Midas Letter

Have you heard of the “Great Rotation”?

It’s a fundamental change in investor attitude as traders shift away from equity funds to buying bond funds.

Well now, we might be seeing a “Great Mini-rotation” Meaning: a shift from a hot sector into an undervalued sector.

Technology stocks have propped up the overall U.S. stock market since March.

For months the largest technology and e-commerce stocks in terms of market capitalization have spurred on a massive v-bounce rally during “Corona time” that has simultaneously caused economic pain globally.

However, as the uptrend in these tech names come into question it may be time to rotate out of some leaders and into less-loved, economically sensitive sectors, like basic materials, gold, interest rates, and ETF’s.

Watch the full interview to see which stocks to look for as this market phenomena continues.

P.S. The stock market will gain more perspective on the economy as a bunch more names are on the earnings docket. (Look out for the reporting periods below)

And remember don’t trade off the back of the absolute value of the earnings, trade the market expectation and whether the company has delivered on what the market has already baked into the cake.

Monday: International Business Machines Corp. (NYSE:IBM)

Wednesday: Microsoft Corporation (NASDAQ:MSFT), Tesla Inc (NASDAQ:TSLA)

Thursday: Intel Corporation (NASDAQ:INTC), American Airlines Group Inc (NASDAQ:AAL)

Original article: How to Get Away from Stocks Missing Earnings Estimates©2020 Midas Letter. All Rights Reserved.

There’s been a reversal of fortunes in the stock market in terms of what’s attracting investors attention right now.

It’s the first time since February that the non “stay-at-home” stocks have been leading the way. In the short-term and based on momentum studies, the technology sector has also been overdone for about a month…

So, what should a traders strategy be for allocating their capital in the market going forward?

Answer: Cool off on individual tech stocks and diversify into ETF’s. ETF’s lower your exposure and risk across several assets but allow you to profit if there is another run-up in the market. Below are the top 3 ETF’s we are currently watching:

1… CLOUD COMPUTING ETF (NASDAQ:WCLD): Almost everything in the digital world is connected to the cloud in some form. All the tech giants and startups are using cloud computing and it will become an even more integral part of our daily lives.

2… CLEAN ENERGY ETF (BATS:ACES): Recent renewable energy advances indicate a fundamental shift in the U.S. energy system. Forecasts predict 80% of America’s energy needs can be fuelled from clean energy by 2050. Therefore, we expect the clean energy revolution will only pick up more “steam” moving forward.

3… DISRUPTIVE TECHNOLOGIES ETF (BATS:DTEC): A collection of stocks that are still in their ultra-growth phases. These particular companies dominate their own niche and don’t have much competition.

Watch the full interview for further analysis of today’s stock market and how best to profit from its conditions.

BONUS: If ETF’s aren’t quite your investment flavour, the guru’s also give you 2 bonus stocks to look into. These companies are benefiting from lots of movement within the real estate sector right now.

Original article: Top 3 ETF’s to Have Your Cake and Eat it Too©2020 Midas Letter. All Rights Reserved.

Earnings season began this week with the largest banks reporting first.

While revenue and earnings per share for the majority beat market expectations and consensus (as seen from graphic below), digging a little deeper we can see these results reflect strong growth in investment-banking fees and trading revenues.

However, the financial institutions debt business is in destruction, their prime brokerages have been exposed and commercial mortgages are imploding… In preparation for an increase in bad loans,  financial institution such as Wells Fargo & Co (NYSE:WFC) and JPMorgan Chase & Co. (NYSE:JPM) have set aside massive cash reserves.

We can shout about the injustices and what happened in the 2008 financial crisis from the rooftops all we want, but it just doesn’t matter… All that matters is the price action, momentum and opportunities in the market to make money.

Watch the full interview to see what we have been trading this week, what to avoid and what we think are the most important earnings yet to come (ahem… Netflix (NASDAQ:NFLX)).

P.S. We interviewed the real Danny Moses from the movie “The Big Short” back in 2018. For those interested in his investing views, click here to watch the video.

Original article: Are Bank Earnings a Warning Sign of the Next “Big Short”?©2020 Midas Letter. All Rights Reserved.

