We’re seeing some green before the open today and that’s good, because yesterday was a nasty day for most of the stock market as Treasury bond yields jumped up again on the open. The selling was most intense, though, in the Nasdaq and the popular fad tech stocks. The ARKK ETF got hit in the face and the Nasdaq 100 buckled as you can see from this chart.
I’m hopeful that the market won’t just collapse here, but can do ok at least into the start of the next round of earnings reports that start at the end of April. We’re actually entering a quiet period going into earnings where companies provide little information ahead of them.
The daily stochastics for the Nasdaq 100 went above 80 on Wednesday to signal overbought, but they can stay above that level for a few weeks. I’m hoping that’s what will happen.
I had one stock in the group ten stocks I bought Monday in my Robinhood account rally almost ten percent to defy the selling in the rest of the market.
CXP is a REIT and before the open a hedge fund and group of market players that have already accumulated 3% of the outstanding shares in CXP released a public letter stating an intention to buy all of the outstanding shares in the company for $18.50 in an unsolicited take-over bid.
This is why I like to buy lot of stocks. It is also one reason I like to buy stocks that don’t have extremely high valuations. Not only do they typically have better long-term investment potential, but they can be taken over by other companies or giant players. That will never happen with a stock like TSLA or many of the other fad high-flyers that excite people.
But you know what – buyout news NEVER EVER happens with crypto currencies!
That’s because crypto currencies are simply virtual paper currency. Yes they can go up and down a lot, but they don’t represent ownership in anything.
When you own a stock you own an share in a company. So if someone wants to buy the entire company they have to buy your shares.
Crypto currencies aren’t stocks, so they don’t represent ownership in companies. That’s why they can never go up like CVX did on buyout offers. That’s why they can’t pay dividends, while CXP pays a bid one. They’re just for short-term trading and speculation and not investing. In fact the only way to buy something involved in crypto and benefit from a take-over is to a buy stock of a Bitcoin mining company or blockchain thing.
This is why I NEVER buy crypto currencies and NEVER will!
When I invest in trends I buy stocks to do it. So if you want to buy into crypto I’d buy stocks involved in it instead of the virtual currencies themselves.
We’re in an interesting time in the markets with a lot of questions that probably won’t be fully resolved for several months. I think what we have seen this week – with more strength in the DOW and S&P 500 than the Nasdaq – is likely to continue for the next few months, with some excitement in gold, silver, and periodic attention towards the bond market. We’re facing crosscurrents being influenced by hopes of economic growth and worries of whether Jerome Powell is correct in his predictions.
Here is an interesting Youtube interview with Russel Napier that I watched yesterday that is well worth your time about where things are headed when it comes to inflation, the dollar, and things like Bitcoin. Napier is someone who has been forecasting deflation for over twenty years and how has now flipped due to events. He has been correct as commodities made a secular low last year!
We certainly are entering interesting times. For more on my trading methods grab my book Strategic Stock Trading.
-Mike
