Midas Letter

Since the onset of the Coronavirus, we are experiencing things never before seen in this lifetime. New norms socially, politically and economically. The stock market is no different.

Markets are completely disconnected from the economy. Stock movements are increasingly not correlating with fundamentals or even technical analysis. Insert wolf of Wall Street Mark Hanna quote: “Nobody knows if a stock is going to go up, down, sideways or in circles.”

Uncertainty is at an all-time high, but this hasn’t stopped people from entering into positions and predicting price bottoms, dead-cat bounces and rallies.

Markets have become a casino.

The gamblers who would normally head to the casino for a game of Black-Jack or are fixed to the TV, betting on professional sport games, are turning into traders/investors. Who doesn’t love the thrill of a stock that is on a tear to the upside?

For Robinhood, the modern trading platform, it has been reported that the company has seen “historic participation and activity” on its platform as more and more people enter the stock market that wouldn’t in normal times.

The “golden” stocks that have exploded during the pandemic such as Twilio Inc (NYSE:TWLO), Datadog Inc (NASDAQ:DDOG) or Beyond Meat Inc (NASDAQ:BYND) are backing off.

Retail and travel stocks are now flying even though earnings have been missed. TJ Maxx or TJX Companies Inc (NYSE:TJX) stores not physically and online have been closed for over 2 months and are still trading within 10% of their prior highs. Travel companies were biggest gainers on Tuesday and is set to keep rising – with Carnival Corp (NYSE:CCL), the British-Panamanian cruise operator, up more than 15% premarket.

With this in mind, we believe traders in today’s market condition should have a patient, selective and diversified mindset. The worst thing traders can do is bet into the recent hot stocks and try to buy small pullbacks.

Instead, maybe the better option, although maybe less exciting is look into the following sectors:

Regional banks such as Fifth Third Bancorp (NASDAQ:FITB) and Huntington Bancshares Incorporated (NASDAQ:HBAN) – the financial institutions that haunt rallied back from their lows like the above retail companies have. From a technical perspective, there is still lots of room for upside.

Industrials such as Honeywell International Inc. (NYSE:HON) and Caterpillar Inc. (NYSE:CAT)

Materials such as Materials Select Sector SPDR (NYSEARCA:XLB)

Utilities with high dividends such as Utilities SPDR (NYSEARCA:XLU) and Industrial Select Sector SPDR Fund (NYSEARCA:XLI)

Watch the full interview to see how you can get the odds back in your favour as you play against the biggest casino of them all: the stock market.

Original article: Is the Stock Market a Casino?©2020 Midas Letter. All Rights Reserved.

As it is Memorial Day and the NYSE and NASDAQ are closed in a day of honour, we thought it would be the right thing to do to give something back to our trading community…

We have gathered 6 expert trading professionals to discuss what they are trading during this shortened trading week.

In this hour long presentation, we discuss topics related to the Fed, 13F form hedge fund insights, small cap trading strategies, large cap investments and much more…

So enjoy the rest of your weekend of grillin’ & chillin’ and let’s get our ducks in a row for this trading week ahead!

Original article: Trading Plans for Week of Memorial Day – Pro Investor Panel©2020 Midas Letter. All Rights Reserved.

Joy of the Trade Head Trader Jeff Zananiri joined Midas Letter to discuss the reflationary measures set by the Fed since the onset of the Coronavirus epidemic.

Fed Chairman Jerome Powell said the central bank has flooded the economy with liquidity and will continue money printing programs for as long as the economy is in need.

“As a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.”

With this precedent set, it is difficult for investors to be trading on commodities dependent on economic activity and growth. Instead, the head trader believers we can look towards inflationary sectors such as gold.

The Head Trader believes we are still set to witness waves of equity selling as the stock market is correlated to personal income. With the jobless rate at its all time high, even with the added liquidity provided by the Fed, the public may still have to sell their investments to make up for the decline in income.

As uncertainty plagues the market with US – China tensions, COVID-19 vaccine concerns and no clear timeline to when the economy/world will return to “normal”, gold prices have been rallying. Spot gold jumped to $1,764.73 per ounce Monday — a 7 year high dating back to October 2012.

Watch the full interview to see other ideas/trades worth considering with the current economic climate.

Original article: What We’re Trading if Moderna Coronavirus Vaccine Fails©2020 Midas Letter. All Rights Reserved.

We don’t have enough answers to the tough questions related to the Coronavirus. We don’t know how many people are affected, we don’t have a vaccine, and we don’t have standardized testing. What will happen when the economy opens up and people reintegrate back within social distant proximities? What will the re-infection rates be?

