockchains communicate with each other and help them become more scalable. So, we want to follow these blockchains, which can help scalability. Some of the larger blockchains like Polkadot or Harmony, or Matic are here to help bring up the scalability of blockchain. If crypto is to grow, there will be an increase in scalability. That means more people can then utilise that blockchain.
It is time of accumulation, we’re waiting for bitcoin to move past the 44,000 point, so a lot more of the altcoins are going to push up too.
It is down a massive 60% from the high. We think it’s a great time to invest. We can go back to 2016 or 15, but every time we’ve seen a bigger fall in the market, PayPal has recovered.
If we look at these companies, how much have these companies fallen in the past? When they were at their peak in 2018-2020, we saw a massive drop of 67% in Square, and now we’re down by 65%. We might be closing in on the lows. Usually, you do see a retest of the previous highs to move higher. That might be something we are experiencing in the tech sector.
Vale S. A.
We moved the stop-loss to 20%. Yes, to get that moving, we’re not showing any emotions. But we are very tempted to take the profits here.
We have moved the stop-loss to 10% percent. This company doesn’t really move that much. It is a very large company but moves by only 10% usually when it does go down.
IPG Photonics Corporation
It is down by 47%. So we added an extra entry to this.
It is down 60%. So we’re getting into this as well. Like all these companies, you might see a trend here – NASDAQ or the tech companies are moving in the same direction. So you might not need to get into PayPal, Facebook or Pinterest because they’re all going to move the same
It is also down by 64%. So you see that they all move the same. You need to be diversified in this.
Pan American Silver Corp.
It is also down, but we have some here with silver miners because it’s good to diversify.
It is a travel industry that’s also down around 60%, but it has been performing better than the tech stocks in the last couple of weeks. For instance, VALE is up by 20%. So it’s important to have a good distribution on your investments, like for MasterCard, which is plus 10%. Don’t just get into every single tech company you can because they’re all going to be the same.
It is down by 19%. It is a good time to get into it. This company has good fundamentals, positive earnings, good income, and a good outlook for the coming five years. If we look in the past, during Corona, it was down by 40%, and now it is down 20% is pretty good.
Facebook or Meta Inc.
It is down by 41%. It is a great time to enter but not if you’re in PayPal, Zoom, Intel, Square or Block Inc because they’re all down by the same amount.
It’s all about diversification. You don’t want to have all your eggs in one basket because what happens if that basket has a hole? If you put all your money in tech companies and the tech market goes down, you’re not making any profit. There is no hedge. This is why you want to look at tech companies or financial companies that will be positive for the increase in interest rates. Look at Pharmaceuticals or Travel, for example. You should start diversifying. So if one sector is heavily hit, like tech, at least the other sectors should be giving up some sort of profit.
Companies like Facebook might be very fundamentally strong and blue-chip companies utilised worldwide. We think they are a secure investment. It’s not the time to get emotional, follow the rules, buy as the market drops, and then when it recovers; you’re going to reap the rewards.
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