Author: Editor

  • Stock Market Correction – The Storm Is Coming

    Stock Market Correction – The Storm Is Coming

    Stock Market Correction – The Storm Is Coming
    A lot of mergers and acquisitions, drop trade investment and lack of business trust indicate a coming stock market correction Bear in mind that markets will not disappear, so you can get back 

    By Guy Avtalyon

    The dark sign of an upcoming stock market correction might be when the companies are buying back their stocks and use them for buying other companies. In this example, the stocks are used as currencies. We can see that so many companies are doing exactly that. Further, we are witnesses of a lot of mergers and acquisitions. The companies are uniting to survive something. But what? What they are expecting?

    Is the logical answer that they are expecting stock dumping and the stock market correction?

    Some analysts say YES.

    The first sign of possible stock market correction they see in companies buying other companies, in mergers with rivals and financed by shares exchange is the signal that the market is close to the end of its bullish period. The opposite opinion befalls when the companies invest in new activities, new operations, development. That would be a good signal for the stock market. But when the companies are using their own shares to buy growth it only can be a sign of the lost confidence.

    Yes, the economy runs in cycles. The sunny days will always follow after rainy days. But we have to be worried when the economy’s condition pattern indicates the coming storm just as we are in a hurry when the real storm is coming.

    How to manage the stock market correction?

    A stock market correction is an alarming condition but quite normal. Some might be surprised, but it is a sign that the market is healthy. Well, in most cases.

    How could we know that the stock market correction is coming? When the stock prices are dropping 10% or higher from their most current peak but not more than 20%. In such a case, we would have a bear market.

    Firstly, don’t try to “time the market.” Avoid swing trading even though trading the ups and downs may give you some profit but for a short while. Many investors are trying to avoid losses by putting money in some other investments where they think there is a better possibility of profiting. 

    Most people lose money by trying to move their money around to participate in the ups and avoid the downs. This is a documented behavior studied by academics around the world. The field of study is called behavioral finance. That is a behavioral bias.

    Our two cents

    When you build your investment portfolio it should be based on knowledge and your education, not on prejudices. It is normal to expect that for every quarter of the year, you will have some negative returns. Tn order to lessen those negative returns or to control them you have to have a diversified portfolio. That means you need to combine your investments. Pick a mix of assets that have more potential for upsides and fewer chances for high returns because that means less risk.

    During the market correction, savvy investors have more discipline, less fear, and stay with their investing playbook. Don’t trade at those times because you may catch larger losses. Behind these words lies the stats, you can easily check it.

    Follow the old Wall Street pattern: Never catch a falling knife.

    Be mentally prepared

    A market crash may happen. When? It doesn’t matter. You have to be mentally prepared for that because the markets are unpredictable and it had happened before. Yes, we all like to be rich even on the paper and it’s really hard to chew a big bite. And the stock market correction is just that – a big bite. Some investors might feel fears, be frightened, and start selling their stocks at the worst time.  

    If you are a long-term investor type, you must have trust that the stock market will adjust eventually. 

    Corrections can last from several days to months or longer but the last mentioned are rare. Remember, a correction may damage your investment for short, but it is a great opportunity for adjusting overvalued stocks. So, buying opportunities are undoubted. So, just keep adding stocks to your investment portfolio while others are selling in a panic.

    Can we predict a stock market correction

    Nope. No one can predict a stock market correction. They aren’t predictable. Moreover, they can be generated by different matters. For example, we know the Great Recession has erupted on the housing bubble. But we know that after everything was finished. But predicting the main cause of the next correction just isn’t possible.

    What we know for sure comes from research. According to one conducted on the example of the Dow Jones, the average correction lasted about 72 trading days or three and a half calendar months. And the correction is when the overall stock prices drop more than 10% and if the decline of more than 20% it is a so-called market crash. That’s all.

    For whom the market correction matters?

    Stock market correction matters for short-term traders. If you stay focused on the long term you will survive anyway. When correction occurs those who’ve adjusted their trading as the short term or those who have leveraged their account with the use of margin, should be worried.

    Traders that used margin had bigger losses during the market downturn. Also, active traders had increasing costs united with their losses during the correction. Holding long-term investment was the best way to survive the stock market correction. At least such investors had a peaceful life.

    Don’t be afraid of a stock market correction. It is usually a great time to buy high-quality companies at a lower price. So, you can add stocks to your portfolio for long-term investments, even the one that previously appeared to be a bit too pricey. Also, a market correction is a good time to examine again what you hold. Sell your position only if you see that your investment, but each in your portfolio, couldn’t meet the cause of keeping it.

    A stock market correction doesn’t need to be terrifying.  If you don’t want to taste it, it is best to stay away from investing in the stock market. Instead, stick with safe investments. 

    Keep your balance.

  • Alibaba Stock Could Deliver Strong Growth in 2020

    Alibaba Stock Could Deliver Strong Growth in 2020

    Alibaba Stock Could Deliver Strong Growth in 2020
    The economic environment is encouraging, the company is paying attention to its development, there is no reason to think that BABA isn’t able to deliver a strong growth next year.

    Alibaba stock could deliver strong growth in 2020 valuing the company’s fundamentals. This company has a big challenge to surpass eventual issues due to the trade war between the US and China. But it looks like a possibility of “phase one” trade agreement is just around the corner.
    Reversing tariffs on both sides, which will be included in phase one, should boost consumer demand in China. Boosting demand should increase the sympathy for BABA stock. 

