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Downside Risk in Discover Financial?Discover Financial Services has come under pressure since the summer, and traders may see risk of further downside. The first pattern on today’s chart is the pair of high-volume bearish gaps. The first occurred on July 20 after earnings missed estimates. The second occurred on August 15 after its CEO unexpectedly left the company. DFS failed to recoup either drop, which may reflect a lack of dip buyers. Second, the series of lower highs since mid-August could be interpreted as a descending triangle. Third, the stock has crept below its October 2022 low of $87.64. Remaining under that level could potentially result in more selling. Finally, the macro environment may be difficult with credit-card losses increasing as the Federal Reserve gets more hawkish. That could be especially important with earnings due in about a month. TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
NYSE:DFS
by TradeStation
Searching The Ocean Floor For Beaten Down StocksInvesting in beaten-down stocks can be a tempting prospect, as these stocks often come with the allure of potentially high returns at a discounted price. However, it's essential to be aware of the risks associated with such investments. Beaten-down stocks typically belong to companies facing significant challenges, whether it's poor financial performance, management issues, or adverse market conditions. With that being said, I don't ever think it's a good idea... Unless... You think you've found something that the market has totally miscalculated in its valuation. I am not a believer in efficient markets, and thus, I must occasionally believe that bargains are possible. The companies on this chart are all beaten down stocks. I'm not saying that they are buys or sells. Just that they are on my watchlist. It seems that one or two of these may be totally misvalued. I need to do some research. I don't know enough about these companies, but they are now on my watchlist. Here's a brief overview of the symbols listed: Desktop Metal NYSE:DM - This 3D printing company experienced a rollercoaster ride in its stock price due to the volatility of the tech sector. While the potential for revolutionary technology is there, investing in a beaten-down stock like Desktop Metal carries the risk of prolonged losses if the company's products fail to gain widespread adoption or if competition intensifies. Expensify NASDAQ:EXFY - Expensify is in the business of expense management software, a niche that is subject to market fluctuations and competition from larger players. Buying beaten-down Expensify stock may lead to losses if the company struggles to differentiate itself or if its customer base doesn't expand as expected. Canopy Growth NASDAQ:CGC - As a prominent player in the cannabis industry, Canopy Growth faced regulatory challenges and market volatility. Investing in this beaten-down stock entails the risk of ongoing legal and regulatory hurdles, which can significantly affect the company's performance. The cannabis industry also faces competition and supply chain issues that could impact profitability. Vimeo NASDAQ:VMEO - Vimeo, a video-sharing platform, competes in a crowded market alongside giants like YouTube. Buying beaten-down Vimeo stock carries the risk of underperformance if it fails to capture a significant share of the market or if user engagement doesn't meet expectations. Allbirds NASDAQ:BIRD - They make shoes... they had a euphoric moment, but it's been nothing but down ever since. Closed stores and more. I still see people wearing them and their material is unique. I don't own a pair, but I need to check the shoes out a little more. That's all. Update coming in a few months.
NYSE:DM
by scheplick
6
$SMTC - Short Catalyst 09/13There is a curious situation brewing in a small-cap supplier of semiconductors. I say “small cap” because this once mighty mid-cap company has been torched down to a market capitalization of just $1.5 billion. It began last year at $89 per share, and currently sits at $24. Compared to the broader semiconductor space, Semtec ( NASDAQ:SMTC ) has grossly underperformed. And now their earnings is scheduled for Sept. 13, presenting a catalyst opportunity. Surely this means I’m bullish on a potential regression to the mean? Actually, no. Last Thursday, Sept. 7th, I purchased 100 puts for October 20th at the $20 strike. Why? 1. Delayed Earnings Originally scheduled for 09/07, SMTC announced on 09/06 that their earnings would be delayed. Companies that postpone a previously announced earnings release date underperform the broad market by 2.44% in the 3 days surrounding the announcement. These companies are also likely to report deteriorating fundamentals, with earnings per share down by about 16% compared to the same period a year ago. 2. Reason for Earnings Delay Not all earnings delays are created equal. For instance, an act of god, such as weather, or a pandemic, such as Covid, can result in generally muted impacts to the stock. The problem is that SMTC delayed earnings because “…the Company is working diligently to complete certain procedures to conclude whether a valuation allowance is to be recorded against certain deferred tax assets” - from SMTC investors page. Given SMTC’s recent acquisition, this calls into question their ability to generate sufficient future taxable income, which is bizarre and a red flag. 3. Sudden Change Notice of CFO On Sept. 08, it crossed the wire that current CFO Emeka Chukwu would be succeeded by Mark Lin no later than Oct. 4th. Combined with the reasons for the earnings delay, this reeks of potential financial mismanagement, liability concerns, and damage control. Position: I purchased 100 Oct. 20 $20 puts.
