Chips & Cloud Stocks: Signals for GROWTH Mode
The market rebound is about to accelerate. In a big way.
We’re getting back to growth mode. At least with your America 2.0 stocks.
I’m calling a timeline for this rebound in today’s video. For me, there are two key things I watch that are pointing up: semiconductor (chips) and cloud stocks.
This bounce is crucial since these sectors are at the core of the Fourth Industrial Revolution.
And we’ve got more for you today on our big three roundup like:
- An entertainment section about Jim Cramer’s crypto view. (And of course, we’ll balance that out with our predictions on bitcoin and Ethereum.)
- New overwhelming demand for cannabis and what that means for your pot stocks.
- An electric vehicle (EV) showdown with Ford’s CEO vs Tesla’s Elon Musk. Plus, I believe we could see another 100% gain in 2021 from TSLA.
There’s a lot of bullish, optimistic, positive (#BOP) info we want to make sure you know about today. It could make all the difference in your portfolio. So, let’s jump in:
The Stock Market Comeback
Paul: In this IanCast we are going to cover the stock market, which looks like to be back in growth mode for our stocks or close to it.
Then we have an amazing new comparison I found on Bitcoin (BTC) that compares BTC to mostly junk. We will show people what that is. Then I have a trigger-inducing article to show you, Ian, to see what your reaction might be. It’s from Jim Cramer on BTC.
I’m certain it will be interesting. Then we have something on cannabis about a crisis of supply. I hope you are ready for that. Finally we are going to up the entertainment level of the IanCast this week by talking about a back and forth going on between the CEO of Ford and Elon Musk with respect to Ford’s new self-driving feature.
They tweeted something out clearly intended to throw shade at Tesla. We will talk about Tesla’s stock as well. Let’s talk about the stock market in terms of what is going on. You start with what you are seeing.
Ian: Like you said, growth mode seems to be getting started again. It’s been a lot slower of a process than we saw last spring where it shot up in April and May. This time, it’s been a little more drawn out. In the past couple weeks I have noticed two key things.
First, a couple weeks ago semiconductors started to bounce. Some of them have even made new highs. That’s important because semiconductors are the core of America 2.0. They are in every electronic device and totally necessary for pretty much everything we talk about.
The demand for semiconductor stocks is crucial as a gauge for America 2.0 stocks in general. Then, more recently, there’s been a bounce in cloud stocks, the more web-based infrastructure of America 2.0. Once again, that’s pretty much tying into every aspect of America 2.0.
These are two critical areas of the market I look at to gauge sentiment. The fact that these are bouncing, to me, is a good sign. The ARK Innovation ETF (ARKK) is what I use as an index for America 2.0. That has been on the rise as well. It’s up more than 20% off its bottom which it made in early March.
There’s been a rebound there. It’s been more drawn out than we’ve seen recently, but there’s definitely demand coming back into these stocks. I believe that’s going to accelerate.
Paul: What about call data? I know you track that for our watch list and what we look at. What’s the call data saying at present?
Ian: There’s a watch list I have that’s about 200 stocks. I track call data on that every single day. Recently it’s been moving up. At first, like I said, with semiconductors there was high volume for call options. More recently it’s been flat, just like the stocks.
Call data is important here because when people are buying call options they are making much more high-conviction bets. When you buy options you can lose 100% of your investment much easier than you would with a stock. So you are risking more with a higher return.
When people are willing to buy call options on riskier stocks, it’s definitely a good sign. To me, it’s a much better sign than even stock prices going up. That’s starting to come back in, especially as we come into earnings season. That’s definitely a big thing I am watching.
Paul: Some of the questions I have been getting on my end in Profits Unlimited and on Twitter as well — if you are interested in Profits Unlimited, go to ProfitsUnlimited.com. There will be a link for you to subscribe.
It’s a multi-cap-based research investment newsletter focused on what we call America 2.0, Fourth Industrial Revolution stocks. In other words, all the new world of using computers, internet, crypto and fintech. That’s what we focus on exclusively.
One of the frustrations our subscribers have been facing that I keep getting in the Profits Unlimited update and on Twitter is that people are index watching. They are watching the Dow make new highs. They are watching the S&P 500 makes new highs. They are even watching the Nasdaq 100 make new highs.