    The company has recorded a 40% year-over-year revenue growth in the latest quarter. Also, the results for the past several quarters were good. In the cloud segment, it had 64% growth year-over-year.

    This put together, make Alibaba stock a strong buy for 2020. And here is why.

    The economic environment is encouraging for Alibaba stock

    The most difficulties of trade are behind two countries now, since phase one of the trade war deal is completed. The fact is that 2020 is an election year in the US and no one wants to upset the voters.

    On the other side, the fact is that China’s economy is slowing. Well, yes, but its GDP is increasing by 6% in the 3rd quarter. Moreover, retail sales jumped 8% in November, which is the sign that  Chinese citizens have increased consumers’ demand based on better personal financial status. 

    Moreover, Nike’s (not only Nike’s but also some other US-based companies) sales in China jumped 23% in the last quarter, so Chinese buyers like to spend money on high-end products. This is a good sign for Alibaba too.

    With the rollout of 5G mobile e-commerce could increase even faster which is also important for Alibaba. So, Alibaba stock could deliver strong growth in the year ahead.

    Alibaba improves algorithms to sell ads

    Alibaba earns by selling ads companies and apps. It has adjusted and improved algorithms that help companies sell to buyers. For example, it improved desktop paid-search ranking algorithms, mobile monetization app, and desktop search personalization.

    Alibaba’s New Retail business

    Alibaba points to its brick-and-mortar stores as a “new retail” business. It unites those stores with the company’s direct sales. Alibaba’s core commerce revenue grew by 40% per year to $14.2 billion last quarter. Due to the acquisition of NetEase’s Kaola e-commerce, Alibaba’s “other” of the total revenue increased by 125% to $2.5 billion.
    Also, Alibaba’s core commerce revenue only grew 29% annually which indicates that the company more dependent on the growth of its brick-and-mortar stores.

    Alibaba stock

    Since the first news of trade tariffs, more than a year ago, BABA had lower price growth of the stock. But its twelve-month revenue has increased by 70%, while earnings per share have increased by 135%, during the same period.
    Completion of a “phase one” trade deal should give an immediate boost to Alibaba stock and grow the investors’ opinion of the company. Alibaba could reach a $10 billion annual revenue by the end of next year. This would improve Alibaba’s stock.
    The company continues with a stable stock growth. Analysts foresee its revenue to rise 29% and earnings to rise 23% next year. That is the extraordinary growth rate.

    However, investors should be conscious that Alibaba’s main business is depending on lower-margin operations, to push its top-line growth. 

    Alibaba’s core wholesale commerce business is sustaining the record strong growth. Alibaba’s revenue growth has been superior in comparison with JD.com, its main rival in China. So, Alibaba stock could deliver strong growth in 2020. Keep an eye on this stock.

  • Cannabis Stocks Could Bounce in 2020

    Cannabis Stocks Could Bounce in 2020

    Cannabis Stocks Could Bounce in 2020
    Cannabis is now legal in many countries and their number will increase. Public support for cannabis legalization is undoubted. That all can provide cannabis stocks to jump in 2020.

    Even though the cannabis sector gets knocked down almost on a daily base, some pot cannabis stocks could bounce in 2020. Yes, Canadian sales missed expectations after the legalization of recreational use of cannabis and remained to stay limited globally.
    But the Canadian sector could have a great stimulus in 2020 with the Cannabis 2.0 rollout. Also, the retail store number increase is one of the trump cards. For example, Canopy Growth plans to open 40 retail stores a month during 2020 in Ontario. Great plan, indeed but will the government really open up the market to such a huge development?
    The stock market wasn’t good in 2019 for cannabis stocks, and investors have to look at the chances of beaten-down stocks. But we truly believe that some of the cannabis stocks could bounce in 2020.

    One of them is the Cronos Group (CRON)

    The Cronos Group missed out on revenue estimates for Q3. It was $1.3 million lower. The stock followed the company’s “success”, it also has dropped and hit the new lows.

    The important fact is the company still grew revenues gradually generated $29.4 million in revenues for the last nine months. Also, the company raised up the production but investors didn’t see the benefit from that. Actually, they were very disappointed by the fact that Cronos sold 8x the kilogram in September but at half the net revenue per gram. But the company ended the third quarter with $1.14 billion on the balance sheet while the company’s value was $0.7 billion. So, this cash flow is Cronos’ main advantage.

    It gives the company an opportunity to invest further while the majority of the rivals don’t have such a possibility. CRON has an optimistic Buy consensus rating from Wall Street. Moreover, the average analyst price target is $13.45 and the last closing price was at $7.14.

    Tilray (TLRY) Cannabis Stocks Could Bounce

    Tilray is one of the most popular cannabis companies in the world. The popularity came from an unusual event after its IPO. What happened? The crazy prices followed the IPO with the stock price over $300 shortly after IPO.
    Tilray was the first cannabis company in history to list directly on one of the major US exchanges at $17 per share. Only a few weeks later, the stock price hit the insane price of $300 per share. It was the hottest IPO in 2018. 