NASDAQ:SMTCShort
by Extractio
3
NVDA has topped. Sell it now.2023 has been an incredibly strong year for stocks. The Nasdaq rallied 38% in the first six months for one of the best starts to a year in history. This rally has been primarily led by an AI/tech theme that has been responsible for the bulk of these gains. That part of the rally is likely over, however… at least for now. Every bull market has a “theme” with leading stocks that set the pace. In the late 90s that was the dot-com bubble. In the 2009-2020 bull market that was big tech like Facebook, Amazon, Netflix, Apple and Google (hence the FAANG stocks moniker). The 2020-2021 bull market was led by “work-from-home” stocks like Zoom, Teladoc and Peloton. The 2023 bull market has been led by artificial intelligece. The leading stocks have been Meta, Microsoft, Dynatrace, MongoDB, Palantir, AMD, and the biggest leader of them all, Nvidia. Over the last 4-6 weeks we have witnessed many of these leading names roll over and retrace beneath their 50-day moving average – a key level that generally supports top stocks through the move higher. Despite the recent pullback in the market, Nvidia has held at its highs. Wednesday after the close, Nvidia reported earnings. And the results were better than anyone could have expected. Earnings $2.70 per share versus estimates of $2.08. Sales were $13.5 billion – 20% above expectations. And the company raised forward guidance (how much they expect to bring in next quarter) from $12 billion to $16 billion. They also announced a $25 billion share buyback which should act to propel the stock price even further. Investors got everything they wanted and then some. NVDA stock shot up 10% after hours. The news was so good, the entire Nasdaq index shot up 1% on the news. But Thursday, in the first few hours of trading, all of those gains were gone. The Nasdaq opened higher, and immediately began selling off. It fell 3% during the session. And NVDA was back where it closed the day before. This, to me, is a clear signal that the 2023 rally in tech stocks is over. The high was likely made on July 19th, and I doubt we see that level again this year. In a bear market, like we had in 2022, what you want to see is the market going UP on BAD news. This is the sign that the low is in, and buyers are coming back in. We saw this on October 13, 2022. After a government inflation report revealed the worst numbers yet – far worse than expectations – the market gapped down and opened a full 3% lower than it was the day before. However, stocks immediately began to rally, and the index surged 5% that day. This was the signal that the low was in. On the other hand, in a bull market, we want to watch for times when the market goes DOWN on GOOD news. This often signals a top. And I believe we saw that on Thursday. Nvidia was the only stock that could have reversed this pullback. The earnings report was better than even the most optimistic investor had hoped. This should have absolutely put an end to the pullback and caused the market to rally higher. Instead, we saw the opposite. So, what does this mean? First of all, and let me be clear on this, I am NOT saying the market is about to crash. I simply believe the “easy money” stage is over. I expect to see fairly choppy conditions for the next few weeks or months, and investors can no longer rely on the bull market to push everything higher. I believe tech stocks have seen their highs for 2023. Those with large open gains in stocks like Meta, Amazon, Apple, Google, Nvidia and the like may consider selling to lock in those gains here. There will still be stocks that go up, some of them by substantial amounts. But I believe this is now a more selective stock picker’s market. Personally, I sold the index funds in my long-term account and moved to cash ( I also went short the Nasdaq via QID). As of yesterday, those index funds funds were up 37% year-to-date. That is a phenomenal year, and I do not want to risk giving those gains back. To me, this is a low-risk decision. The worst-case scenario is that I am wrong or something material changes that propels stocks higher. If this happens, and the Nasdaq makes new highs this year, I will simply buy those funds back. All I will have missed is a 6% move.
NASDAQ:NVDAShort
by rossgivens
79
GFSC, towards ATH, undervaluedStock has announced 10 rs dividend, Gujarat based PSU stock, stock has book value of rs 300+. it is a highly undervalued stock, PE is half of industry PE. Given best results this year. Chemical sector has bottomed out and this is going to be strong candidate for value unlocking. Stock can be chasing its Book value and trade close to 300 in 6-12 months. It is giving highest ever dividend of rs 10, its last year dividend was 2rs. In charts also stock is trading in ath territory.