What we do know: money is not affected by economic factors and data. Money is the underlying measure of economic activity, yes. But money doesn’t disappear when the economy is in a downturn. There’s no fire that engulfs economies dollar dollar bills forever. Capital just redistributes itself in response to external stimulus. The Fed continues to print more and more of their monopoly dollar bills, meanwhile what broader economic issues does this solve?

Quantitative easing is an economic solution like a bandaid on top of a bandaid on top of a bandaid. Can there be a material solution which heals the initial cut? And what happens when some bandaids fall off?

So even with those bleak metaphorical questions, how can we profit in today’s market when the fundamentals don’t make much sense? We follow where the big money is landing as that is what drives asset prices higher within certain sectors. What stocks are moving right now?

5G, solar energy, non-perishable foods…

Watch the full interview to find out the amazing trading opportunities present in todays market.

Original article: How to Follow the Big Money with your Stock Picks©2020 Midas Letter. All Rights Reserved.

Joy of the Trade Head Trader Jeff Zananiri joined Midas Letter to discuss gold’s strong upwards trend recently and the divergence between the commodity’s spot and next month future price.

Gold futures finished for the second straight day above $1,700. Traders are investing into the precious metal commodity as the outlook for economic growth and the inclination of negative interest rates in the U.S. have spooked traditional equity investments.

With the state of the economy during these Coronavirus pandemic times, the Head Trader sees the price of gold hitting $2,000 very soon and provides a safety play which makes sense in the short and longer term.

The duo discuss how they trade the commodity in various ways including gold-backed exchange-traded funds. ETF’s for precious metals trade like a stock but track the price of the commodity, with the precious metal being put into storage to back the shares.

We recently hosted a webinar with the world’s leading gold experts such as Eric Sprott. We discuss the role gold will play during both the new recession and the eventual recovery. Watch the full video below which helps traders and investors of all experience levels understand the role of gold in the post pandemic economy… which will allow you to prosper in the new bull gold market!

Original article: Why Gold Price is Set to Test $2,000 Lickety-split©2020 Midas Letter. All Rights Reserved.

Wealthpress Head Trader Roger Scott, Joy of the Trade Head Trader Jeff Zananiri and Future of Wealth Head Trader Lance Ippolito joined Midas Letter to discuss the divergence in the stock market to headline news and economic data.

20.5 million Americans lost their jobs last month. A decade worth of employment growth gone. But the stock markets has been on the rise. The financial experts tackle the tough question of whether or not economic data means anything and whether that is a new mindset traders/investors need to now adopt.

We look towards the movement in the iShares Russell 2000 Index (NYSEARCA:IWM) as a “canary in a coal mine” to understand how the broader market is reacting to the reopening of the U.S. economy. The Russell 2000 or IWM sends signals of confirmation to the broader market, including the S&P 500 Index (INDEXSP:.INX). If capital flows into the Russell 2000 for it to catch up to the larger S&P 500, we could see a continued rise in U.S. equities. This again is country, to the sentiment actually within the economy.

Watch the full interview as the trio give their insights and trade ideas for short-term plays to capitalize in these contrarian times.

Original article: How to Trade the Divergence in the Stock Market and Economic Data©2020 Midas Letter. All Rights Reserved.

The Coronavirus has presented many challenges to healthcare workers, the economy and traders. The uncertainty in markets are at a all-time high.

We ask ourselves as traders and investors… How do we learn from this? How do we profit from this? How do we take advantage of the happenings in the economy right now?

Wealthpress Head Trader Roger Scott joined Midas Letter to answer these questions and discuss what he’s looking at in the stock market today to make investors profits.

We have to look at industries and sub-industries where opportunities lie. Industries that have benefited when most stocks valuations get slashed.

For example: Digital Realty Trust, Inc. (NYSE:DLR) is a REIT, but one a bit different from the usual commercial real estate owners. The company rents out server rooms to power the cloud-based operations.

Netflix Inc (NASDAQ:NFLX) subscribers have been streaming about 203,840,000 hours per day during quarantine. The average Netflix users in the US are using a total of around 18.346 million TB of data per month during the pandemic quarantine. All of this data has to live somewhere. Digital Realty Trust owns the physical infrastructure for this kind of data server.

But, there are 3 other types of REIT’s that are completely focused on what is driving the economy right now. Most investors aren’t even considering these REIT angles.

Prologis Inc. (NYSE:PLD) is the largest owner of warehouses in the U.S. and is getting a boost as social-distancing pushes consumers into the world of e-commerce. As Amazon and Walmart deal with the increased demand for shipping products, those companies also need warehouse space to store all of their items. Prologis is that solution.

