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Netflix Stock Slumps After Earnings – Charting the Way Forward

Netflix stock is getting crushed after the earnings report. Is it time to buy or get out of the way?

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Netflix stock is getting crushed after the earnings report. Is it time to buy or get out of the way?

Stocks fell on Wednesday, had a nasty bearish reversal on Thursday -- and then Netflix  (NFLX) - Get Netflix, Inc. Report really dashed the bulls’ hopes, reporting a disappointing quarterly result. 

The market is trying to find its footing (and struggling) on Friday, but Netflix isn’t making it easy.

Netflix beat on earnings expectations, but missed slightly on revenue estimates.

Worse yet, Netflix missed fourth-quarter subscriber expectations, while its outlook for first-quarter subscriber additions badly missed estimates.

Of course, the Los Gatos, Calif., streaming major is not the only culprit, as the Nasdaq remains entrenched in correction territory and as investors try to find a balance between the risk-on, risk-off price action.

Disney  (DIS) - Get Walt Disney Company Report, Roku  (ROKU) - Get Roku, Inc. Class A Report and other streaming plays are getting hit on the news, too, although the overall market action isn’t doing these stocks any favors.

With Netflix well off the highs, is any support nearby?

Trading Netflix Stock

Weekly chart of Netflix stock.

Chart courtesy of TrendSpider.com

Netflix stock hit an all-time high on Nov. 17 and at today’s low, the stock was down 45%. It’s the worst-performing Faang stock relative to its all-time high.

The next worst component? Amazon  (AMZN) - Get Amazon.com, Inc. Report, which is down 20% from its high.

With today’s drop, Netflix stock is trading down into a significant area of interest. The question is: Will it be enough to act as support?

Specifically, the stock is trading down into the 200-week and 50-month moving averages, as well as the monthly VWAP measure and the 61.8% retracement of its multiyear range.

It’s also trading back into a big resistance area from 2019 and early 2020, and a support zone after the initial Covid-19 selloff.

Back over $422 puts Netflix back above all these levels. It can start, however, with a rebound back over $400.

That puts Netflix above its monthly VWAP measure. Over $412 puts it above three of the four measures pointed out above, with just the 200-week moving average remaining.

Regaining these measures gives the bulls a great opportunity. But -- it also serves as a notable risk if the stock can’t regain these levels or if they act as resistance.

So far, Netflix is bouncing off the lows and that’s good. Let’s see if it can continue to gain momentum. If not, don’t be stubborn; not in this environment. 

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Bitcoin Back Below $30,000 After A Record 8 Weeks In The Red

Bitcoin decoupled from equity markets to the downside on Monday after ending last week as the eighth consecutive weekly loss.

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Bitcoin decoupled from equity markets to the downside on Monday after ending last week as the eighth consecutive weekly loss.

Bitcoin has failed to hold the $30,000 level on Monday after scoring its eighth consecutive week in the red for the first time ever.

During these eight weeks, which began in late March and ended on Sunday, bitcoin has lost over 35% of its U.S. dollar value according to TradingView data. Before the beginning of the losing streak, BTC was trading at around $46,800.

Bitcoin has scored losses for eight consecutive weeks for the first time in its history and it is starting the ninth with yet another red candle. Image source: TradingView.

Bitcoin is changing hands slightly below $30,000 at the time of writing. The peer-to-peer currency climbed as high as $30,600 earlier on Monday to trade at around $29,400 as the trading in equity markets nears its end in New York.

While bitcoin turns south, major U.S. stock indices have been in the green. The Nasdaq, which is said to be highly correlated with bitcoin, decoupled from the digital money along with the S&P 500 to denote modest gains near market close on Monday, per TradingView data.

While bitcoin, Nasdaq and S&P 500 were trading in tandem for some time on Monday, the P2P currency saw a sharp sell-off decouple it from the two indices and take it to a more than 3% loss for the day. Image source: TradingView.

A Tough Year For Bitcoin

Despite making two new all-time highs in 2021, bitcoin already erased nearly all of those gains in 2022.

Bitcoin’s choppy trading year so far can be partly attributed to a broader sentiment of economic uncertainty as the Federal Reserve tightens the U.S. economy, withdrawing liquidity from the market after almost two years of quantitative easing.

