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Earnings & Green Flags for America 2.0 Stocks

Earnings & Green Flags for America 2.0 Stocks

When it comes to the stock market, there are some green flag factors that we watch.

Right now, we’re seeing a few:

  • Earnings season.
  • Conviction with “follow-through buying.”
  • AAPL (the Death Star stock) is staying down.

Green flags. Great news for your stocks!

We recommend the most up-and-coming, innovative mega trend stocks out there. When you add in these #BOP (bullish, optimistic, positive) signs, you’ve got a recipe for Strong Hands success.

Oil companies and brick-and-mortar stocks are on their way out… We’re approaching America 2.0’s shining moment!

Watch now for our stock market analysis and why we’re going to crush the final stretch of 2021:

 

Paul Mampilly: Good morning, Ian.

Ian Dyer: Hey Paul. How’s it going?

Paul: It’s that time. It’s a little earlier than normal. We usually record the IanCast later in the afternoon, but it’s before 11 on a Thursday. What is going on? Is something going on at the farm? The animals woke you up early?

Ian: I was just up and ready to go.

 

What’s Going On In The Stock Market?

Paul: There is a lot to chat about in this IanCast. Let’s get to it. Let’s start with the stock market. Do you sense there is a different thing going on? Even the bidding on the stocks we follow and ARKK, there’s something called follow through that I’ve been seeing on a number of stocks.

Tell folks what you are seeing.

Ian: If you remember, a couple weeks ago I was talking about how I saw this sudden rise in demand for call options on tiny stocks, more risky stuff. That’s what you want to see early on in a rally or late in a downturn that could be a signal of a bottom. I think that really was the turning point.

Things went a little lower after that, but now I am starting to see more consistent demand for options that are usually short-term bets that stocks are going to go up over the next few weeks or months. That is very bullish. And it’s still on small-cap stocks. It’s what you want to see at a time like this.

We have earnings season coming up. A lot of these companies report in early November. I think we are going to continue to see strength, momentum and demand building up into earnings season. The overall point here is that these companies are still growing, even as their stocks have been falling most of this year.

The companies are still in great shape, even better than they were at the beginning of the year. I think the market is finally going to recognize that after all this selling pressure that I think is pretty much done. Now we are starting to see higher volume in the stocks on rising prices.

That’s also one of the most bullish things you can see. It’s shaping up here and looking like most things have bottomed out and are going to head up. I think earnings season could give a boost in demand going forward.

Paul: I have been seeing follow-through buying, for those who don’t know, is where you see a higher price on higher volume. The reason why we feel that’s important is because it shows conviction. Someone who is willing to buy a larger amount or a group of buyers who are willing to buy a larger amount of stock at a higher price shows that they have conviction and belief.

That’s often a good sign. Then combine it with some other things I have noticed that most people wouldn’t think of. There’s been a lot of downgrades from analysts. I can tell you from my experience when you see that it is actually a contrarian indicator.

Analysts tend to put out some of the most bearish ratings somewhere near the bottom. That’s one thing that also makes me feel BOP on things. The other one is where some of the companies on the 52-week low list. Normally during regular markets I am tracking the 52-week high list.

That has been filled with junk. It’s been filled with these oil companies for a week straight. There are no-holders. Where will oil be in three years? I don’t know. But it’s very clear we are transitioning to non-fossil-fuel based energy. That’s where the dumb money is going.

On the 52-week low list have been some of the more vulnerable companies like the biotech stocks that really need funding. Those have dominated the 52-wek low list. Some of our companies that are America 2.0 companies that were on the 52-week low list are not making lows anymore.

The lows are in. The final thing I can say is that Apple — I know I will get trolled — is a death star. It acts as this magnet for big money, dumb money. They’ve got money to put in and if they are a small invest, medium-sized investor or a big investor, what do they buy?

They go and buy Apple. It’s a stock that epitomizes America 1.0. There’s zero innovation happening. It’s a stock that’s supported by $75 billion of buybacks year after year. My god. And then of course because Apple is such a large part of the S&P 500, it bids the S&P 500 up.

This then has even more money chasing something they shouldn’t be. Ok, should or shouldn’t be? Whatever. Everyone is entitled to do whatever. But Apple is no longer going up, even on up days. That’s another positive.

