Tonight’s AI “social signals” event with Louis Navellier … oil can’t catch a meaningful bid … shipping stocks pop on Houthi aggression … what will the SEC do with bitcoin?
Earning season begins Friday with the big banks reporting (Wells Fargo, Bank of America, Citigroup, and JPMorgan).
If you wanted to trade these reports (or any other this season), what would be your approach?
Whatever the specifics, my hunch is your core strategy would reduce to one thing…
Capitalizing on a surprise to a consensus expectation.
After all, in the long run, the strength (or weakness) of earnings drive stock prices. But in the short-term, surprises are what lead to price volatility – whether that’s up or down.
The challenge for investors is how to find and correctly forecast these tradeable “surprises.”
Well, tonight at 8 PM ET, legendary investor Louis Navellier will discuss a powerful AI tool that’s engineered precisely for this challenge when he sits down with Andy and Landon Swan. They’re the brains behind Derby City Insights, one of InvestorPlace’s corporate partners.
Andy and Landon have created an artificial intelligence tool engineered to track “social signals” that can provide valuable insights into a company’s popularity with consumers.
In short, if a company has a hot product or service, there’s going to be significant buzz around it online. The louder the buzz, and the stronger the momentum of that buzz, the greater the likelihood that a company’s upcoming earnings will be stronger than expected.
Such a “surprise” earnings report can move a stock price, putting a nice wad of cash into the pocket the investor who had the benefit of the insight ahead of time.
Here’s Louis with more:
Andy and Landon have their own system – LikeFolio – that turns hundreds of millions of social data points into proprietary demand and sentiment metrics to tell them when a stock could be ready to lift off.
Understanding that the major drivers of a stock’s prices are earnings (or the anticipation of them) and developing advanced algorithms that can help us spot the opportunities earnings create is our shared secret to unlocking profits in the market.
Switching gears, oil fell again yesterday after a surprise price cut from Saudi Arabia yesterday
Oil dropped more than 4% after Saudi Aramco (Saudi Arabia’s state-owned petroleum and natural gas company) cut the price of Arab Light Crude to Asian customers by $2.
As I write Tuesday, oil is trying to claw back some of those losses but not getting much traction. This Saudi Aramco price cut has heightened worries the oil market is oversupplied at the same time that global demand is weakening.
From CNBC:
The Saudi price cut comes amid persistent market weakness due in large part to record U.S. crude production and softening demand in China.
OPEC and its allies are cutting their production by 2.2 million barrels per day this quarter in an effort to balance the market.
“While it is possible that the price reduction was to maintain market share in the face of production cuts, the market is taking it as a clear sign that the economy is slowing. Maybe the landing might not be so soft,” Phil Flynn of the Price Futures Group wrote on Monday.
The market also appears to be worrying less about geopolitical risks in the Red Sea – at least for the moment
As we’ve been tracking here in the Digest, repeated attacks by Houthi militants on commercial ships in the Red Sea have impacted trade routes, shipping times, and global supply chains. Plus, in recent weeks, there have been growing fears of a widening regional conflict in the Mideast.
This has resulted in temporary bouts of higher oil prices over the last month. But any price bumps have been short-lived. It’s clear that the market feels weakening demand will offset any potential supply challenges related to the Houthis or expanding Mideast conflict.
We’re eying this situation for a potential trade.
Given the seasonality of oil demand (we’re near seasonal lows today), combined with growing hopes for a soft economic landing (which would mean increasing oil demand), oil appears increasingly attractive the lower it falls.
For now, we’re just watching. But there’s an inconsistency in bullish forecasts for robust economic growth supporting a soft landing and today’s bearish oil prices. We’ll keep you updated.
In the meantime, the growing chaos in the Red Sea and Mideast has been profitable for shipping stock investors
As container availability has dropped due to the Houthi attacks, freight costs have skyrocketed, which has sent the prices of leading shipping stocks stratospheric.
Legendary investor Louis Navellier just recommended his Accelerated Profits subscribers take advantage of this surge by cashing in on their shipping position, DHT.
From Louis’ Flash Update profit alert yesterday:
The reality is tensions in the Middle East are extremely high right now. The U.S. Navy even sank three Houthi rebel ships in the Red Sea in response to a distress call from a Maersk container ship.
These escalating tensions have effectively forced the insurance industry to redirect ships away from the Red Sea. In turn, not only have shipping rates risen in 2024 so far, but the prices for LNG and container goods are also increasing.
The boost in freight rates is certainly good news for shipping companies, which is why shares have climbed nicely higher over the past week. I want us to take advantage of this near-term strength.