The central bank has already raised its basic interest rates two times this year, the last of which was double the magnitude of the previous one and represented the largest hike in two decades: While the Fed increased interest rates by 0.25% in March, it raised them by 0.50% earlier this month.

Image source: Federal Reserve Economic Data (FRED).

When the Fed raises or lowers interest rates through its Federal Open Markets Committee (FOMC), what it is actually doing is setting a target range. The graph above depicts the lower and upper bounds of that target range in red and blue, respectively.

While the U.S. central bank system sets the target, it cannot mandate that commercial banks use it — rather, it serves as a recommendation. Therefore, what banks end up using for lending and borrowing excess cash between them overnight is called the effective rate. This is shown by the green line in the graph above.

The Fed previously hiked interest rates consistently from 2016 to 2019, until plunging it near zero in the aftermath of the COVID-19 pandemic outbreak, as noted in the graph.

Bitcoin’s higher sensitivity to liquidity and therefore interest rates can be explained by a greater participation of institutional investors in the market, whose allocations are based on the availability of capital and broader economic conditions, Morgan Stanley reportedly said.

Therefore, while Bitcoin was able to sustain a bull market in the midst of the Fed increasing interest rates in 2017, raising nearly 2,000% from January to December that year, the odds aren’t on the side of the bulls this year.

For two weeks, bitcoin has now closed below a level of weekly support it formed over a year ago and had respected since, indicating it might be turning into a zone of resistance. Image source: TradingView.

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Here’s What Will Be Open And Closed on Memorial Day

Rite Aid, Best Buy and Pizza Hut will be open. Not so much with the Stock Market, though.

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Rite Aid, Best Buy and Pizza Hut will be open. Not so much with the Stock Market, though.

Just in case you forgot to remember, Memorial Day will take place on Monday, May 30th.

Memorial Day is one of the most American of all holidays, second only to the Fourth of July. 

The holiday was created to honor people who served in the United States military. 

The first Memorial Day took place in 1868, though it is a holiday with a surprisingly murky history. 

The U.S. Department of Veterans' Affairs says that 25 different cities and towns have claimed to have invented the holiday. 

Still, Memorial Day weekend has long served as the unofficial kick off of summer, with friends gather in backyards and public parks to hold BBQs and flout open container laws.

As with many federal holidays, it can be a bit unclear what business and government agencies will be open. 

Maybe you’re the type that always needs to buy some last minute potato dip at the grocery store, or if you’d prefer to go to a restaurant rather than deal with all that sunshine.

Either way, we’ve put together a list of what definitely won’t be open on Memorial Day, and what likely will be.

There is also the caveat that some chain restaurants and stores give their franchises the flexibility to set their own hours and days of operation.

What Will Be Open On Memorial Day?

Public Parks And Beaches

It just wouldn’t be Memorial Day without people grilling in the park and on the beach. 

While some public parks closed down during the pandemic, that is thankfully behind us. 

Some parks might close on the early side, but you should be all set for an afternoon picnic.

Movie Theaters

Memorial Day is the unofficial start of summer, as well as the unofficial start of summer movie season. If you’re curious about checking out “Top Gun: Maverick,” most theaters will be open.

Subways and Buses

While a lot of government employees get the day off, subway and buses will continue to run, though in reduced capacity in some cities. 

Rite Aid, CVS and Walgreens

Chain drug stores seemingly never take the day off, just in case you really need to buy some shampoo from Rite Aid  (RAD) - Get Rite Aid Corporation Report, CVS  (CVS) - Get CVS Health Corporation Report or Walgreens  (WBA) - Get Walgreens Boots Alliance Inc Report

Kohl’s, Lowe’s, Big Lots, Sam’s Club, Walmart, Target and Home Depot

All the major big box stores will be open on Memorial Day, though some locations might close early.

Shopping Malls

Nearly all shopping malls will be open on Memorial Day, and many of them will be having sales.

Trader Joe’s, Publix, Walmart, Wegmans 

Most chain grocery stores like Walmart  (WMT) - Get Walmart Inc. Report and Trader Joe's will be open, though some might close on the early side. 

Barnes and Noble

Need to find a bathroom? Most Barnes and Noble  (BKS) - Get Barnes & Noble, Inc. Report book stores will be open on Memorial Day weekend.

Starbucks and Dunkin

Do you need coffee before the day drinking commences? Both Starbuck  (SBUX) - Get Starbucks Corporation Report and Dunkin  (DNKN) - Get Dunkin' Brands Group, Inc. Report will have you covered.