The Nasdaq Composite is not yet making new highs. They are saying, “Paul, everything is going up but we are staying still.” I keep telling them it does depend on where you start measuring.
Ian: If you are measuring just in the past couple of months, absolutely, the big indices are outpacing America 2.0 stocks. But like you said, if you zoom out and go back to a couple years ago and look at ARKK versus the S&P, ARKK is crushing it.
Every major index is being destroyed by ARKK if you do any timespan outside the past three months. Long term, there is still a ton of demand for these stocks. In the short term, we are going to see rallies in any sector you can think of.
We believe these are going to be short lived and demand is going to keep coming in to America 2.0 stocks.
Paul: I just checked before getting on the IanCast. Despite the complaints, the equal-weighted Profits Unlimited portfolio is still up 12% for this year. It’s definitely the last folks who came in starting around — what would you say? October, November? When was that last parabolic move up?
Ian: I think the correction started mid-February, so even later than that.
Paul: Yes, so it’s those folks who would be seeing some of those prices. For sure, some of the stocks that we put in toward the end there’s definite pain. I acknowledge that. You mentioned semiconductors. What was the other?
Ian: Cloud stocks.
Paul: Then when I look at it, I took a lot of heat in the last Profits Unlimited update on 3D printing stocks. People wrote me and said they are crap stocks and loser stocks. They cited stocks they we are super bullish, optimistic, positive — BOP — on. Stocks like 3D Systems, Stratasys, Proto Labs.
Then you know in the service we run together called Paul’s Secret Portfolio we have a number of 3D printing plays. Then we have them scattered. People are asking if it’s too early or if the move is over. What do you think?
Ian: I don’t think it’s too early. Earlier this year we did see crazy 400% spikes in these stocks. For example, 3D Systems is one of the bigger ones by market cap. I believe it’s still 300% off the bottom. It’s still doing very well this year. Again, you have to look outside the recent past.
I do believe these stocks are going to keep going up. It’s just that when you have a huge spike like that there is going to be profit taking. There are going to be people who buy in at the top and panic sell. That kind of kills the sentiment for the short term.
Ultimately, looking at the long term I believe these stocks are still winners.
Paul: Right. 3D Systems in particular had a huge spike around that Reddit period. I believe that was short covering. Most folks don’t know but when there is a short covering move you get a call from your broker. They say it’s short and we need to cover and we have done it for you.
It’s usually done at the top tick. Those vertical moves are short-covering moves. They are unsustainable. Are you going to buy 3D Systems at a price that is 50% than the day before?
Ian: No. Not many people will.
Paul: Right. No regular buyers are going to buy into that. Even on top of that, if you are a regular buyer and you run a hedge fund and you are building a position in 3D Systems, what does that make you want to do? You see a stock you were buying and now suddenly it’s 50% higher.
What does that make you want to do? Does it make you want to go all in and fill your position up or pull back?
Ian: Definitely pull back. 3D Systems and some of these 3D printing stocks are small and very illiquid. If a fund wants to sell a few million worth of stock, it’s going to hurt the price and take a big chunk out of it.
That just gets the ball rolling. Between that, short covering and panic selling, you’ve seen the kind of drop we’ve seen.
Paul: You had this gigantic spike driven by short covering. Then it’s driven even higher by people who jump on bandwagons to get the last part of the move. Then the buying dies out because it’s too high for the long-term buyer. They are going to step away.
The last buyers are usually lacking a lot of firepower to continue the move higher. Then once it starts going the other way, it draws the same folks who bought in the last move to sell. Nonetheless, you can do that for multiple sectors.
Molecular diagnostics is still kind of being felt out in terms of being a sector. It has suffered. I have looked at other areas. Folks as me all the time so I will put it to you. What do you think? Is it another three months or two months or six weeks? What are you thinking?
Ian: I think it will be sooner than three months. In between these last two earnings seasons it has been rough for these growth stocks. Everybody was very excited about them toward the end of last year and it has definitely cooled down over the last few months.
I think based on what I have seen between the stock price action and option data that it won’t be several more months of this.
