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Fear was out of control yesterday.

With an upcoming Federal Reserve meeting, the virus, fears of a slowing economy, and a potential default in China, the Dow fell more than 600 points.

According to Business Insider, “Some have suggested that if Evergrande collapses, it could be China’s Lehman Brothers moment, referring to the role played by the demise of the US investment bank in the 2008 financial crisis.”

It was the fuel on the bearish fire.

However, at the same time, that excessive fear created opportunity.

• Technically, the Dow was oversold at double bottom support. RSI, MACD, and Williams’ %R were all deep in oversold territory, telling us a bounce was imminent.
• Also, according to Fundstrat’s Tom Lee, people are talking about Evergrande and the spill-over being like Lehman [but] I’m in the camp that this is going to prove to be a really good buying opportunity,” said Lee, as quoted by Business Insider. “We’re at a moment where everyone’s only seeing darkness and downside and usually that’s when you want to be adding risk.”
• And, as we learned today, Evergrande is too big to fail. In fact, according to Ed Yardeni, president of Yardeni Research, as quoted by Business Insider, “”The reality is (Evergrande) is too big to fail, and I think the Chinese government is going to intervene big time. It will be restructured, and in a way, that won’t harm the economy too much over there and won’t affect the global economy or financial markets the way Lehman did.”

But don’t let your guard down just yet.

Even though markets are bouncing back today, there’s still a massive amount of fear.

The post Market Chaos: Why Markets are Bouncing Back appeared first on Morningology.

The fear is palpable.

At the moment, the Dow is down 800 points, as the NASDAQ sinks 408.

According to The Wall Street Journal, “The retreat came amid concerns over property developer China Evergrande Group. Market participants increasingly believe that Beijing will let Evergrande fail and inflict losses on its shareholders and bondholders. The company’s debt burden is the biggest for any publicly traded real-estate management or development company in the world.”

That, coupled with the irus, fears of an economic slowdown, tapering, geopolitical issues, and an upcoming Federal Reserve meeting, volatility is skyrocketing.

With the exception of the China Evergrande Group news, we all knew this was coming.

It’s why – on August 17 – we highlighted opportunity in volatility trades, including:

ProShares Ultra VIX Short-Term Futures ETF (UVXY)

The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index. On August 17, the UVXY traded at $24.25. It’s now up to about $30, and could easily race higher, as fear escalates.

iPath S&P 500 VIX Short-Term Futures (VXX)

The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index. The VXX last traded at $27 and could easily run well above $30, near-term with the chaos, we said on August 17. Nowadays, the VXX is up to $31.56.

ProShares VIX Short-Term Futures ETF (VIXY)

ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.

At the time, the VIXY traded at $22. It’s now up to $25.81.

Until there’s clarity on the situation in China, and with the Fed, and with the economy, volatility could easily continue to spike.

The post Three of the Top Ways to Protect for Further Chaos appeared first on Morningology.

Over the last few days, investors have been cashing out of casino stocks.

All as China moves to tighten control of the industry.

According to GGR Asia, “The Macau government wants to increase the share of the mass-market segment in the casino industry, and pledged to implement strict oversight on the allocation of new live-dealer gaming tables. The goals are stated in the draft version of the city’s second Five-Year Development Plan, which was released on Monday for public consultation.”

Not helping, JP Morgan analysts have been bailing on casinos, too.

Analyst DS Kim for example says the latest announcement is enough to de-rate the stocks. Then, analyst Joseph Greff issued downgrades.

According to TheFly.com, “This could have potential implications on gaming patron spend, as well as reduce the casinos’ ability to repatriate Macau free cash flow back to the U.S., The analyst does not like the ‘uncertainty and opacity’ surrounding Macau and China policy. He thinks the uncertainty translates, at least in the near term, to ‘much lower’ multiples for the Macau gaming stocks.”

Despite the news, casino stocks may be worth the gamble.