    But the year after…

    The average net selling price per gram dropped to $3.25 last Q3, the prior price was $6.21. A gross margin of 31%, the adjusted EBITDA loss of $23.5 million, and only $122 million in cash are weak results.
    But Tilray appears well-positioned in combination with the InBev JV which may be catalysts in 2020 and make these cannabis stocks could bounce.

    The 2020 revenue estimates are only at $316 million but the stock has picked analysts’ optimism. They forecast a possible upside of over 40% and the stock price at $29.57. There is hope for Tilray.

    OrganiGram (OGI)

    OrganiGram Holdings is down from the high above $8 in May it falls to $2.5 on December, 24 but it is 1.62% more than the previous close price.

    The day before, the company announced the first of its ‘Cannabis 2.0’ products have been released. Trailblazer Spark, Flicker, and Glow 510-thread Torch vape cartridges, filled with C0₂-extracted cannabis concentrate oil and botanical terpene. 

    Some unpleasant events occurred before this announcement.

    For the quarter ended in June, OrganiGram generated revenues of $24.8 million. Everyone was expecting a great year. Instead, shipments fail to $20.0 million, the company was faced with $3.7 million in provisions, and the company forecasts revenues of only $16.3 million. The EBITDA profits were shifting into the loss.

    Now, OrganiGram could raise more cash.

    That’s the reason why the stock has a ‘Strong Buy’ rating. Analysts are predicting an upside potential of 225% from the current price of $2.5.

    Bottom line 

    Why Traders Paradise is so sure that any cannabis stocks could bounce in 2020?

    First of all, cannabis sales will increase.
    Cannabis is now legal in more-than-ever countries and their number will increase. Some experts state that the cannabis industry has the potential to advance to $130 million per year soon. This isn’t likely to happen in  2020, but this number figure out how fast the industry is growing.

    Public support for cannabis legalization is undoubted. The public is more aware of the potential benefits of cannabis. Also, we can expect new strains of cannabis. Moreover, cannabis-infused products will become more broadly available, and some of these products will be produced by companies that are well-known in the drink industry. For example, Molson-Coors and Coca-Cola both are considering to produce drinks with CBD.

    Experts found that cannabis can have important benefits for people’s general health. For example, cannabis can potentially lower cancer risk. Moreover, cannabis is much safer than alcohol. Right?

    All this put together, the cannabis stock could easily bounce in the year ahead.

  • NextEra Energy Could Be The Top Stock Of The Next Year

    NextEra Energy Could Be The Top Stock Of The Next Year

    NextEra Energy Could Be The Top Stock Of The Next Year
    NextEra Energy’s date of posting quarterly earnings reports is almost here. What investors could expect?

    NextEra Energy (NEE) traded the Wednesday, December 24 at $240.51. The most recent price rose for 0.72% from the previous trading day. On the same day the S&P 500’s 0.02% loss, while the Dow lost 0.13%, but Nasdaq scored an increase of 0.08%.

    NEE is approaching its next quarterly earnings report. The analysts expect NextEra Energy to post earnings of $1.53 per share. That would represent the growth of 2.68% in comparison to the prior year. Also, there is an expected revenue of $4.69 billion or 6.77% more than in the same period last year. 

    Speaking about the whole year, analysts’ expectation is earnings of $8.37 per share (an increase of 8.7% compared to the last year) and revenue of $19.27 billion (an increase of 15.09% compared to last year).

    The beginning of NextEra Energy

    Long-time ago, it was 2001, NextEra Energy’s market value was $10 billion, today it is $117 billion. The company is, in other words, the largest publicly traded utility in the world.
    The company has large cash flow thanks to onshore wind-power infrastructure in promising areas, low-cost production and, also, the federal support. 

    NEE is a good dividend stock too, that paid out $2.1 billion in common stock dividends last year. The current dividend yield is 2.1%. NextEra generates cash flow from a power generation subsidiary NextEra Energy Resources (one of the biggest producers of electricity from the wind and sun) and two Florida utilities. 

    NEE stock

    Currently, the stock’s P/E ratio is 28.53, while the average P/E ratio for the industry is 20.45. 

    The data shows that the stock price has been in an uptrend for the past 12 months. NextEra Energy stock price has a rising tendency. So we can conclude, the future price of NEE easily could hit $390 which means to increase for more than 28% at the end of the next 12 months period. NextEra Energy stock is a good long-term investment. The experts’ recommendation is to HOLD this stock since the further rise is expected.

    But for the short-term traders, this is a good opportunity to sell, because the stock is in the upper part of a weak growing trend so it can be expected the move back towards the lower part of the trend. If the stock passes the level of $242.93 it will be the sign of a strong raising rate. The stock could hit this price in the next 3 months or less, and rise further up to near $250 over the next 3 months.

    The company’s ABOUT

    NextEra Energy’s headquarters is composed of five buildings in Juno Beach, Florida. It is a leading clean energy company and is the largest rate-regulated electric utility in the US by retail electricity produced and sold.
    The center of NextEra Energy’s business is Florida Power & Light. This utility serves about five million customers. It is also the low-cost provider of electricity. The average customer cost is under $100 per month, which is lower than the average of $140. 

    Recently the company announced that will start the new year with the lower customer bills. The monthly bill for a typical 1,000-kWh residential customer will decrease by nearly $4 due to lower operating costs. That will be about 30% below the national average.