Paul: I can tell you from being a manager of a lot of money that, generally speaking, whether it’s retail investors or fancy Wall Street investors, people are most excited after they buy. Any time you see a lot of sentiment being high it’s because a lot of people who have bought in.
From our perspective it means there’s a good chance, unless there’s a lot more money that’s going to follow it, that that may represent a short-term peak in demand. It turns out that’s what happened in February from what we look at. I agree with you. I believe the strong earnings are going to be in our companies.
Yea, the reopening trades are moving. However, there is no genuine earnings growth or sales growth there if you look out past even one year. This is why I believe those are going to peak out soon. What’s your view?
Ian: Yes, that, and also those companies don’t have the same buyers that America 2.0 stocks have. It’s not people buying and holding, it’s the reopening trade. People just want to buy and hold during this period of news. They are reopening, their sales are back to where they were or at least close to it.
They are not planning to hold on and buy more. They want to sell for a quick profit. Whereas with America 2.0 companies it’s definitely more sustained buying and bigger buying. These companies are not far from being startups.
They are new, exciting companies that people want to buy for the long term because that’s where the high growth is.
Paul: They have open runway for years and years of massive sales growth. As you mentioned, very few people actually own them. I think that some of our readers take our investment style and names and think everyone knows about them. In truth, very few people know about these.
Ian: It’s us and ARK Invest. That’s pretty much the only people who are going out and telling people about these stocks.
Paul: You’re part of a number of social groups and are active on social media. What is your view? What is that crowd buying? Where are they now?
Ian: Same things: pot stocks, 3D printing, some cloud stocks, brands that people recognize in ecommerce. For the most part that’s where the people I see are buying. Of course more recently they are very into crypto.
Paul: That’s a good point to end this and say from my perspective the 52-week high and low list is critical to how I look at the market. We are starting to see Fourth Industrial Revolution companies to come back into that list after nearly two months.
I am still BOP on our stocks. I know it can seem painful, but I think it’s also painful because people can see other things going up and us being down here. That seems to drive some anxiety. We would tell you in our opinion this is a magic trick bring performed by market makers.
Move something from here, move this one higher, swap out of this. You know in some amount of time everything will be reversed. You will be in income and value stocks and growth will be flying. Then you will say, “I was there.” We’ve seen this game before.
It never ends well for people who want to be among the action. We are staying with what we are good at, which is growth stocks, innovation, Fourth Industrial Revolution and America 2.0, which we are BOP on.
Will BTC Suck-Up the Junk Currencies of the World?
Ian, moving on to crypto and BTC. One of my favorite websites is Coin Market Cap. It’s what I use to track my crypto. I saw this new page pop up which I want to share with you. This page compares BTC to the largest fiat currencies in the world by market cap. Have you ever seen anything like this?
Ian: I have not. That’s actually very cool. I wonder how they are getting those numbers for the fiat currencies. That’s very interesting.
Paul: How do they know what the circulating supply is of the U.S. dollar or the euro?
Ian: That’s a good question.
Paul: Maybe there is a secret blockchain project that the government hasn’t told us about.
Ian: You got me with that. I would like to know too.
Paul: We have said and gone on record as saying I believe BTC is going to simply suck up a lot of the market capitalization of the junk currencies of the world, then gold and silver and a lot of the store of value currencies that exist.
If you added all this — and I haven’t done it yet — what would you say is the market cap of BTC if you assume that there’s about 10 currencies that survive the BTC invasion of currency? Let’s say the dollar is going to survive, the euro, the yen, Swiss franc, probably three or four more.
Countries like India or Brazil have terrible monetary policy. They devastate their savers. What would you venture is going to be the BTC price if you essentially ended up with 10 currencies that continued to keep their market cap?
Ian: My initial guess is that it would be at least $10 million a coin.
Paul: I am stunned into silence. It’s rare that happens. That’s an amazing thought. However, definitely thinkable given that there are large countries where these currencies are genuinely junk.
Ian: When a bunch of money pushes into something it has an exponential effect on the price. $10 million might be high, but that’s where my brain went first.
Paul: Last week I mentioned I thought it could hit $1 million. I’ve been searching for some time to find out what the market cap is of various world currencies to see where BTC could actually get. Then add to it gold, silver and other stores of value. Also, an entire digital economy that is almost separate from the existing economy.