Ian: I think we’re going to see, going back to earnings, those big tech companies that dominate the indices might go up a little after earnings. If they do go up it will be a fakeout. Stuff that has been rallying while growth stocks have suffered is going to end up being flat or down for a while.

It’s going to be like we saw in February, right after that earnings season at the beginning of the year. That’s when growth really started to top out. Then it fell sharply after that. I think it’s going to be the opposite. This earnings season you are going to see a huge amount of money flow into these stocks.

At the same time, you are going to see way less strength in the bigger stocks. Like you said, the oil stock and reopening stocks like consumer staples, banks, brick-and-mortar retail and all these stocks that have been attracting money the past few months I think they are topping out and earnings season is going to be the big momentum switch in the market going forward.

It’s definitely looking good. Apple hasn’t made a new high for a while. As a result, the indices have been down a little too. I think there’s going to be a flat or down period for that stuff for months to come here.

Paul: As Apple was making its highs, a lot of our stocks were plummeting lows. There is an equal and opposite effect going on. Apple makes the S&P 500, the Dow and Nasdaq all go higher. It puts bids under, essentially, six or seven stocks. That environment is toxic for us.

 

What Stocks Are People Flooding Into?

It means everybody is just flooding into six or seven stocks. Some of those are OK. Like Amazon. What do you think? Is it still OK?

Ian: Yea. I would say so.

Paul: Facebook, in my book, is still OK. Apple is not OK. Microsoft, I don’t know. Where do you stand on Microsoft, Ian?

Ian: I think there’s room for Microsoft and Apple to come down. Growth is slowing and with all this disruption from smaller companies I think there’s a lot of market share to take in areas that Apple and Microsoft pretty much dominate. Maybe not Google, but I don’t know.

Google is kind of similar to Microsoft to me, but we’ll see.

Paul: The one thing I look at is the amount of money Microsoft is buying of their own stock. I can tell you someone is paying a very high price to make you want to be a seller to these people. It’s intended to give you money back. If you are riding along with them, you better have good short-term timing.

With Apple and Microsoft, they are putting billions in the market every day to support their stock or give you back money. What it’s been doing over the last few months has been rocketing their stocks higher.

Ian: Imagine if they weren’t doing that. Apple especially has topped out. If they weren’t putting their own money in their stock they probably would have topped out a while ago because the demand isn’t there. Most of the demand, other than from the company itself, is from people buying index funds.

That’s because Apple is at the top of all of them. When you can’t get that demand from those people who buy index funds and your own company, that’s when I think things are going to turn. Like you said, it’s a death star situation because long term I don’t see where that demand is going to come from.

Paul: For us, from a demand and supply perspective we can actually see it. When the money is flowing into those five or six big stocks, it sucks the liquidity away from our stocks and causes the people who do short-term trading to do for those stocks. Then they crush the liquidity in our stocks.

 

Is Tesla Inching Back Up!

ARKK, which is the ARK Innovation ETF — Cathie Wood’s signature ETF — that too had a follow-through buying day this week. Its major components — Tesla, Square and others — are also seeing significant demand. Tesla quietly is inching back up to its all-time high.

Ian: Yes, very quietly. I haven’t seen much about it other than a video you sent me. I think it was from CNBC. It was some guy with a $150 price target. You were talking about downgrades and it’s a super bullish sign to me when someone is going out there and saying Tesla is going to fall 80%.

Paul: Did you watch what that dude had to say? It made no sense at all.

Ian: It was based on a poll or something. I don’t remember the details. He clearly didn’t know what he was talking about.

Paul: We were chatting before this about Tesla. Here’s a company that’s sold out of it’s two most-popular models — Model 3 and Model Y — until the first quarter of next year. It doesn’t have enough capacity for the Cybertruck. I follow Tesla very closely and Ian was asking me when the Cybertruck is coming out.

I said, “Not for a while.” They have to get Austin going and they need even more capacity. They are sold out. They have stopped counting because they have so many pre-orders for the Cybertruck. This is for a truck nobody has seen, nobody has test driven.

Then there’s the Semi. They are going to have to put up three more gigafactories.

Ian: That’s at least five or six years more of scaling just based on their current product line, and we didn’t even get into their solar business. It’s an endless amount of scaling they are going to have to do. There’s’ no end in sight for that. They are going to have to build other factories.