    NextEra Energy also owns NextEra Energy Resources, LLC, which is the world’s largest generator of renewable energy and also a global leader in battery storage. The company produces electricity from eight nuclear power units in Florida, New Hampshire, Iowa, and Wisconsin. NextEra Energy is rated as No. 1 in the electric and gas utility industry on Fortune’s 2019 list of “World’s Most Admired Companies”. Also, last year it was rated among the top 25 on Fortune’s list of businesses that “Change the World.”

  • A Good Entry Point, the More Chances of Profit

    A Good Entry Point, the More Chances of Profit

    A Good Entry Point, the More Chances of Profit
    The entry point is very important and can determine the end of your trade both in losses or in profits.

    Having a good entry point is the first round in reaching a prosperous trade.
    What is the entry point? It is actually the price investors have to pay to buy/sell a stock. The exit point, on the other hand, represents the price at which investors exit the trade with loss or in profit.

    While the entry point has been extensively examined from the divergence/convergence aspect, the exit point has not got full attention.

    Why is that? Well, exits may have hidden tendencies.  

    But let’s stay on a good entry point.

    Traders’ successes or failures depend a lot on trade entries. One wrong entry can destroy your trading, for example. Yes, traders are using stop-loss to lessen the risk in case the market makes big moves.
    But let’s talk about how the risk-reward potential can be enhanced by a better trade entry.

    First of all, never enter the trade when the market is near to extreme highs or lows from the recent position. That fault may ruin your trade.
    We already have seen traders that decided to enter the trade when the trend broke the final high with the hope that the stock price will continue running up.
    That was the wrong decision because when the price reaches its highs, in most cases the only way it can go further is down. The price will drop into the previous range. So, you will make a loss.
    The reason behind this is that markets never move in one direction forever. Especially after the trend reaches extreme highs and lows. If you place the entry point when the trend reaches the highest, it will always result in losses.
    But if you like to take more risks in trading you can do that but be sure where you want to set the stop-loss to lower your losses when exiting the trade.
    The wrong entry may occur if you are trying to enter the trade at the point where a large move is, but you are not sure what caused this move is. The direction may shift quickly in the opposite direction and your trade will end in losses.

    Reversal strategy for a good entry point

    Some traders like to set entry using reversal strategy. What does that mean?
    In this entry strategy, the traders are taking the trade with the hope that the market will make changes its trends. They are using pivot point levels, so-called Fibonacci levels. This entry is useful only when the market isn’t trending in an obvious, clear direction.
    Don’t use this in all trading.

    The real role of a good entry point

    The role of a good entry point is to allow you to identify high probability trades. You need the confirmation that you have an edge by reducing emotions.
    You need a trading strategy that makes sense and where you can execute entry orders with confidence. It is very important and your good entry point should provide you that. Otherwise, it isn’t good.
    Eventually, with a good entry point, you are more likely to enter the profit target or stop-loss. And the chance to look for other opportunities is here also.
    A good entry will help you to repeat your trades and increase your advantage. But don’t be too focused on your entry point. Overoptimizing is never good.

    Bottom line

    A good entry point is very important for the success of your trade. But the exit point is what will control your profit. So, you will need to optimize it. To be honest, the best way is backtesting and finding out what works best for you. There are two ways to do that. You can use complicated calculations, charting, etc. or you can use Traders Paradise’s unique and simple app for optimizing your exit strategy. It’s up to you. 

    Remember, all is important. But as you can see, you can enter the trade in many situations but you can end your trade with only two: profit or loss.

    Trading is a game, you have to make the best move at the right moment.

  • Superstition In the Stock Market May Lead You to Lose the Shirt

    Superstition In the Stock Market May Lead You to Lose the Shirt

    Superstition In the Stock Market
    Stevie Wonder wrote in his famous song:
    Very superstitious
    Writing’s on the wall
    Very superstitious
    Ladder’s about to fall
    Thirteen-month-old baby
    Broke the looking glass
    Seven years of bad luck
    Good things in your past

    Superstition is so live in the stock market that you can barely believe. Imagine that it is Friday 13, just like it was in April, September, and December this year. Some people, especially scientifically-minded, would roll the eyes. But, despite the fact that Friday 13th is just a day in the calendar and it may occur several times in one year, some investors truly believe that it is a bad-luck day. 

    When enough investors share this foolish belief, stock prices can be changed but not in the investors’ favor.

    But do superstitions really affect the stock markets? 

    Some studies revealed that people are more risk-averse when thinking about Friday13.
    One study from 2005 discovered that hesitation to do business on this day ends in a loss for the US economy of almost $900 billion. Does this scare affect stock prices? Believe or not, yes.

    First superstition: Friday 13th

    According to a study, returns on Friday 13th are lower compared with other days.

    This Friday 13th effect was broad spread among numerous investors until 1980 but has disappeared. The reason is simple: automated trading erased the “Friday 13th effect”. 

    But it so funny to talk about Wall Street superstitions. So let’s proceed.

    Superstition In the stock market No2: Did you know anything about the witching hour?

    Several years ago I found an article written by the man who worked as a broker on Wall Street. I am sorry, I didn’t remember his name. But what I remember is the witching hours are between 2 and 3 PM. Superstition linked to this part of the day (notice, it was on a daily base) was related to market close. If the market sold off at that time, it was a sure sign that the market will be closed on a positive mark. In that interval, from 2 to 3 PM, he and his colleagues were maniacally buying stocks. Just to provide a stronger close.  