NSE:GSFCLong
by manideepcs024
As we approach new highs, what's the bear case?Historically, a rebound of this magnitude has almost always indicated that the bear market is over and that we've entered a new bull market. And there's plenty of reason to be optimistic right now. With the US dollar down, US manufacturing numbers have been coming in above expectations (PMI of 49 in July, vs. 46.7 estimate). Consumer confidence and home prices were also stronger than expected this week. The liquidity crisis for regional banks seems to have resolved itself, and the uptick in continuing jobless claims (USCJC) seems to have stabilized, at least for now. The ECRI weekly leading index is forecasting positive US growth. Yesterday, the Fed said it's no longer forecasting a recession. Preliminarily, it kinda seems like the magnitude of stimulus and interest rate hikes were in the right ballpark to actually stick a soft landing this cycle (with a big assist from the AI productivity boom). But as the market pushes toward new highs, let's consider what might be the bear case. Because markets love to surprise, and I do think there are some worrying signs. 1. Inflation could come roaring back, forcing the Fed to keep interest rates high. A few weeks ago, interest rate futures were forecasting a 99% probability that rates would be lower by this time next year. But now it's only 87%, with a 2% chance that rates will actually be higher next July. Why are rate futures getting more hawkish? Basically because housing costs have been slow to correct and commodities prices have been climbing since May, which points to the possibility that inflation may continue to run hot. Why might housing prices and commodities stay hot? Well, for housing, it's basically because there's a shortage . We've got more real estate agents than houses for sale, by a wide margin. I do think housing prices will gradually come down, but it may take quite a while to normalize without a supply-side fix. And for commodities? Well, there are basically two problems. First, geopolitics are extremely ugly right now. You've got active insurgencies in huge swaths of Africa and the Middle East, and you've got Russia threatening to blockade food shipments on the Black Sea. That all drives commodity prices up. And second, you've got a six-sigma temperature anomaly that's destroying crops. Global warming seems to be running ahead of forecasts, which raises the worrying possibility that we've hit some kind of climate change tipping point and the North Atlantic Current might collapse sooner rather than later. That would be not only very inflationary for food prices, but also very bearish for equities in Europe and the US. Something to keep an eye on, for sure. 2. Expectations may be too high, especially for tech. Investors have been throwing money at tech companies because of the AI boom, on the assumption that these companies will be the main beneficiaries of it. But the reality, in my opinion, is that AI greatly erodes the value of their intellectual properties. For instance, ChatGPT has dramatically reduced the cost for me spin up a competitor product or even an open-source version of any major enterprise SaaS. The big software firms are going to have to throw a lot of money and people at AI in order to keep their edge. So far, only Microsoft is doing a really good job. And what about semiconductors? The AI boom is good for semis, because all that AI requires a lot of GPUs. But you know what? With rapid advances in the field, the compute demands have come down a lot . I can train a LLaMa model on a Colab notebook now, which is insane. Meanwhile, there's a semiconductor inventory glut on a scale not seen since 2001. Chips have been an extremely good bet for decades, and investors have rightly thrown a lot of money at them. But it's possible that we may now be late-cycle for the industry. Overall, I think the expectations for the S&P 500, and especially for Big Tech, may just be too high. We've got P/E above 26 at a time when profit margins are in a slide. My models point to a P/E in the 21–23 range as more appropriate for the current rates of interest and inflation. So it may be that there's not much room left for multiple expansion to lift the market higher here, so productivity gains will have to do a lot of work. 3. Liquidity remains a concern. In addition to raising interest rates, the Fed is continuing to shrink its balance sheet. Liquidity from the Fed has driven a lot of the market gains over the last decade, so a shrinking balance sheet is a headwind for stocks. There's also some reason to think consumers and small businesses have some cash flow issues right now. Last month, the Fed published a report showing an unusually high level of commercial financial distress. Auto loan delinquencies also hit a high last month. As long as money and jobs don't get any tighter than they already are, we probably won't see anything break. But if inflation rises again and we see more interest rate hikes, then there may still be some systemic risk. Conclusion I'm definitely not betting on a major bear market here. But this close to a major resistance level, it's worth looking parking some money in cash or bonds or putting on a hedge. S&P 500 puts are somewhat cheap right now, so it's not a terrible time to buy protection. And long-term bonds are on the cheap end of the range they've been trading in since last November, so it's also not a terrible time to put on bonds. I'm basically just thinking in terms of modest rotation and rebalancing here.
SP:SPX
by ChristopherCarrollSmith
70