Long term, I think they are going to end up building all their own batteries. That’s going to require at least a couple gigafactories just for the batteries. Their business is way bigger than people think. People see a Model 3 and then a Model Y every once in a while and think that’s it.

There is so much going on behind the scenes. It’s a deep rabbit hole just to go through Tesla’s product list because it’s huge and it’s only getting bigger.

Paul: I have the Powerwall and it’s amazing. It does a number of things. It really makes your solar panels into something where you can time when you want to use your power by storing it. The software is so beautifully done. It makes it so easy to use. That’s the differentiating factor.

People write to me about Lucid, Rivian and some of the others. What is your take on these?

Ian: Now I remember, that’s what that analyst was talking about. He said people would rather buy Ford and GM rather than Tesla and some of the more smaller and obscure EV makers like Lucid and Rivian. Those companies have been hyped up for a while.

A lot of them came public last year and there was a lot of initial demand for them. These are the stocks that got hit the most. I think that’s the market telling us that Tesla has such a big lead on competitors that it’s going to take a lot for those competitors to succeed. Maybe one or two long term.

When automobiles were first starting to become popular there were a lot of car companies. Now there are only a few that dominate the industry. I think it’s going to be the same here. I don’t think Tesla has anything to worry about at this point.

They already have several gigafactories, they have the top-selling EV in the world, they dominate the U.S. are starting to dominate Europe. They are even gaining a lot of market share in China, which is the second-biggest EV market in the world. These other companies that want to compete with Tesla have a huge hill to go up before they can make a dent.

Paul: Norway is setting up to be all electric in terms of cars sold by April of next year. With respect to Lucid and Rivian, people forget they have to scale up to produce hundreds of thousands of cars. Remember, Elon was sleeping on the factory floor and having a nervous breakdown to scale this up.

Their hardest moment is ahead. Elon says scaling up production is like eating glass and I believe him. Tesla knows how to do this. Then there’s the software. They have millions of actual miles driven and data that they put into their self-driving program. Rivian is going to be a decade behind by the time they get going.

Ian: Tesla’s self-driving program is fueled by their customers. Every time someone drives somewhere in a Tesla it adds to that and improves the program. That’s growing exponentially. A lot of other self-driving car companies that claim to have this great technology is pretty much all simulated miles.

Tesla has real-world miles driven. They are a huge leader in that area too. They not only have a lead on the brand and the hardware, but they also have a lead on the software. Once you have that tech, it’s not as hard to scale.

Paul: I am a huge geek for investing in EVs. There’s a guy that folks in the EV community that people follow: Sandy Munro. Ford went to him and said, “Would you like to test drive our autopilot?” Having had Tesla’s Autopilot for three years now, it demonstrated how far ahead Tesla is.

With the Ford autopilot, on a gentle curve the person told Sandy he needed to put his hands on the wheel because they don’t feel comfortable that the car really has the capability to just turn into a curve. Tesla has been doing that for four or five years now.

Ian: That’s why it’s even harder for Ford and GM to keep up with Tesla because all their production lines and factories are built to make ICE engine cars. That’s what they have done for decades and that’s what they are good at.

They have to not only get into EVs and be able to make the cars right, but they have to redo their production line just to get started on these. That’s not even getting into the software yet. The simulated miles are one thing, but you need real world miles on your cars to get an efficient system.

It’s a big barrier for these companies in the auto industry to get into EVs. They have to spend so much money. A lot of them are in debt anyway. They have to spend a ton of money to get their factories refit for the production line.

Paul: Ford announced they are going to have to spend $11 billion over three to five years. Forget it. In my opinion, they aren’t going to make it. Tesla has this endless line of opportunities. The ultimate end of the software business is robotaxis, which nobody at this point considers a real business.

I think Cathie Wood considers it to be something you would discount into Tesla’s price, but the vast majority are just looking at it like it’s a car company. They have so much opportunity. We could go on and on about Tesla. Let’s move on.

 

 

Jamie Dimon Says Bitcoin Is Worthless? We Don’t Agree…

Our most favorite banker, Jamie Dimon, was out letting us know — I think he’s a good contrarian indicator himself — in his opinion, Ian, Bitcoin is worthless.