    It worked until it didn’t. They didn’t leave the stats.

    Superstition In the Stock Market No3: Sell on Rosh Hashanah and buy on Yom Kippur

    The superstition works like this: on Rosh Hashanah, which is the first day of Jewish New Year investors should sell some of their positions and buy them back on Yom Kippur. This year Rosh Hashanah began on the evening of Sunday, September 29 and ended on the evening of Tuesday, October 1. 

    Do you believe that this trade works? Well, yes. More often than not. But for Jewish. Maybe you should try to sell some of your positions on January 1 or on Christmas or on Islamic New Year. In 2020 it will begin in the evening of Wednesday, August 19 and ends in the evening of Thursday, August 20

    But I am not so sure, dates may vary. 

    Chinese new year will begin on Saturday, January 25, 2020. 

    Did you know that for one part of Orthodox the New Year actually begins on January, 14? Confused? It is just a calendar. But if it works for Jewish why it doesn’t work for others? There is no reason. The only thing to consider is, do you have to trade according to the Jewish calendar or you can use any.

    What I learned during my life is: about superstition and taste is worthless to argue. Take it or leave it.

    Superstition No 4: Super Bowl theory

    This theory goes that the Dow Jones will have a good year if a National Football Conference (NFC) team wins the Super Bowl. But if the American Football Conference (AFC) team wins it will end the year lower.

    For those with a lack of knowledge about American football, the American Football Conference (AFC) and National Football Conference (NFC) are parts of the National Football League (NFL). Honestly, European football is simpler. 

    From 1967 to 2003 this superstition showed it was accurate 68%.  Several years in a row AFC teams were winning the Super Bowl and that was a period of economic growth, but who cares?

    Let’s ask the stats.

    It was 1967 when one AFC team won the first Super Bowl. During the following period, AFC teams have won 11 times, if you check the stock market result you will be surprised. In 6 of those 11 years, the stock market was dropped. On the other side the stats aren’t so favorable, NFC won Super Bowl more than 30 times and Dow Jones didn’t advance in each of them.

    October Effect

    This one is a bit harder to rebut. 

    The October effect is a market anomaly. The stocks tend to decrease during October. Honestly, it is mainly a psychological effect rather than a real wonder. The stats show something different than this theory. 

    But…

    October has this reputation thanks to Panic in 1907, Black Monday, Black Tuesday and Black Thursday in 1929, and Black Monday in 1987.

    Black Monday, 1987 that happened on October 19. The Dow fall 22.6% in one day. It was possibly one of the most unlucky days for investors and the stock market. 

    Despite the scary title, this effect is not statistically exact. From a historical view, October has seen the end of bear markets more than it witnessed the beginnings. But, investors see this month as dangerous and they are selling, and that sentiment creates possibilities to buy on the other side. So, superstition or not, while one sees the end, the other will see the beginning.

    Bottom line

    Irrationality and superstition in investing will always cause lower returns. Traders, whether they admit it or not, are superstitious. Some will have a happy pen, the other lucky shirt or underwear (hard to believe), some will have some other talisman. Superstition in the stock market is broad spread.

    Luckily, many investors and traders are devoted to science, education, and knowledge. 

    As Stevie Wonder wrote: 

    When you believe in things
    That you don’t understand,
    Then you suffer,
    Superstition ain’t the way

    Happy trade!

  • Chinese stocks that will benefit from phase one deal between the US and China

    Chinese stocks that will benefit from phase one deal between the US and China

    Chinese stocks that will benefit from phase one deal between the US and China
    Morgan Stanley believes that IT and Transportation stocks will benefit the most from any de-escalation of trade tensions.

    Morgan Stanley says there are some Chinese stocks that will benefit from phase one deal between the US and China.

    Almost half of them belong to the IT sector. This sector suffered in the trade war because the companies took place on tariff lists. Also, some of them are from the consumer sector.
    Morgan Stanley said in last week’s report: “These two sectors saw the biggest scale of valuation re-rating based on their previous reaction to de-escalation events.” 

    These 29 stocks have significant exposure to U.S. revenues, according to this investment bank.

    The so-called phase one trade deal, the US President and President of China, was made several days ago. It is a kind of initial agreement but nevertheless, it caused some optimism. Anyway, it is progress in this situation. The US President said in his tweet on Saturday that the US and China would  “very shortly” confirm the deal.

    Morgan Stanley wrote: “We believe IT/Internet-related and Transportation stocks will benefit the most from any de-escalation of trade tensions.” The airlines’ stocks or in general, transportation  stocks, is going to benefit from, as bank wrote, from “strengthened CNY/USD” and “improved global trade outlook.”

    What are the Chines stocks that will benefit?

    First on the list could be AAC Technologies, with 58% publicity exposure. It supplies Apple. Further, Lenovo. This laptop producer has 31% exposure to the US revenues. Also, Samsonite could benefit. 

    As much as Alpha Group, Goodbaby International, Nexteer Automotive Group, Ningbo Joyson Electronic,  Regina Miracle International, Zhongji Innolight, Sunwoda Electronic, WuXi AppTec, Crystal International Group, SMIC, Bestway Global Holding, Jiangsu Changjiang Electronics Tech, Cosco Shipping, Jiangsu Yangnong Chemical, Lens Technology, Shandong Nanshan Aluminium, GoerTek, WuXi Biologics Cayman, GigaDevice Semiconductor Beijing,  Luxshare Precision Industry, Shenzhen Sunway Communication, Universal Scientific, FIT Hon Teng, or Legends Holdings are also Chinese stocks that will benefit.