You are very savvy with that in terms of borrowing money and doing things. The total market cap of crypto is $2 trillion. If you were to venture a guess, given what you are seeing in platforms like Compound, Uniswap and others, where would say you crypto is going to be three years from now?
Ian: Definitely a lot more than it is now. I think it could be more than $10 trillion in market cap. I think that’s conservative. Like you said, there are so many countries with fiat currencies that are going through inflation every single year. People are more than willing to put their money in BTC, which is the most accessible crypto.
I think Ethereum (ETH) is starting to get there and with ETH you can do a lot more. Like I’ve said before, ETH is like Android or iOS where you can program a lot of apps. A lot of them, at this point, are for borrowing, lending and trading crypto so you can earn interest on crypto.
You can lend it out, you can borrow it and trade it all without an intermediary. There is no permission required to do it. Anybody can use these. I think that is going to be very appealing to people in those countries that are experiencing inflation.
Paul: You have told me about how you can borrow on a platform and a coin called Compound. Many people around the world have no access to banking or lending, if they were to take some value and put it into some crypto now they could use this.
It could be like a universal banking system. It makes me think our prediction of it absorbing market capitalization from all the world’s junk currencies is probably a good bet.
Ian: I agree. It’s like a parallel economy that is going to take over in a lot of places. It’s only a matter of time before it happens. We are probably going to see big acceleration over the next five years or sooner than that.
Paul: One way to participate in this is we are starting a crypto service called Crypto Flash Trader. Ian is going to be leading it. I’m certain it’s going to be amazing. If you are interested in that and participating in what I believe is going to be an extraordinary new world really —
It’s like how the Industrial Revolution created the industrial world that was previously an agrarian world. There’s a digital world that crypto is going to give form to. There’s going to be so many opportunities. If you want to get in on this, sign up on the email list to keep you informed on where we are in terms of the rollout of the service Ian is going to lead.
Before I get into the entertainment section, give folks your prediction for BTC and ETH.
Ian: My prediction for BTC is $115,000 by this August and $350,000 by the end of this bull run that I see going for another 12 to 18 months. For ETH, my prediction is it will hit $8,000 by the end of this bull run.
Paul: I am on record as saying I believe BTC could go to $250,000 in the next one to three years. I am working on a prediction over the next seven to ten years, which no one will take me seriously about anyway, of BTC hitting $1 million.
However, I can tell you we were doing some prep work for the Crypto Flash Trader and Ian gave an even more amazing number which is going to be in some of the preliminary emails that go out. If you want to hear that, you can subscribe below and you will get it.
Ian, I have the entertainment section of the crypto segment. This comes from Jim Cramer. The headline goes as follows:
“Phony money paying for real money — Cramer sells some BTC and pays off a home mortgage”
In the key points — you can tell me when to stop and when I’ve sufficiently triggered you.
“CNBC Jim Cramer said Thursday he recently paid off a mortgage in profits he made in BTC. ‘I now own a house lock, stock and barrel because I bought this currency,’ he added.”
I will stop sharing that in case you continue to have an allergic reaction to it. Is that a trade you would make? Selling BTC for a house. Is that a trade you would make right now?
Ian: No. Definitely not. We still have a long way to go. I wouldn’t do that. First, I thought it was funny he called it a currency and then continued to bash it. Didn’t he recently say “Pay me in Bitcoin.” I think he recently said that. This would be totally contradictory.
Paul: It does seem like people go to one extreme back to the other. Guggenheim talked about BTC going to $300,000 then it was $400,000 and then he called for a crash. You sent me an article about it. Then he said his prediction was for over 20 years and it was clearly a bubble.
It does make you wonder what folks really think or what they believe. Maybe they are trying to cater to different constituencies.
Ian: It could just be clickbait. I don’t know.
Paul: Could be. Nonetheless, Jim Cramer is on record as having sold some amount of BTC. He has not said how much, just that he sold enough to pay off his mortgage. I am with you, I would not sell my BTC.
If anything, in my judgment crypto is alongside Fourth Industrial Revolution stocks and I would be putting more money. I don’t know if you are in agreement with that.