This week is all about earnings. The outcome of this trading week will set the tone in the stock market for the rest of the summer. If traders aren’t diligent, reality could set in again and bring some traders back down to earth.

35 S&P 500 Index (INDEXSP:.INX) companies are reporting their Q2 earnings this week. All sectors have recorded a decrease in expected earnings growth led by the Consumer Discretionary, Energy, Industrials, and Financials sectors.

Banks are up first. See the below graphic (courtesy of Earnings Whispers) to know who’s reporting on which days.

We are less interested in the specific financial results and are studying how overall markets and individual stocks are going to react to the upcoming news flow. This will show us how the large institutions are playing the results… And that is the momentum we want to get behind.

Watch the full interview to see how expert traders are playing the stock market as the U.S. earnings seasons kicks-off.

Original article: What to Look for as US Earnings Season Kicks Off©2020 Midas Letter. All Rights Reserved.

The NASDAQ-100 (INDEXNASDAQ:NDX) continues to climb but if you look closer under the hood – momentum levels are all declining.

Meaning: Fewer and fewer stocks are causing the market to increase. This fact misleads the market and can only continue for so long until ultimately the broad market will take back control.

Add this to president Trump’s income tax release, plus an election year, being deep into the summer cycle, the worst earnings reports are almost due and volatility is still 3 times the historical average…

Everything is pointing to a cool off in the stock market.

But we’re not all bearish… watch the full interview demonstrating strategies traders can use to lower risk and increase profits from the market volatility.

I’ll give you a short summary – a TLDR (too long; didn’t read) as the kids are saying nowadays:

Lower your exposure on each trade – reduce your positions by at least half (you will still get bang-for-your-buck because of the increased volatility).

Become more defensive – increase exposure to gold and interest rates.

Buy stocks that will perform better because of COVID-19 – think work (and play) from home stocks.

Don’t try to think 3 steps ahead – don’t be a hero and bottom fish the banks and airlines.

Happy Trading!

Original article: Hot Trading Strategies as Stock Market Chills©2020 Midas Letter. All Rights Reserved.

It’s hard to trade stocks when they are at (or are very close to) their all time highs.

Sometimes it’s hard to see stocks continuing to rise into unseen levels. But, if you had that mindset 3 weeks ago, you would’ve missed out on some serious gains.

Conversely, it may be tempting to try to bottom-fish and find stocks that are severely undervalued… Perhaps, finding a bank or airline stock which looks cheap and should be trading higher based on fundamentals or attempting to pick a bottom in this market might just be the worst strategy.

Watch the full interview with Future of Wealth Head Trader Lance Ippolito to find out which stocks you should keep on your trading radar based on momentum indicators.

And remember: you don’t have to ride the wave of these stocks to the shore, but you can certainly catch some nice wake in the short-term.

Happy trading!

Original article: Hot Momentum Stocks to Trade Today©2020 Midas Letter. All Rights Reserved.

COVID-19 cases have been continuing to increase and the economic forecasts outlook has been revised lower by the banks again…

Yet, even with these negative catalysts in worldwide markets, China risks inflating another stock market bubble.

Investors in Chinese stocks are jumping in aggressively to say the least. The CSI 300 Index (SHA:000300) has now risen more than 18% in one week of trading. To show how scary that jump is – that’s the largest climb in the index since its massive bubble pop and crash in 2015. The main Chinese stock benchmarks are  in massive overbought territory demonstrated by their relative strength indices (RSI’s). As traders well know, when price action excels into those extreme territories, a correction will always takes place.

Watch the expert-panel video to see which Chinese stocks could surge (including the Spotify of China), how the rise in the Chinese stock market will affect U.S. markets, and what key levels to look into as traders to profit on the back of this news.

Original article: How to Play China Stock Market Surge©2020 Midas Letter. All Rights Reserved.

If you read my article yesterday explaining how Gold’s value is achieved, how the precious metal is correlated to the U.S. dollar and why the commodity is about to explode higher, you may have come to the same conclusions as Roger Scott in today’s video.

The spot gold price is mere dollars away from an 8 year high of $1,800 per ounce and had the biggest quarterly rise in 4 years. As long as the COVID-19 cloud remains hovering around our heads – gold is looking like a very strong trade and investment option.