    All of them are publicly listed on Chinese exchanges.

    Morgan Stanley warned that the final outlook for the sector depends on the talks’ “dynamics” among the U.S. and China, including the signing of a deal.
    The bank said that both countries have been so close to signing a deal several times in the past 18 months but it didn’t happen.

    Some US stocks could benefit too

    Intel, the largest producer of semiconductor products in the world. Also, Harsco, a service, and engineered products corporation. Diodes Incorporated, a leading producer and supplier of discrete and analog semiconductor products could benefit from the deal between the US and China, for example.

    Unexpectedly, on Dec 11, China made new offers to the US to end the trade deadlock. China proposed to reduce tariffs on U.S. vehicles from 40% to 15%.

    It seems that both sides are looking to end this trade war. For example, President Trump has offered to mediate in the case of Huawei’s executive whose arrest had increased trade tensions.

    More about China’s economy

    China’s economy began this decade in growth and it looks like it will end with the slowdown, the worst seen since 1990.

    Well, policymakers have the chance to avoid a crisis and they know how to do that. The question is, do they want. For investors, it is a buying opportunity after Chinese stocks dropped to record lows in comparison to world peers.

    The main topic for China for the next 10 years is it going to fix these problems more quickly and dynamic way. The other choice is to have them forever.
    It is surprising how they maintain the pace of growth with the state sector involved. The progress away from a state-controlled economy to a more private-sector is lacking.
    Further, China has very little or low motivation to allow complete fluidity of capital flows into and out of the country.

    Michael Pettis, a finance professor at Peking University recently commented on Bloomberg:

    “China was unlikely to experience a financial crisis and a sharp depreciation of the currency. I think the market didn’t understand that these are mainly balance sheet events, and as long as China’s financial system was closed and its regulators powerful, Beijing could easily extend and restructure liabilities so as to prevent a crisis.”

    Bottom line

    Supplies, Technology,  and Industrial are Chinese stocks that will benefit the most from ending a trade war. So, pay close attention to the stocks from those sectors and make your investment choice.

  • The Bitcoin price may rise towards $8,000 next week?

    The Bitcoin price may rise towards $8,000 next week?

    The Bitcoin price may rise towards $8,000 next week
    Bitcoin rose above $7.402 and market cap moved upward by +0.89% to $137.68 billion

    The Bitcoin price may rise further since it has continued being above the level of $7,000. That is important not from psychological only. Over the weekend, it traded between the $7.100 and $7.200 and by now has grown to reach a bit over $7.402 according to the Coindesk and at the moment of writing,

    The weekend began with cryptocurrencies retracing, but it ended with a rally. Bitcoin (+4.5%), Bitcoin Cash (+4.14%), Ethereum (3.7%), and Litecoin(+4.73%) were the best among the top ten cryptos.

    That caused crypto analysts to be hopeful about the short-term price action of Bitcoin. One of them suggests a price range to which Bitcoin may rise this week.

    @CryptoMichNL wrote:

    “Currently at potential local resistance. Wouldn’t be surprised with the continuation of ranging for the coming days, before we make another push to $7,800-8,000 resistances later next week.”

    Today ( December 23) followed by another tweet:

    Last week, the famous investor and BTC bull Tim Draper had stood by his previous forecast about Bitcoin popping $250,000 by the end of 2022 or by early 2023.

    And CNBC’s crypto expert Brian Kelly said that technically this price action is possible and described how it could befall.

    Brian Kelly said:

    “It sounds bizarre but it wouldn’t be out of the realm of what Bitcoin has done in the past.”

    Kelly showed a chart of Bitcoin price movements since 2013 and pointed out that since then Bitcoin price has been moving within a rising channel. The top of that channel, Kelly says, is right about $200,000 – $250,000.

    As for the fundamentals that could lead to this price leap, Brian Kelly calculated that by late 2022 or early 2023, Bitcoin could take half of the market share from all the world’s gold and by that time the market cap of Bitcoin should be almost $4,5 trillion.

     

    If that arises, Kelly said, Tim Draper’s prediction “isn’t too far out of whack.”

    The Bitcoin market cap moved upward by +0.89% to $137.68 billion and trading volume is at $27.23 billion.

    Bitcoin dominance increased lightly and is now 68.65%.

    Bitcoin has broken the sideways movement after the bullish impulse that made last December 18. The price moved up from $7,150 to exceed the $7,650 value but fall again to $7.402.

    This $500 movement was the confirmation of the trend reversal that was expecting. Will the move proceed until it touches the upper descending trendline at $7,800? We’ll see.

  • Pharmaceutical stocks – Risk and Reward Of Investing In

    Pharmaceutical stocks – Risk and Reward Of Investing In

    Pharmaceutical stocks - Risk and Reward Of Investing In
    The pharmaceutical stocks belong to the larger healthcare sector.
    With faster drug approvals and increasing customers, investing in pharmaceutical stocks could be a good choice.