American Tower Corp. (NYSE:AMT) is one of the largest global REITs. They operate multitenant communications real estate with a portfolio of approximately 180,000 communications towers with contracts with AT&T and T-Mobile for 5G. This Stock is providing all the towers in the U.S. for 5G.

Crown Castle International (NYSE:CCI) Keeping with the 5G trend. This REIT holds 40,000 cell towers and 70,000 miles of fibre-optic cable installed all on the 5G line.

Watch the full interview for a unique perspective on how the world and the stock market alike will be changed permanently after this pandemic. Using the information presented to gain a thorough insight into how to capitalize on the current market conditions in the short-term and long-term.

Original article: These 3 Stocks Are Poised To Boom During The Pandemic©2020 Midas Letter. All Rights Reserved.

AS GOLD BREAKS $1,700 WE COULD SEE A SURGE TO $2,150… OR EVEN HIGER!

AND WE’LL SHOW YOU HOW TO PLAY IT

In the middle of a pandemic that has already caused a global economic crisis, set to dwarf anything we saw during the 2008 financial crash and the following “Great Recession”…

And as extreme volatility, unpredictable markets and an uncertain future force investors flock to safe havens…

It’s time to look at the role gold will play during both the new recession and the eventual recovery.

From 2005 to 2011 we saw a 320% surge in gold prices… most of that was a direct result of the financial collapse in 2008.

In 2020 alone we’ve already seen a double-digit increase in gold prices as stocks have collapsed…

And with the current crisis set to be much worse than the so called “Great Recession”…

It’s definitely not unthinkable that another 300%-plus rally could land the gold price at $6,000 per ounce or higher by the time this crisis is over.

This is the time to take a serious look at gold and the massive opportunities it offers.

In order to help you make the most of it… we’ve hosted an exclusive, one hour, webinar.

It’s packed with actionable information, specifically aimed at allowing you to take advantage of the coming surge in gold prices.

MEET YOUR GOLD EXPERTS

Eric Sprott: Legendary Billionaire Gold Bull Investor

Sean Roosen: CEO of Osisko Gold Royalties

Marin Katusa: Has arranged over $1 billion in financings

We have assembled a dream team of experts on gold and they all share one common goal…

To help traders and investors of all experience levels understand the role of gold in the post pandemic economy… and to allow you to prosper in the new bull gold market!

These top experts will give…STRAIGHT ANSWERS TO ALL YOUR GOLD QUESTIONS

You’ll never have a better opportunity to get top level gold advice and insights directly from some of the most knowledgeable people in the world.

The panel will answer questions… including:

Should you buy gold now… and what form of gold should you buy?

Should you hold your gold personally… or store it with a third party?

When will gold break through the old high… and how high will it go?

Is silver going to close the gold/silver price gap again?

What’s next for the U.S. Dollar and what does that mean for gold?

Should you buy stocks, bullion, futures… or something else?

With trillions of dollars being printed, where does the global financial system go from here?

What is the future of the global economy post COVID-19?

After just one hour in the company of these experts… you’ll have all the knowledge you need to take advantage of the new bull gold market and start investing like a seasoned pro.

P.S. Don’t forget to visit and subscribe to SaveCanadianMining.com who made this exclusive event possible.If you agree with the mission of the movement and want to make a contribution, you can do so here.

Original article: BUY GOLD?! Eric Sprott, Marin Katusa AND Sean Roosen on Gold Superstar Panel©2020 Midas Letter. All Rights Reserved.

Wealthpress Head Trader Roger Scott, Joy of the Trade Head Trader Jeff Zananiri and Future of Wealth Head Trader Lance Ippolito joined Midas Letter to discuss the reopening of the U.S. economy and the effect that could have on the lives of Americans and world’s markets.

In order to revitalize the economic recovery, the U.S. is gradually lifting lockdown procedures in the country after the Coronavirus pandemic. Parks are reopening, arena’s are unlocked and restaurants are serving at a 25% capacity. President Donald Trump is saying Americans can start to re-integrate back to their lives before the pandemic, while still remaining safe and without risking lives. This fact however remains to be seen. The Coronavirus has killed more than 67,000 Americans to date and the number that statistics climbs to after the reopening will be very telling on the future state of the economy.

The reality of a normalizing market post pandemic, for both businesses, traders/investors and people’s lives, will be a gradual process. As economies reopen, we will be looking at the severity of a “second-wave” of COVID-19. From a market perspective, what could perhaps be even more scary than the virus itself is if there is a new spike in cases/fatalities as populations start to reintegrate. Will nations start to adopt further testing requirements and controls in order to prevent a large-scale second virus breakout? It is going to be interesting to see how governments continue to support economies moving forward as we find out the answer to how the world is going to adapt back to normality.