With that in mind, the Wealthpress Head Trader has found 2 stocks with technical charts to support a move to the upside.

Agnico Eagle Mines Ltd (NYSE:AEM)

A senior Canadian gold mining company with a history of mining production in  Canada, Finland and Mexico (world diversification). The company’s numbers are up 40% from last year with revenue reports above earnings estimates.

Wheaton Precious Metals Corp (NYSE:WPM)

Wheaton are one of the world’s largest precious metals streaming companies. Streaming allows Wheaton to purchase by-product precious metals from a mine that it does not own or operate in exchange for an upfront payment. This ultimately provides leverage to grow as gold price increases.

Watch the full interview for more stock analysis and trading rule-of-thumbs.

Original article: Ride the Gold Rush with these 2 Stocks©2020 Midas Letter. All Rights Reserved.

It’s a holiday-shortened in North America this week. It’s Canada’s birthday Wednesday and, of course, U.S. markets are closed on Friday as it’s the 4th of July.

So expect markets to behave a little oddly this week and be somewhat front-loaded.

In broad market news, there are a few catalysts which could potentially see a further downturn in the economy and another drop-off in the stock market. A high unemployment rate being one of them…

Data to keep your eye on this week in that regard is US Labour Market Report & Initial Jobless Claims on Thursday July 2nd.

The fear of a second wave of the Coronavirus is another one…

Confirmed cases have now eclipsed 10 million worldwide with the death toll nearing half a million.

So where do the opportunities lie this week, this summer and beyond into the U.S. election?

With a prospective devaluation of the U.S. dollar, economic uncertainty, and rising demand for physical gold, a gold breakout above the $1,800 per ounce level in the somewhat near term isn’t so difficult to see. Even Goldman Sachs analysts are predicting gold to move to as high as $2,000 per ounce by 2021.

Watch the full interview with the Wealthpress Head Traders to see what other trading opportunities they are paying close attention to.

Original article: How to Trade 4th of July Short Week©2020 Midas Letter. All Rights Reserved.

The U.S. is halting the reopening of the economy as Coronavirus cases hit record highs, stimulus money is running out and we don’t seem to be any closer to a vaccine or accurate testing…

Market conditions are eerily similar to right before the first outbreak of the pandemic…

Due to the times we find ourselves in, we wanted to give our followers some great stocks that we like the look of. Stocks that have performed well before and during COVID-19 and stocks we see with great momentum on their side.

Thor Industries, Inc. (NYSE:THO)

The market has priced-in the demand for motorhomes as people are looking to get-away from the COVID-19 mess and look to take vacations inside their own confines. The world’s largest recreational vehicles (RV) manufacturer, Thor, has seen through-the-roof sales to satisfy customers RV demands.

TAKE-TWO INTERACTIVE SOFTWARE, INC (NASDAQ:TTWO)

Sporting events are off, people staying at home and spending their time and money on video games… 5G is making Virtual Reality possible… All good news for the video game industry and Take-Two Interactive. The company has beaten earnings expectations for the last 4 quarters and with the pandemic still very much on, this stock could look poised to continue the momentum.

Trupanion Inc (NASDAQ:TRUP)

Demand for pets has been at an all-time-high during the Coronavirus pandemic… Animal shelters across the U.S. have been empty of all pets… The pet industry has been very hot even as markets decline. Trupanion has a subscription model for pet insurance and pet care with a reliable cash flow. The company reported a quarterly revenue of $111.3 million and subscription enrolment is up 25% from a year ago.

IDEXX Laboratories, Inc. (NASDAQ:IDXX)

Another stock benefiting from the surge in the pet industry is IDEXX Labs. They primary business model is pet software diagnostics. The company reported a profit of $359.59 million and saw revenue increase to $626.34 million. IDEXX Labs annual income has been growing 20% annually for the last 5 years.

Watch the full interview for in-depth analysis on these names and a comprehensive breakdown of markets/economy in these unprecedented times.

Original article: 4 Premium Stocks as Markets Drop©2020 Midas Letter. All Rights Reserved.