Ian: Yes, I keep putting more money into it. I am right there with you.
Paul: 100% BOP on crypto in general, BTC, ETH and a whole lot more which you can find out if you sign up for our Crypto Flash Trader emails.
The Legalization of Marijuana in New Mexico
This is with respect to the legalization of cannabis in New Mexico. One of the CEOs of one of the companies in New Mexico — Top Organics Ultra Health — his name is Duke Rodriguez.
He says something must be done immediately to raise the level of production. He says under the state’s medical cannabis program patients can buy up to 230 grams, about eight ounces, but under the new regulation anyone 21 or older can buy up to two ounces of cannabis.
In other words, you are going to have a lot more people being able to buy a lot more. It generally speaks to something we have been telling people about. The opportunity in cannabis is very early.
Ian: It’s very early. There are dispensaries being built constantly. There are new states legalizing constantly. I have seen a lot of things about shortage. Believe it or not, Jamaica is having a shortage. Within the last few months I have seen shortages in Arkansas, Illinois, Arizona and now New Mexico.
There is overwhelming demand for this. Companies can only move so fast and get through regulations. There is a rush to get to this. I think that’s going to have a huge positive effect on these stock prices. When stocks have been beaten down like pot stocks —
I know we had that huge spike earlier this year but there’s still some hesitancy for people to buy into these. I think it’s only a matter of time. I still believe ETFMG Alternative Harvest ETF (NYSEArca: MJ) will hit $40 by the end of the year. I think it’s about $20 now.
It’s still up 50% in 2021, so it’s still outperforming the indices despite this big correction. I am still bullish on cannabis.
Paul: I will end that segment by saying if you are seeing shortages and seeing people needing the supply to go up, to me that’s a bullish sign for the stocks. It’s also going to be the truth in the market itself where the demand for the stock is also going to rise. Ian has the price target for MJ which is one of the biggest cannabis ETFs out there.
Tesla and Ford Twitter Battle
Elon Musk and the CEO of Ford have gotten into it.
Ford’s version of Autopilot is called Blue Cruise. I guess this tweet was meant to throw shade at Tesla.
“We tested in the real world so our customers don’t have to.”
Then Elon went and responded and said he found some footage from the drive. It’s from that scene in Tommy Boy where the car is going crazy. That’s probably about right. The car industry is how many years behind Tesla in terms of autonomy?
Ian: I would say around 10 years.
Paul: That’s probably about where it is. Tesla is getting better and better by the day and they are just starting. That little entertainment section on Tesla goes to the stock section. Tesla does seem to have bottomed out. What do you think it’s setting up for in 2021?
Ian: It looks like it has bottomed out. It’s a great sign for America 2.0 stocks because it’s like the Apple of America 2.0. It’s the biggest company, the most well known and most in demand in terms of the stock. In 2021 I think it will have a great year. It has a lot of upside.
I think it could hit $1,400 or $1,500 by the end of the year. I think that is just over 100% gain from here.
Paul: I am personally excited to get a Powerwall and install it. I believe that business is underappreciated and undervalued with Tesla. People say, “Paul, you are crazy.” We talked about Autobidder for some time. That’s huge.
Ian: It’s my favorite project Tesla is working on. I don’t’ know anybody who wouldn’t want that just to have the option. It will balance out the energy grid. It’s so clunky right now. It’s controlled by a few big companies. This would free people of that.
They would be able to control their energy supply, get energy when they need it and get paid when they have excess. I think that’s going to benefit everybody involved. I think it will be a big part of their business soon.
Paul: The Powerwall is the car, if you will, and Autobidder would be like the Autopilot. You have the thing that generates a lot of value at a company: hardware and software working together to generate a lot of value.
Editor, Rapid Profit Trader
Editor’s Note: You heard Paul and Ian talk about their predictions for bitcoin, Ethereum and the whole crypto world today. Now it’s time for you to act. We just finished filming the first Crypto Flash Trader video that will go out exclusively to those who sign up here. And that’s not all. We’ve got more videos and free crypto goodies coming before we officially launch this new Ian-led service. All you have to do is put your email in here and we’ll start sending you the pre-launch material as soon as it’s ready!