A congrats to Louis’ subscribers who locked in gains of roughly 49% including dividends.
Yesterday, shipping stocks pulled back on rumors that the Houthis and shipping companies had agreed to a safe passage deal through the Red Sea
Such a deal would mean faster sailing distances between Asia and Europe. That would eventually result in lower costs, lower shipping rates, and lower shipping profits. So, this pullback in shipping stocks makes sense.
However, as I write Tuesday, it appears the rumors are unfounded. The latest news is that shipping giant Maersk has denied that a deal was struck. However, shipping stocks continue to give back recent gains.
Based on how rapidly the tensions can escalate in the Mideast, we don’t think the opportunity to profit here is behind us.
If you’re looking for an easy, one-click way to play the situation, check out the SonicShares Global Shipping ETF, BOAT. It holds top shipping companies including Maersk, Frontline, Scorpio Tankers, and International Seaways to name few.
As you can see below, BOAT has jumped 20% higher (and has since pulled back slightly) since the Red Sea conflict began just a few weeks ago.
Finally, have you checked your bitcoin balance in a while?
If you haven’t been watching, bitcoin just broke through $47,000 for the first time since April 2022.
Here’s our crypto expert Luke Lango with what’s behind the surge:
This January promises to be a wild one for cryptocurrencies — and potentially very profitable for us if we play our cards right.
The market is already off to a volatile start, with the potential approval of a Bitcoin (BTC-USD) exchange-traded fund (ETF) on the horizon [this] week.
To recap, the SEC is reviewing 13 applications for spot Bitcoin ETFs. The review period began on Friday, Jan. 5, and will conclude by Wednesday, Jan. 10. It’s widely anticipated that the SEC’s decision will be revealed early [this] week, likely on Monday, Tuesday, or Wednesday.
Rumors about the SEC’s next move are rampant online. Some speculate that approval will be granted for all ETFs. Others anticipate outright rejection. Many, however, expect a decision delay until March.
Luke believes the SEC will approve some, but not all, of the 13 bitcoin ETF applications (potentially, by the time you read this). Approving any of them will be fantastic news for crypto investors long-term.
As Luke points out, the bulk of investable money in the world has been restricted from investing in cryptos because most of it is held by major financial institutions. These institutions often have rules limiting their ability to deposit customer funds directly into cryptocurrencies.
An SEC-approved bitcoin ETF would sidestep this problem, enabling a tsunami of capital to flood the bitcoin market.
Back to Luke:
A 2022 survey of 500 financial advisors revealed that 72% of firms would be more inclined to allocate client assets to crypto if spot ETF products were accessible in the U.S.
Therefore, if one or several Bitcoin ETFs receive approval next week, this could trigger a substantial influx of capital into the cryptocurrency markets.
Financial firm VanEck projects that approximately $300 million could pour into Bitcoin ETFs during the initial trading days. They anticipate this figure to increase to $750 million within a quarter. Over a two-year span, inflows might soar to above $40 billion as Bitcoin ETFs potentially capture a considerable portion of the market from gold ETFs, as per VanEck’s analysis.
To be clear, if there is good news from the SEC, Luke believes the immediate market reaction could be a “sell the news” drawdown
Bitcoin has surged in anticipation of an SEC approval. As you can see below, it’s up 81% since September 1st.
Source: StockCharts.com
This is the market pricing in the expectation of good news from the SEC. If/when that good news finally comes, look for a selloff as early traders take profits.
But don’t confuse that selloff for the far greater wave of buying pressure that would come later in the wake of an SEC approval.
Back to Luke:
In the previous three months, Bitcoin’s value escalated from $25,000 to $45,000. Specifically, it climbed from $37,000 to $45,000 in the last month.
Several optimistic factors contributed to this surge. Yet, the anticipation of a Bitcoin ETF approval was a key driver.
This suggests that a positive ETF decision next week could potentially trigger a “sell the news” phenomenon.
It is our experience in financial markets that when everyone expects something, and that something does eventually happen, the short-term reaction in markets is usually the opposite of what everyone expects.
Traders have front-run this authorization. A lot of them are sitting on some pretty big profits already. They’ll likely do some profit-taking after the decision.
If things play out this way, Luke believes it will create fantastic buying opportunities since we’re now in the Fourth Crypto Boom Cycle – and not just for bitcoin, but for top-tier altcoins too.
From Luke:
With the Halving event on the horizon, the market is ripe with opportunities for those who navigate it with patience and an informed strategy.
We remain vigilant, ready to identify and seize the moments that promise the most significant returns. Stay engaged, for the journey through this dynamic landscape is just as thrilling as the destination.