With the news now out, MGM, LVS, and WYNN are already starting to pivot higher. Look at Las Vegas Sands (LVS), for example. After gapping from about $43 to triple bottom support around $37, the stock is beginning to pivot higher. While its overall chart is nothing to write home about recently, near-term, LVS could at least fill its bearish gap.

The news out of Macau, coupled with downgrades is becoming overkill.

The post With Negativity Priced In, Consider Rolling the Dice of Casino Stocks appeared first on Morningology.

Steel prices – and related stocks could be headed higher.

All with the current supply-demand imbalance.

Plus, with a potential $1 trillion infrastructure plan designed to fix U.S. roads, bridges, and ports, there’s no telling how high steel prices could run. “It’s crazy for steel,” said Brian Nelson, president of HCC Inc., which sells large metal accessories to tractor manufacturers, as quoted by Fox Business. “I can’t even get material at times.”

Until there’s a resolution to the imbalance, steel prices will rise.

Steel stocks to consider are US Steel (X), Steel Dynamics (STLD), and Nucor (NUE)

With higher demand for steel, US Steel now expects to post record EBITDA numbers in the third quarter. In fact, according to David B. Burritt, President and CEO, as noted by Street Insider, “the expected Q3 adjusted EBITDA will be a record result for the company, supported by strong reliability and quality performance, sustained customer demand, and continued increases in steel selling prices.”

Steel Dynamics just said earnings are on track to outperform year-earlier numbers, seeing Q3 EPS in a range of $4.88 and $4.92, which is above estimates for $4.29. Three, there’s substantial demand for steel at the moment. In addition, analysts at Deutsche Bank just raised their target price to $98 from $72.

Even Nucor just “third quarter earnings to be in the range of $7.30 to $7.40 per diluted share. Third quarter of 2021 earnings are expected to be the highest quarterly earnings in Nucor history, surpassing the previous record of $5.04 per diluted share set in the second quarter of 2021,” as noted by a company press release.

The post Three of the Top Steel Stocks to Buy and Hold Now appeared first on Morningology.

Cryptocurrencies are pushing higher.

Since bottoming out around $29,807 in July, Bitcoin, for example is back to $47,971. From here, there’s hope it could test prior resistance around $63,503.

Helping, Cathie Wood, CEO and founder of ARK Invest says Bitcoin “will be in the six figure range,” as reported by Investing.com. “She anticipates that Bitcoin prices will more than tenfold and trade nearly $500,000, up from nearly $47,000 now. She did, however, emphasize the importance of institutional investors allocating at least 5% of their portfolios to digital assets.”

Even better, crypto adoption is on the rise, with the AMC theatre chain to accept Bitcoin, and other cryptocurrencies by the end of 2021.

Plus, according to Changpeng Zhao, founder and CEO of Biannce, “global financial institutions and investors have already realized the digital assets’ merits. With that said, they have started jumping on the cryptocurrency bandwagon, with bitcoin being their primary interest.”

In short, the crypto boom is alive and well – with plenty of interest.

Even the billionaires are excited. In fact, according to Reuters:

“Billionaire investors Steven Cohen and Ray Dalio have joined the cryptocurrency craze by putting cash to work and saying at a conference this week that bitcoin and other digital currencies are an interesting way to diversify their holdings.”

Dalio reportedly said he has more crypto than gold. Cohen said he hopes not to miss out on current crypto opportunities.

While investors can always jump into individual cryptocurrencies, like Bitcoin, another great way to gain exposure to digital currencies is with the miners.

Some of the top ones include:

Riot Blockchain (RIOT), which just reported August 2021 numbers.

“In August 2021, Riot produced 441 BTC, an increase of approximately 451% over its August 2020 production of 80 BTC. Year to date through August 2021, the Company produced a total of 2,051 BTC, an increase of approximately 221% over its production during the same 2020 period of 639 BTC. As of August 31, 2021, Riot held approximately 3,128 BTC, all of which were produced by its self-mining operations,” they noted.