    Pharmaceutical stocks increased in 2019. The best pharmaceutical stocks have strong Composite Ratings and Relative Strength Ratings. That recommends buying them.
    As we can see the healthcare industry will only intensify. The new technologies are developed or in the phase of developing with good predictions to get approvals for use. This industry will continue with modernization, it is obvious.
    The increasing development of tech in healthcare also will give new chances for the industry. Prescript medicine sales CAGR from 2019 to 2024 is set to be three times that in the period from 2010 to 2018.|
    The forecast annual CAGR of +6.9% for the next 5 years is $1.18trn in the US.

    Pharmaceutical stocks to diversify the investment portfolio 

    Investors who want to diversify their investment portfolios would do well to look at the pharmaceutical stocks.

    Pharmaceutical stocks are high-risk investments, but companies from the industry can be very good for investors seeking long-term investing. The changes in this field, almost on a daily basis, approval of new treatments, new drugs and therapies, great returns, make this industry favorable for investors. It shows profitable opportunities.

    If you want to invest in publicly traded pharmaceutical companies, just keep a close eye on them when they enter clinical trials. The results of clinical trials are extremely important for investing in pharmaceutical stocks. Why? Well, those trials can be ended with the make-it-further option or break it.
    The auspicious results can reach big gains in the stock market, but failures or loss of progress can have a reverse impact. 

    Approvals before market

    Before selling their products, drug companies are required to first test them. Results from pharmaceutical products are sent to the relevant government organizations or agencies to examine the safety, proposed use, and efficacy.

    The approval means that they have analyzed the medication’s consequences and that there are more positive than negative effects. There are various approval stages: analyzing the disease the drug is targeting, treatment options, analyzing effects from clinical trials and how to handle any risks linked with the drug or method.

    Since there is a lot of examinations, the approval can take years.

    Well, drug approvals are possibly the most attractive in pharmaceutical stocks investment opportunities. They are always on the radar. New drugs are innovation on the market, especially when it gets to rare diseases. 

    For example, during 2018, the US FDA’s CDER approved 59 new pharmaceuticals. Among approved medications were the first to treat smallpox and the first treatment for hypophosphatemia. Over the first 6 months of 2019, the approvals got 16.

    All this taken together, represent the excellent market conditions for pharmaceutical companies.

    Pharmaceutical stocks: the trends

    In the pharmaceutical market currently exist 10 main therapeutic sectors, which shows data from Statista.
    The global sales for medicines generated a total revenue of US$36 billion. The top sales go to pain therapy, anti-diabetic drugs, and oncology.
    In terms of revenue, pain therapy generates sales of $79 billion, anti-diabetic drugs $40 billion, and oncologic $100 billion.
    Treatments and drugs for depressive disorder and anxiety also generate greater revenue. For example, Eli Lilly Company (NYSE:LLY) reached $36 billion in revenue this year.
    The main fields of developing new therapies or drugs, so far this year, were treatments for non-small cell lung cancer and breast cancer.

    Pharmaceutical stocks: market growth

    The global pharmaceutical market is ready for outstanding growth. Big and famous brands are always interesting but small and micro-cap stocks are good too.

    According to many reports, the industry reached $1.2 trillion in 2018, up to $100 billion from 2017. In the next 4 years, the market is predicted to grow at a compound annual growth rate between 4% and 5% and to reach $1.3 trillion. But this rate is less than between 2014 and 2018.

    Nevertheless, investing in pharmaceutical stocks could be a good addition to everyone’s portfolio. You don’t have to invest in leading pharmaceutical stocks, some are not as big as leaders but have great growth potential. And, they are cheaper, also.

    In the next 5 years, the sales volume in the pharmaceutical market is possible to reach $1.18 trillion. It looks like a great opportunity.

    Here are some Traders Paradise’s picks:

    Merck & Co., Inc. (MRK)

    The last price $91.58 (December, 20)
    Market Cap $233B

    Merck is rapidly growing, the CAGR is 10.9%.

    Merck & Co., Inc. offers therapeutic and preventive agents to treat a huge range of diseases such as cardiovascular, type 2 diabetes, chronic hepatitis C virus, HIV-1 infection, insomnia, neuromuscular blocking agents, cholesterol, anti-bacterial and vaginal contraceptive products. Also, the company is focused on products to prevent chemotherapy-induced and postoperative vomiting, treat non-small-cell lung, breasts, thyroid, cervical, and brain cancers, vaccines for measles, mumps, rubella, varicella, rotavirus gastroenteritis, and pneumococcal diseases. Additionally, the company produces antibiotics and anti-inflammatory drugs to treat fertility disorders, and pneumonia in cattle, bovine, and swine, and antibiotics and vaccines for fish, dog, cat, and horse vaccines, and many others. It has collaborations with many bio-pharmaceuticals companies. The company was founded in 1891 and is headquartered in Kenilworth, New Jersey.

    Roche Holding AG (RHHBY) (SIX:ROG)

    The last price $39.88 (December, 20)
    Market Cap $271B

    Roche Holding AG is the leading trend in biotechnology, with a forecasted $38.7bn of sales in 2024

    On December, 23 Roche announced that it entered a $1.15 billion worth licensing agreement with Sarepta Therapeutics to get the right to start and commercialize Sarepta’s investigational gene therapy for Duchenne muscular dystrophy outside the US.
    Roche will make a payment of $750 million in cash and $400 million worth in equity. Sarepta’s micro-dystrophin gene therapy SRP-9001 is in clinical development.
    Roche said the agreement is supposed to close in the first quarter of 2020.