Ian: I know. Favorite banker is an interesting oxymoron. He once again came out and said Bitcoin (BTC) was worthless. He said, “How do you know there’s only 21 million? Have you read all the algorithms?” It was also funny. Clearly he still has no idea what’s he talking about.

It’s pretty funny to watch.

Paul: Have you read all the algorithms? I thought that was truly LOL. He should not talk. Clearly he has no idea how a coin is mined. Do you think he knows crypto is mined using code? Do you think he understands this?

Ian: It doesn’t show if he does. I honestly think he’s trying to ignore the whole thing and hope it goes away. He was talking about his customers and I think he even said, “They’re adults, they can buy it from us if they want.” It’s a bizarre situation. His company offers BTC.

I think they have a crypto trading segment of their business now. It seems like willful ignorance at this point.

Paul: There is actually a JP Morgan coin. I did not know they actually followed through and did that. They believed people would adopt it as some kind of way to buy into an obsolete, old style banking system. What would be the end game there?

Ian: I don’t know. They bought a blockchain service to do that. They sold it and bought it back cheaper or something weird like that. It was a weird business move. They think people are going to want it. I don’t see anybody ever wanting JP Morgan coin. It seems like satire to me.

Paul: I kind of thought it was a joke. I recall them talking about it but I didn’t realize they were dumb enough to follow through and actually do it.

Ian: I know. It never ceases to amaze me.

Paul: Moving on from comedy and satire to reality. BTC, like growth stocks and America 2.0 stocks got a huge bid. You have been putting up charts. I haven’t been on Twitter a lot but definitely in the updates for Crypto Flash Trader. If you are interested, this is the sponsored part of the IanCast, click on the strong hands.

It will send you to Ian’s presentation on Crypto Flash Trader. Tell folks what’s going on with BTC where there’s a lot of action and then in crypto in general.

Ian: Just overall so far in October it’s been a strong month, especially for BTC. That’s exactly what you want to see at the beginning of a rally. If you look at the actual data behind the crypto, like the demand and supply, the supply has been going down.

Long-term holders hold more than 70% of the coins. Like I have been saying, all it takes is a spark of demand to get BTC moving up again. That’s finally what we are seeing now. It’s similar to last October where BTC star its move back up to new highs.

At the beginning of these rallies, you want to see strength from BTC and you want to see it lead the market back up. Alt coins haven’t been moving as much. I think the past couple days they have been strong. You are going to see more strength in BTC, at least at the beginning of this rally.

Then once it makes new highs, you will see some of the money flow into smaller coins. I think BTC is going to be the leader, at least that’s what we want to see and that’s what happened in every rally up to new highs before. I think a lot of people are sleeping on BTC from what I have seen on Reddit and Twitter.

A lot of people are pumping up these other coins that are way newer. The big money is still going to be buying into BTC and Ethereum (ETH) because they are the most liquid market and the easiest to get into. That is what people know. The market is looking healthier to me than it has since February.

I’m very bullish. I think BTC will hit new high next month I would guess. Then it will run up further than people think. We will see a huge explosion in the rest of them next year.

Paul: I have two observations on the crypto market. In many ways being that it is people who underpin what happens in the market, people always chase what pumped the hardest in the previous run. That’s Cardano and Solana.

Then there’s also the social media pump that I think is still going on in Shiba Inu, which is the son of Doge. Or the daughter of Doge? I don’t know.

Ian: Something like that. Elon bought that breed of dog and so basically that has resulted in some of this demand. Then once a coin goes parabolic it sucks in the dumbest of money. Although, the ones that get in in the beginning, I can’t call them dumb.

They probably made a ton. It’s not going to end well I don’t think.

Paul: There is a demand from people who say, “What’s the next shit coin?” If you can figure it out, there is money to be made. Money is money.

On ETH, which we don’t get into a lot, I saw something interesting. Vitalik Buterin, who is the founder of ETH, came out and said something interesting. He felt what El Salvador is doing is forcing people to use crypto and is not in the spirit of crypto. What is your take?

Ian: I don’t think they are forcing people to use it. By making it legal tender, if you are running a business, you can’t not take it if someone wants to use it, but I don’t think that’s as dark as people are trying to make it. You still use the dollar in El Salvador. I don’t think it’s that bad.