For shorter-term trading plays: 148 companies inside the S&P 500 Index (INDEXSP:.INX) are reporting earnings this week. This follows the “Big 5” tech stock last week. Feel free to read: What to Invest In as Amazon & Apple Earnings Disappoint, Sell in May and Go Away? or Buy Right Now and I’ll Tell You How or Making Sense of the S&P 500 where we dissect those earnings.

2/30 components from the Dow Jones Industrial Average (INDEXDJX:.DJI) also report. On an international basis, some of the big names reporting this week are: BNP Paribas SA (EPA:BNP), UniCredit SpA (BIT:UCG), Bayerische Motoren Werke AG or as you know them: BMW (ETR:BMW) and Credit Agricole SA (EPA:ACA). Even if you are not trading in international markets, the results are key to understanding the “big-picture” of how the Coronavirus is effecting nations and the largest corporations worldwide.

Traders are going to have to be increasingly cautious when placing their capital into markets in the short-term. The sentiment in the market leans towards a “bearish” view with surging unemployment rates, uncertainty as economies reintegrate and further data releases from the negative impact on businesses from the virus.

A common theme for the average investor at this moment in time is: value investing. People are selecting stocks which appear undervalued currently due to the sell-off with hopes of a large recovery. Although this can be a great strategy, famously used by Warren Buffett, attentiveness and diversification is encouraged as there is no promise of a complete economic recovery in the foreseeable future.

Watch the complete interview for a complete analysis of what traders should be considering this week.

Happy trading!

Original article: How will Markets React as US Economy Reopens?©2020 Midas Letter. All Rights Reserved.

The calendar ticks into May and we approach ever closer warmer and sunnier times here in the northern hemisphere. Living in Canada and being as far north as we are, we are ever more thankful for this yearly occurrence. The mood and atmosphere seems to brighten – we start to think about cottage weekends, being able to explore outside (remaining 6 feet apart of Coronavirus plagued individuals, obviously), and experiencing longer hours where we enjoy evenings after market closes and some time for a bit of relaxation.

A lot of things change at the beginning of every month in the mindset of traders too. Investors try to interpret all the happenings of the year-to-date and the month before to to gain some insight into the upcoming month. Historically, investors buy stocks on the first day of every month. Pschology plays a big role in this. We, as humans, hold predictable and observable patterns which is fun to dissect (possibly ties into why it is fun for me to analyze the stock market and find ways to profit from other patterns and behavioural phenomena). We like round numbers and fresh beginnings. We will always set an alarm for the nearest hour or half an hour and you will find that the biggest support and resistance levels in technical analysis hold around round integers too. A new month provides new opportunity where we can forget about the losses of that last time period and start making healthy profits again in the next 28-31 days.

This year however may not correlate to the usual patterns as there is nothing normal about what is going on in the world. A worldwide pandemic like something straight from an apocalyptic blockbuster, negative oil prices and the S&P 500 bouncing 10% in a week…

Another phenomena that may be worth looking into this time of year is the old expression: “Sell in May and Go Away”. An investment proverb warning investors to divest their stock holdings in May and wait to reinvest in October/November. Of course, there are profits to be made during this time, and Midas Letter prides itself on finding the value of investments regardless the time of year. It may just be something worth keeping in mind when making investment decisions this spring/summer. For example, instead of ignoring timelines, perhaps its worth considering rotating your investment portfolio into stocks that may be less affected by the seasonal slow growth in the markets during the summer, such as technology or health.

Below is the real-world data over the last decade, of the returns during the “selling” months in the S&P 500.

In the NEWS:

Shell or Royal Dutch Shell plc (NYSE:RDS.A) has cut its dividend for the first time since World War II. The company declared a $0.32/quarterly dividend which is a -66% decrease from prior dividends of $0.94. This surprising news is the latest illustration of the impact COVID-19 is causing the world. Oil demand is undergoing a historic drop and this represents an unprecedented time for Shell and the entire oil sector. The company has provided a reliable income to millions of pension fund investors for an entire generation. People invest into dividend stocks knowing they will always receive passive income. A dividend is often the sign of a financially healthy and stable business that is committed to rewarding shareholders. These are some of the qualities Warren Buffett looks for when he invests. Do people invested into large market-cap companies have to start worrying that their steady income is not going to be as circumvent as usual as times are changing?

American Airlines Group Inc (NASDAQ:AAL) received a massive hit on Friday as Evercore ISI analyst, Duane Pfennigwerth, slashed his price target by 92% from $10 down to a single $1. Airlines, in general, have seen their valuations slashed thanks to the coronavirus as travel has become an impossibility. American Airlines being hit the hardest, falling 65% since the onset of the virus as the company has the weakest