    Eli Lilly & Co. (LLY)

    Last price $132.43 (December, 20)
    Market Cap $127B

    Lilly published a better-than-expected financial outlook for 2020 while confirming the previously announced 2019 sales and earnings plans. Lilly awaits adjusted earnings from $6.70 to $6.80 per share in a year ahead. Revenues are expected from $23.6bn to $24.1bn. If the company reaches this planned sales range, it will exceed its 7% revenue CAGR target. Lilly is expecting important results for several key pipeline drugs. Also, it awaits approvals for two new drugs and three new launches in the next year.

    Eli Lilly’s stock price has a rising tendency and it looks like a good long-term investment.

    Bottom line

    These stocks are just a suggestion. Of course, you may choose some other pharmaceutical stocks. For example, Pfizer Inc. (PFE) with Market Cap: $227.87 billion that generates an 18.7% annual return. Or Johnson & Johnson (JNJ) with a Market Cap of $375.67 billion. Zoetis Inc. (ZTS) can be a good investment choice with 17,7% of the annual return.

    If you are looking for long-term investment for your portfolio, investing in the pharmaceutical industry could be one of the best places to invest in.

    But be conscious, the overall performance for the industry was worse in 2018. The leading pharmaceutical sector market index (S&P Pharmaceuticals Select Industry Index) made negative returns of -16.87% last year. The index started at a closing value of 5,082 and ended at a value of 4,225 at the end of the year.

  • Roche Got European Commission’s Approval For Kadcyla

    Roche Got European Commission’s Approval For Kadcyla

    Roche Got European Commission's Approval For Kadcyla
    Kadcyla is medicine for the adjuvant treatment of people with HER2-positive early breast cancer with the residual invasive disease after neoadjuvant treatment.
    Roche stock price rose for more than 21% over the past 12 months

    Roche on December 19 has announced that the European Commission has approved Kadcyla for the after-surgical treatment of patients with HER2-positive early phase breast cancer. Kadcyla is a single agent for treatment HER2-positive patients metastatic breast or lymph nodes cancer. 

    According to Levi Garraway, Roche’s Chief Medical Officer and Head of Global Product Development, this approval of Kadcyla from the European Commission “will allow many more women with HER2-positive early breast cancer to be given a transformative treatment that may cut the risk of their disease returning or progressing.”

    The purpose of neoadjuvant treatment is to make tumors smaller thus enhances surgical results. Adjuvant treatment helps to eliminate any residual cancer cells and reduce the risk of cancer returning. Patients who have the remaining disease after neoadjuvant treatment have a worse prognosis and this drug should help them to improve the chances of longer and normal life.

    The good results of treatment with Kadcyla are well-known in the US where women are already been treated with this drug. The US Food and Drug Administration approved this treatment on May 4 this year. Kadcyla is approved in 27 countries for the treatment of early breast cancer phase. It is recommended by the St. Gallen International Breast Cancer Conference, the NCCN and the AGO.

    Learn more about breast cancer

    Roche stock

    Roche stock price (SIX: RO, ROG; OTCQX: RHHBY) has risen more than 21% over the past 12 months. During that time, Roche Holding AG got two approvals of new treatments for breast cancer. Kadcyla and Perjeta, both came from the large oncology drugs portfolio at Roche’s Genentech group.

    Roche stock price chart

    So, Roche Holding AG’s stock price is higher than it was 12 months ago, with a return of about 6.4% in the same period. Moreover, it looks like it can hold up for the long-term. For investors, it may seem like very good news. But, the long-term returns were 17% over the three years. It wasn’t too much.

    And Roche Holding had a Total Shareholder Return (TSR) of 25% for the last year. That beat its share price return. This is mainly a result of its dividend payments! 

    Roche Holding has paid shareholders with a TSR of 25% in the past twelve months. The dividend is included. As we can see the TSR for one year is better than for 3 years, which means that the Roche stock is running better in the more recent period.

    The share price momentum continues strong, and it might be worth paying attention to this stock. At the time of writing (December 20), the price of Roche (RHHB) stock is $39.38 and data shows that the asset price is in an uptrend for the past 12 months with a further rising trend. That may drive the price up to $46 or $47 in the next 12 months. 

    The current consensus among analysts is to buy stock in Roche Holding AG.

    About the company

    Roche is a pharmaceutical and diagnostics company, the largest biotech company in the world. This combination under the roof of one company made it the leader in personalized healthcare.
    Its products are aimed at oncology, infectious diseases, immunology, ophthalmology and diseases of the CNS. Roche is famous for in-vitro diagnostics and tissue-based cancer diagnostics. Also, it is a leader in diabetes treatments.

    The company is founded in 1896. Since then, more than thirty drugs developed by Roche are in the World Health Organization Model Lists of Essential Medicines.
    By the Dow Jones Sustainability Indices (DJSI), Roche is for 11 years one of the most sustainable companies in the pharmaceutical industry.

    Its headquarters is in Basel, Switzerland. Last year, Roche invested around $11.2 billion in R&D and posted sales of almost $58 billion. In the US, Genentech is a wholly-owned member of the Roche Group. Also, Roche is the majority shareholder in Chugai Pharmaceutical, Japan.