Marathon Digital Holdings (MARA), which just reported it, “Produced 469.6 new minted bitcoins during August 2021, increasing total bitcoin holdings to approximately 6,695 with a fair market value of approximately $316.4 million. Received approximately 21,584 top-tier ASIC miners from Bitmain year to date with an additional 5,916 ASIC miners currently in transit.”

Bit Digital (BTBT), which recently reported that, “Revenue from bitcoin mining was $28.3 million. The number of bitcoins earned was 562.9. We owned 32,500 miners, with 3,515 miners acquired in the second quarter of 2021.”

The post This is Why Billionaire Investors are Jumping on the Bitcoin Bandwagon appeared first on Morningology.

Weakness may be opportunity in beauty stocks, like ULTA.

The stock came under pressure after Amazon.com said it plans to hold a beauty products event in October to boost its position in the category.

According to CNBC, Amazon has been trying to gain market shares in the $500 billion global beauty market. “The beauty market is of particular interest now, as consumers have flocked to the web to buy makeup and personal care items during the pandemic. Online makeup sales surged 40% in 2020 from a year earlier, while sales of “self-care” items like shampoo, face wash products and lotions climbed 59%, according to market research firm 1010data.”

However, don’t count out ULTA just yet.

The company has done a good job of protecting its customer base, and keeping its stock in a strong uptrend for the last two years. Helping, the company recently raised its full year outlook as beauty product demand races back.

In addition, according to CNBC:

“Ulta estimates sales this year will range between $8.1 billion and $8.3 billion. Previously, it expected $7.7 billion to $7.8 billion in sales. Same-store sales will rise 30% to 32%, it said, higher than its prior outlook of 23% to 25% growth. Earnings are forecast to be around $14.50 to $14.70 per share for the year, compared with a prior range of $11.50 to $11.95 per share.”

The Amazon-induced pullback may be a great opportunity to buy.

 

The post Weakness May be Opportunity in $500 Billion Beauty Market appeared first on Morningology.

The electric vehicle boom shows no signs of slowing.

Countries all over the world want millions of electric vehicles all over the roads, in an effort to reduce emissions. Major auto companies are changing their fleets to electric. General Motors announced it’ll increase global spending on EVs to $435 billion through 2025. Ford Motor Company recently announced that sales of its EVs jumped 117%.

Helping, President Biden is pushing for millions of electric vehicles.

According to NBC News, “There are a number of reasons behind the administration’s push for battery-car technology. There’s the need to reduce CO2 emissions in order to meet global warming targets. There’s a desire to reduce America’s dependence upon petroleum imports, and there’s also a growing concern that China will wind up dominating the EV segment — something that raises defense, as well as economic, concerns.”

However, none of this is possible without more lithium supply.

According to Reuters:

“Right now it’s very simple: the market is so tight that players are fiercely competing for any spot tonnage available,” said Max Deudon, a trader at Transamine in Geneva.

More investment in lithium production is needed to meet future needs of the electric vehicle supply chain, analysts say. “Things are heating up and there is huge anxiety about where lithium supply is going to come from in the near future,” said Benchmark Mineral Intelligence analyst George Miller. “If new lithium doesn’t start coming to market, we might start to see electric vehicle production rates hamstrung by a lack of raw material supply.”

That’s why lithium companies have become red-hot, such as Lithium Americas (LAC), Livent (LTHM), American Lithium (LIACF), and Albemarle (ALB), which, according to Barron’s, “expects sales to grow at 24% to 28% a year on average between 2021 and 2026.”

“That means Albemarle’s lithium business should be more than three times its current size by 2026, compared with this year. What’s more, the company expects lithium pricing to improve 15% to 20% in 2022. Higher pricing and higher volumes are a powerful combination for a commodity producer,” they added.

In short, jump on the lithium story. It’s showing no signs of slowing at all.

The post The Top “Must Own” Stocks to Buy and Hold Through 2022 appeared first on Morningology.

Vaccine stocks are taking a massive hit.