The Apple Store

If you want to spend your day off at the Apple Store  (APPL) , that is an option available to you, as most locations will be open that day.

Fast Food

Not in the mood to make your own hamburger? More of a taco kind of person? 

Take heart: all the major fast food chains, including McDonald’s  (MCD) - Get McDonald's Corporation Report, Wendy’s  (WEN) - Get Wendy's Company Report, Taco Bell  (YUM) - Get Yum! Brands, Inc. Report, Subway, Chipotle  (CMG) - Get Chipotle Mexican Grill, Inc. Report and Pizza Hut will all be open. 

Chain Restaurants

Are you a fan of air-conditioning and having other people cook for you? 

Well as an American, you are entitled to go eat at Ruth’s Chris Steakhouse, The Cheesecake Factory  (CAKE) - Get Cheesecake Factory Incorporated Report, Bonefish Grill, Applebee's, Chili's or Olive Garden  (DRI) - Get Darden Restaurants, Inc. Report on Memorial Day.

Most chain restaurants will be open for takeout, delivery and dining in. Many will offer discounts to service members and veterans. 

Total Wine

If it’s your job to bring a six-pack to the BBQ, Total Wine will be open on Memorial Day, as will the majority of locally-owned liquor stores.

What Will Be Closed On Memorial Day?

The Federal Government

Memorial Day is a federal holiday, so federal courts and government offices will be closed. 

The State Government

Most non-essential state government offices will be closed, including the Post Office and most courthouses. 

Banks

Some local banks may choose to remain open for part of the day. But generally, national banks such as Bank of America  (BAC) - Get Bank of America Corp Report, Capital One  (COF) - Get Capital One Financial Corporation Report, Chase  (CCF) - Get Chase Corporation Report and PNC  (PNC) - Get PNC Financial Services Group, Inc. Report will be closed.

The Stock Market

The New York Stock Exchange, Dow Jones, NASDAQ will all be closed on Memorial Day. Go eat some hotdogs, day traders.

Schools

(Alice Cooper Voice) School’s is out for the summer! 

Though in some cities, schools may be open until June, especially if it is trying to make up for time lost because of covid-19. 

But even then, students will have Memorial Day off.

The Department of Motor Vehicles

The DMV is a state agency, and not a federal one. They are generally closed on Memorial Day in most cities.

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Top Gas ETFs to Buy in 2022 with Soaring Gas Prices

To grab your piece of the rising energy costs, below are the top gas ETFs to buy in 2022. Let’s get started.
The post Top Gas ETFs to Buy in 2022 with…

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All anyone wants to talk about anymore is the soaring price of gasoline. After all, the cost to fill your tank has never been higher. With industry profits piling up, get your share with the best gas ETFs to buy before the second half (2H) of 2022.

First, the pandemic severely strained the industry as demand fell off from global lockdowns. As a result, over 100 oil and gas companies went out of business.

Then, as the economy reopened and demand started catching up, Russia’s invasion of Ukraine stoked a fire under an already strained market. So, demand is outpacing supply as nations look elsewhere to fill the supply gap left by Russia’s massive presence in the commodity market.

Nonetheless, gasoline is essential to keep the economy running smoothly. You need gas for fuel to get to work and back. Not to mention, businesses rely on gas for transporting goods, which influences prices. To grab your piece of the rising energy costs, below are the top gas ETFs to buy in 2H of 2022.

What Are the Best Gas ETFs to Buy Right Now?

The top gas ETFs to buy are outperforming the market right now as soaring energy costs boost profits. For example, Natural Gas Futures (NG1) are up over 120% YTD and almost 200% over the past year.

Meanwhile, all major indexes are down significantly this year, with the Nasdaq 100 Index (NDX) slipping almost 30% YTD. On top of this, researchers at J.P. Morgan predict gas prices could remain elevated “even as far back as 2024” as supply disruptions will be hard to overcome.

No. 3 Barclays iPath Series B Bloomberg Natural Gas Subindex (NYSE: GAZ)

  • YTD Return: 124%
  • Expense Ratio: 0.45%

Although the Natural Gas Subindex is set up as an Exchange Traded Note (ETN), it can help you gain exposure to the surging gas market. An ETN differs from an ETF in that the fund consists of unsecured debt notes rather than holding a group of stocks.

