Don’t Blink
Did you blink? I didn’t blink.
*Looks around at the Great Stuff staff*
Did any of you blink? (Nope, not in weeks!)
Well, somebody finally blinked. And it was just the trigger Wall Street needed to do a little profit-taking. The Dow quickly shed more than 400 points in the early hours of trading this morning, ending the blue-chip barometer’s six-day winning streak.
All across the market, profit-taking dominated the landscape. Travel stocks, such as American Air Lines Group Inc. (Nasdaq: AAL) and Carnival Corp. (NYSE: CCL), shouldered the brunt of the selling pressure.
In the past, “a little profit-taking” meant small, incremental drops in stock prices. In today’s volatile market, profit-taking means drops of 1%-plus across the board. It’s almost like Wall Street knows the market is completely divorced from reality and expects the other shoe to drop at any minute.
No, I’m not going on another bearish rant.
Regular readers should know how I stand on the market right now: Keep most of your powder dry in safe haven investments. Take advantage of the market’s rally with the rest of your dough.
Sure, today’s drop could be the start of another sharp downturn … but then, it could also just be overextended bulls taking profits off the table.
With the way this volatile market goes, I wouldn’t be surprised to see another round of all-time highs within the next week.
Great Stuff is holding for normalcy … whatever that looks like when the maelstrom that is 2020 finally passes.
Now, I’ve seen some financial publications blame today’s sell-off on the National Bureau of Economic Research’s (NBER) declaration that the U.S. entered a recession in February. All I have to say is this: Well … duh.
Wall Street knew a recession was coming. It’s why the market tanked in March. The recession was already priced in. We’re now in “hopeful post-recession” mode on Wall Street.
The rally off the bottom represents investors’ belief that the worst is behind us … that normalcy will return sooner than later. With May’s stellar jobs report, this looks more and more likely.
However, Wall Street remains skittish, and today’s early sell-off proves that. Expect this volatility to remain until we finally have an all-clear.
Since no one knows the time or day … your best bet right now is to consider your options … literally.
Paul ’s “Rebound” research is designed to take full advantage of opportunities in volatile markets like these. His strategy is fine-tuned for prime profit making. It’s why Paul has already closed out more than 20 winning trade recommendations this year.
Going: Badgers, Badgers, Badgers…
Looking for mushrooming stocks? Look no further than Nikola Corp. (Nasdaq: NKLA).
If you’re not familiar with Nikola, it’s an American company that makes electric vehicles (EV). It specializes in trucks, including long-haul semitrucks. Here’s the company’s website if you’re interested in making Tesla comparisons — I mean, look at the trucks.
But that’s not what we came to talk about today. We came to talk about the fact that NKLA shares doubled yesterday. Yes, doubled. In one day.
Nikola Founder Trevor Milton tweeted yesterday that the company would start taking reservations for its Badger pickup truck: “Nikola World 2020 (Badger World) to be announced Monday, June 29. Badger reservations open same day.”
Unlike Tesla Inc.’s (Nasdaq: TSLA) Cybertruck with its weirdly sci-fi angles and designed-by-toddlers appeal, the Badger actually looks like a real truck. As in … it’d earn you fewer jeers from Ford boys and Chevy heads in my neck of Kentucky.
What’s more, the reservations announcement is a huge step forward for Nikola, and investors clearly envision another Tesla moment here.
As with Tesla’s early days, it remains to be seen whether Nikola can deliver on its promises. But with traditional design lines on the Badger, Nikola is already on to something big in the electric truck race.
Also, doubling your stock valuation with one tweet? Eat your heart out, Elon Musk.
Going: From Nikola to Tesla
According to a leaked email from CEO Elon Muck, there may be trouble in Tesla town.
The email cites the need to “minimize rectification needs” on Model Y production. In other words, Musk doesn’t want to rework any Model Y vehicles after they come off the assembly line. It’s a problem Tesla had with the Model 3 when it ramped up production — you know, that whole “fixing the mistakes after production” thing.
Tesla certainly doesn’t need any hiccups at this point, especially with Nikola’s Badger nipping at its heels.