I think it’s great to see BTC adoption. It’s hard to say because you’ve seen polls saying people in El Salvador don’t want to use it, but then the BTC Wallet app is the most downloaded app there. People clearly are using it. They still have the option to use the dollar but are choosing BTC.

I don’t think all the negativity around it is really warranted, at least from what I have seen.

Paul: I don’t know if you read the article I sent you about this business in Afghanistan. It’s a women-owned business that has been paying people in BTC for how many years? Six years or something like that. Right now it’s a lifeline because their economy is essentially shut.

I don’t know if Vitalik has the right idea of how an economy can really use a cryptocurrency and solve a lot of problems, which is exactly what the president of El Salvador was trying to do when he introduced BTC. He was trying to take away destructive inflation, which is a horrible problem for countries with junk currencies around the world.

Transacting it is cheap. In that article about Afghanistan they asked how they send money and it was super cheap. Of course it’s risen in value versus plummeting in value.

Ian: It’s just a matter of time before we see the people in these countries that lead the movement in crypto. They will be the ones that get this going. At some point it will be inevitable. We will see all these countries making BTC legal tender at one point or another over the next few years.

Maybe even sooner. It’s businesses like the one in that article that are leading the movement. I think it’s becoming more and more promising for these countries. Like you said, a lot of these currencies are junk. There are only a few currencies that are used internationally.

BTC can replace a lot of this stuff. Eventually, it might replace all of it or at least crypto in general will. I am overall very bullish. Not just from an investment perspective, but also I think it’s going to do a lot of good for countries that have been destroyed by a weak currency.

 

What Is Predicted For Ethereum?

Paul: Last note before we end. I don’t know if you went through the article or sat through the podcast Bankless put out where they had a guest talking about something we have been talking about which is a $20,000 price target for ETH.

When I look at ETH, there’s really an ETH economy now. It’s a large, substantial, robust real economy. $20,000 seems very doable. Then there are coins that sit underneath it that you trade in Crypto Flash Trader, I think these are dirt cheap.

Ian: I do too. The main DeFi coins like the ones we’ve talked about on here — Aave, Uniswap, Chainlink, Compound — these are way undervalued. A lot of the attention in the market shifted away from BTC, ETH and the DeFi coins to alternative chains like Solana and Cardano.

I think when the momentum gets going and when BTC makes new highs, the attention is going to be put back on the coins that have established themselves, retained users and money. The amount locked in the ETH ecosystem in these apps is more than $100 billion at this point.

It’s not just a niche thing nobody uses and is going to go away. It’s a legitimate economy at this point. I think money is going to flow back into those coins. A lot of them are still down 50% from their high. There’s a ton of room for these to run.

Paul: Meanwhile, the total value locked in them has just rocketed up. Then from an analysis I saw, there’s more projects on ETH than all the other blockchains combined.

Ian: It’s kind of like the Tesla situation. ETH has that advantage. They got started before all these other projects and they really ran with it. They have taken so much market share at this point that I don’t know if many of the others will be able to keep up, much less survive, in the long term.

Paul: One last thing about ETH 2.0. Do you know what the timeline for that is? Is that a date that might set a “buy on the rumor, sell the news” trade setup?

Ian: It might. It wouldn’t surprise me if there was a “buy the rumor, sell the news” pattern on that. As far as I know, there’s not a set date. This has been up in the air for a while. It seems like I am hearing more and more the end of Q1 or beginning of Q2 next year. So sometime in the spring is a very tentative date range.

That’s going to be huge because when that happens the fees on ETH are going to go down significantly. All these users that go on these alternative chains, they don’t want to use ETH because of the high fees like you would buying a stock if you pay a commission.

The fees to use ETH are very high. They have been driving users away. I think that it might be “buy the rumor, sell the news” on the price, but long term I think it’s going to be a huge benefit for ETH.

Paul: I was just thinking within the constraints of my prediction of $20,000 by the end of June next year. Ian, let’s close this IanCast out. You go and say goodbye and I will wave everybody goodbye next.

Ian: Everybody, thank you so much for watching. Have a great weekend. Happy Friday and we will see you next week.

Paul: Same from me. This is Paul saying bye.

Of course, we talk about crytpo in the IanCast, but you’ve got to hear this.

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Regards,

Ian Dyer

Ian Dyer

Editor, Crypto Flash Trader

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