The GAZ ETN seeks to replicate the returns of the Bloomberg Natural Gas Subindex by investing in futures contracts. That said, the ETN does not pay a dividend. Therefore, GAZ is best as a short-term tool.

Since the ETN is not tied to any companies, only futures, it can carry additional risks. For example, investors are left with little or nothing if the issuer defaults. In comparison, ETFs hold several companies, helping to diversify and spread risk.

At the same time, the ETN moves alongside the price of natural gas contacts. So, if you are looking for direct exposure to gas prices, the GAZ ETN may be for you.

Keep reading for more on gas ETFs to buy.

No. 2 United States Natural Gas Fund (NYSE: UNG)

  • YTD Return: 128%
  • Expense Ratio: 1.11%

The United States Natural Gas Fund is another way investors can invest in natural gas prices without physically trading futures. For one thing, UNG is a commodity pool. Or in other words, it pools investor money to invest in futures, swaps and forward contracts.

The fund aims to give investors access to daily changes in natural gas deliveries at the Henry Hub, a distribution center. As a result, the daily changes resemble changes in natural gas prices.

However, since management is consistently active, it will cost more to invest. Though the higher expense is not slowing UNGs momentum, up close to 130% YTD. Likewise, UNG is more geared for short-term trading as it holds near-month contracts.

No. 1 United States 12 Month Natural Gas Fund (NYSE: UNL)

  • YTD Return: 113%
  • Expense Ratio: 0.90%

Similarly, the United States 12 Month Natural Gas Fund is a commodity pool targeting the price of natural gas. But, UNL differs in that it holds futures contracts for the nearest 12 months.

In other words, UNL buffers itself from short-term movements. As a result, investors can gain exposure to changes in natural gas prices with less risk than short-term contracts.

If you wish to capture your piece of the soaring energy prices but want less risk of contango (higher spot price), UNL may be a better choice.

Best Leveraged Gas ETFs to Buy

To maximize your returns, you can opt for a leveraged ETF to multiply the changes in an underlying index. For example, the ProShares Ultra Bloomberg Natural Gas ETF (NYSE: BOIL) targets to return 2X the daily performance of a natural gas index.

As a result, investors can earn double the daily returns of natural gas changes. With this in mind, the BOIL ETF is up 322% in 2022 alone.

However, there is a significant risk of investing in leveraged ETFs. Though you can earn double the returns, you can also double your losses. Investing in these funds is only recommended if you are comfortable with the significant fluctuations.

Best Inverse (Short) Gas ETFs to Buy

For those that think gas prices will ease soon, finding an inverse gas ETF to buy in 2022 may be for you. Or, if you have earned a pretty penny on gas and oil stocks already, you may want to protect your downside.

Nevertheless, the ProShares Ultrashort Bloomberg Natural Gas ETF (NYSE: KOLD) is a way to earn (-2X) the daily performance of a natural gas index.

In comparison, the KOLD ETF is down 90% YTD while natural gas prices soar. So, it gives you an idea of how quickly earnings can dry up in these types of investments.

What Gas ETFs to Buy for Passive Investors

The funds listed above are the best gas ETFs to buy for capturing the explosive rise in gas prices. But, for passive investors, these may not be the best option. For one thing, the gas and oil market can change rapidly.

During the pandemic, oil prices plunged below $0 for the first time. Then, two years later, we are looking at record high prices of over $130. As a result, oil and gas ETFs are having wild swings.

Nonetheless, research from J.P. Morgan shows the cost burden of higher gas prices is around $7 billion per month. As a result, consumers have less to spend in other areas of the economy. We already see the evidence with companies like Walmart (NYSE: WMT) and Target (NYSE: TGT) missing earnings estimates while blaming transportation costs.

In short, profits are being pulled from other parts of the economy to compensate for the lack of supply and rising demand. With this in mind, the energy sector looks ready to continue its run.

The Energy Select Sector SPDR Fund (NYSE: XLE) is an excellent option for passive investors looking to gain exposure with less risk. The XLE ETF is up 48% YTD while investing in top gas and oil companies like Exxon Mobile (NYSE: XOM). No matter your investing style, with the price at the pump holding steady, these are the top gas ETFs to buy this year to get your share.

The post Top Gas ETFs to Buy in 2022 with Soaring Gas Prices appeared first on Investment U.

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