Honestly, if the pandemic hadn’t shut down Model Y production, Musk probably wouldn’t need this “rally the troops” email.
In other news, Tesla is riding high after seeing a 205% jump in Chinese EV sales. The report helped push TSLA shares to an all-time closing high yesterday.
The China report should help ease Model Y concerns for now. Me? I’m just waiting for companies to give it a rest with the Nikola Tesla namesakes.
Gone: Oh, Henry!
We saw the EV upstart Nikola double its share price in one day. We saw the EV market’s leader, Tesla, rally the troops around its latest model. But what about the big boys in the auto market?
Well … Ford Motor Co. (NYSE: F) just announced that its 2020 Ford Escape Plug-In Hybrid gets an estimated 37-mile EV range. The Blue Oval is taking aim at Toyota Motor Corp.’s (NYSE: TM) RAV4 Prime, which has an estimated 42-mile EV range.
By comparison, the Nikola Badger has an estimated EV range of 600 miles, while the Tesla Cybertruck’s range is estimated at 100 miles.
Is it just me, or are Ford and Toyota not even playing the same game as Tesla and Nikola?
I get that the RAV4 and the Escape aren’t in the same market segment as the Badger or the Cybertruck. I also get that Ford and Toyota cater to a much broader market — one that isn’t ready to go full EV just yet.
But Tesla and Nikola are so much further along in the automaking future. How can the current big boys like Ford and Toyota not get left behind? Would you ever buy a Cybertruck … or the new Badger?
Let us know what you think at GreatStuffToday@BanyanHill.com! It is almost Reader Feedback day after all.
Something’s happening here. What it is ain’t’ exactly clear. There’s a man with a buy order there, telling me I don’t have to beware.
— Jim Cramer, The Street
Today’s Quote of the Week comes from “espresso in my Corn Flakes” Jim Cramer … plus a little Buffalo Springfield, too.
Jim Cramer writes as he talks — this is a yay or a nay, depending on your taste in rants and rambles — and who am I to judge? (Kettle meet Great Stuff. Great Stuff, meet kettle.)
First, Cramer reminisces on the not-so-good ol’ B.G.L. strategy from the ‘80s, where stocks are “bagged, gunned and liquidated.”
No, this isn’t the Guantanamo method. What happens is simple … in theory: Ride the news-propped rally higher and then parachute in a blaze of glory. Thus, gunned and liquidated.
Wait, liquidating? That’s right — nobody’s selling here! Cramer points out that the Treasury should exercise those warrants, i.e., take the money and run.
You see, as part of the Treasury’s economic stimulus, it scooped up warrants on many struggling companies. These aren’t your Cherry Pie kind of warrants, they’re kind of like “options on crank,” allowing the Treasury to buy stocks at specific prices, say 13.7 million shares of American Airlines for $12.51 each.
But today, not selling speaks as loud as actual selling. Why? Because then the jig would be up — the Treasury’s market confidence bluff is blown. Then it’d have to rinse and repeat the confidence-glow-up process.
Personally, I think Cramer is dead on. Something odd’s happening here … but when and where this corrects itself ain’t exactly clear. Until then, what can you do?
Two things:
- If you’re gunning along with some of these high-flying travel stocks … maaaaaybe consider taking the gains off the table. Just maybe. I mean, we’re talking about the chance to outplay the Treasury here.
- Listen to what expert Jeff Yastine calls the “Law of Unstoppable Profits” — a formula used by Peter Lynch and Warren Buffett alike to judge a stock’s profit potential … in about five minutes flat. Click here to learn how you can gauge whether or not a stock is positioned to soar like a rocket … or drop like a brick.
Great Stuff: She’s My Nikola Tesla
Before I sign off today, have you heard the news?
What do you mean, dude? This is all news, isn’t it?
Yes! And in just a few days’ time, we quit our yappin’ to hear from you. That’s right: You have two days to make this week’s edition of Reader Feedback.
We’d love to hear from you! Drop us a line: GreatStuffToday@BanyanHill.com.
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Until next time, be Great!
Regards,
Joseph Hargett
Editor, Great Stuff