At the moment, shares of Moderna (MRNA) are down $31 a share. BioNTech (BNTX) is down about $26 a share, as Pfizer (PFE) falls about $1.25. All after an international group of scientists, including those at the US FDA and the World Health Organization support the need for boosters for the general population.

In fact, as reported by The New York Times:

“In the new review, published in The Lancet, experts said that whatever advantage boosters provide would not outweigh the benefit of using those doses to protect the billions of people who remain unvaccinated worldwide. Boosters may be useful in some people with weak immune systems, they said, but are not yet needed for the general population.”

Also, while the Biden Administration has proposed boosters eight months after initial shots, some scientists oppose that idea, “saying the vaccines continue to be powerfully protective against severe illness and hospitalization,” as noted by The New York Times.

At the moment, that’s devastating news for vaccine stocks.

But don’t write these stocks off just yet.

As noted by Investor’s Business Daily, “Boosting could be appropriate if the virus mutates to the point that the vaccines are no longer effective. Experts say the virus mutates in unvaccinated people whose immune systems aren’t prepared to fight the virus.”

The post Vaccine Stocks Plunge as Officials Argue Against Boosters appeared first on Morningology.

Keep an eye on Affirm Holdings (AFRM), we noted on August 2.

At the time, the stock traded around $63 a share.

All after Square announced it was buying its competitor Afterpay in an all-stock transaction worth $29 billion. And all as “buy now, pay later (BNPL)” just begins to gain popularity.

According to Barron’s, “BNPL is gaining popularity given that interest rates are ultralow, reducing costs for consumers. Other fintech apps have entered the market, including Affirm, a pure play on the sector, and PayPal (PYPL). Apple (AAPL) is also developing a BNPL service with Goldman Sachs Group (GS), its credit-card partner.”

Today, shares of AFRM are up to $118.19 a share, and pushing higher.

Not only is AFRM disrupting the credit card industry, it has a deal with Amazon, and both Paypal and Square are making moves into BNPL.

Even better, AFRM just provided solid earnings and raised its guidance, thanks to “The secular shift toward flexible and transparent financial products continues to accelerate. With our superior technology, Affirm is strongly positioned to build a more valuable two-sided network for consumers and merchants,” said CEO Max Levchin, as quoted by The Street.

On top of that, the company’s gross merchandise volumes (GMV) more than doubled year over year to $2.5 billion. Its active customer base rocketed to 7.1 million. Revenues were up 70% to $261.8 million. As for 2022, the company sees GMVs running higher by 70%, with revenues of between $1.16 billion and $1.19 billion.

In short, AFRM and other BNPL stocks may be some of the most exciting stocks to own now.

The post As Expected, Affirm Holdings is Exploding to Higher Highs appeared first on Morningology.

Uranium stocks have gone nuclear.

There’s a few reasons for that.

One, investors are betting that nuclear power could be a part of the move away from fossil fuels. Two, according to the Financial Times, “The Sprott Physical Uranium Trust has snapped up about 6m pounds of physical uranium, worth about $240m, since launching on July 19, helping to push uranium prices to more than $40 per pound, up from $30 at the start of the year. Global mine supply is expected to be about 125m pounds in 2021.”

Three, China has plans to increase its nuclear power capacity over the next few years.

However, there’s just one problem.

This year, demand for uranium. Is expected to climb to 162 million pounds this year to 206 million pounds by 2030. From there, it could increase to 292 million by 2040, as countries like China increase power generation, and look to cut emissions.

At the same time, thanks to a lack of new uranium mines, supply could fall 15% by 2025, and by as much as 50% by 2030.

With the supply-demand struggle, some of the top stocks and ETF to consider include Denison Mines (DNN), Energy Fuels (UUUU), Uranium Energy Corp. (UEC), Cameco Corp. (CCJ), and ETFs such as the Global X Uranium ETF (URA), which holds positions in Cameco Corp., Paladin Energy, Rio Tinto, Uranium Energy Corp., and BHP Group to name a few.

The post The Top Reasons Uranium Stocks Just Went Nuclear appeared first on Morningology.