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$NDX $QQQ - Update.. Turned after nearing my 4th Target from the Primary Bear 'Wedge' I had warned of
By: Sahara | January 4, 2024
• $NDX $QQQ - Update..
Turned after nearing my 4th Target from the Primary Bear 'Wedge' I had warned of.
I also showed a 'Broadening' Plot (Black) where we have tapped both Measured Move targets.
Now a Bear 'Wedge'. Which may be in-play to the Red Arrowed Targets if correct...
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$Oil $WTIC #Energy - Update...
By: Sahara | January 4, 2024
• $Oil $WTIC #Energy - Update...
Price followed my Alt Pattern (Bear 'Wedge') prior, tapped the Target I had & exceeded it.
Therefore I have had to adjust the 'Bowl' with a new pot'l pathway. See if it can hold, as any drop from the Pattern other than a brief one will negate it..
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SPY $3.5M Unusual OTM Call Print *Above the Ask*
By: Cheddar Flow | January 4, 2024
• $SPY $3.5M Unusual OTM Call Print
*Above the Ask*
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Bear Of The Day: Elbit Systems (ESLT)
By: Hedge | January 4, 2024
Elbit Systems (ESLT) is a Zacks Rank #5 (Strong Sell) and has seen earnings estimates slide lower recently following a rough year with 4 misses of the Zacks Consensus Estimate. This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.
Description
Elbit Systems Ltd. engages in the defense and homeland security sector. It develops and supplies airborne, land and naval systems and products for defense, homeland security, and commercial applications. The firm also provides training and support services. The company was founded in 1996 and is headquartered in Haifa, Israel.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of ESLT, I see four misses of the Zacks Consensus Estimate. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.
The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.
Earnings Estimates
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For ESLT I see annual estimates moving lower of late.
The current fiscal year (2023) consensus number moved lower from $6.90 to $6.30 over the last 60 days.
The next year moved from a gain of $7.75 to $6.60 over the last 60 days.
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
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Bull Of The Day: Stronghold Digital Mining (SDIG)
By: Hedge | January 4, 2024
Stronghold Digital Mining (SDIG) is a Zacks Rank #3 (Hold) that has a D for Value and an A for Growth. Stronghold Digital is in the business of mining bitcoin and selling it to fund operations. The price of SDIG stock surges in December as investors piled into Bitcoin related names in anticipation of SEC approval of Bitcoin ETFs. On top of the ETF, there is a “halving” of Bitcoin coming in April of this year and that will be another strong catalyst for Bitcoin miners like Stronghold Digital. Let’s explore more about this company in this Bull of The Day article.
Description
Stronghold Digital Mining, Inc. is a vertically integrated crypto asset mining company, which engages in mining Bitcoin. It operates the Energy Operations and Cryptocurrency Operations segments. The company was founded by Gregory Allan Beard and William B. Spence on March 19, 2021 and is headquartered in New York, NY.
December Surge And Short Interest
When the Federal Reserve declined to increase interest rates in December they also released a dot plot that indicated that rates were likely to come down in 2024. The long awaited pivot will likely force cash from money market accounts and back into the market. Many investors rushed to buy some of the higher beta / beaten down small cap stocks like Stronghold Digital (SDIG)
Stronghold Digital (SDIG) saw its stock price more than double in the month leaving investors waiting for a dip in price in order to build a position in the name. That has come over the last few days as the stock has slipped from more than $11 back down to $6.
Those who have waited for pull back now have a great chance to see their investment prosper. On the flip side, the short sellers have not built a very large position in the stock with only 7.8% of the float sold short. There is a lag in reporting short interest data so we are working with data that was published on December 27 but was accurate as of December 15. The next publication date will be January 10, but again, the lag puts the date of accuracy closer to December 29 when the stock was peaking.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
For Stronghold Digital, I see three beats of the Zacks Consensus Estimate and one miss over the last year. The average positive earnings surprise over the last year works out to be 34%.
Earnings Estimates Revisions
Earnings estimates revisions is what the Zacks Rank is all about.
For SDIG estimates are holding still.
The Zacks Rank tells us which stocks are seeing positive earnings estimate revisions so it makes sense that this stock has no positive or negative revisions over the last 60 days when it is a Zacks Rank #3 (Hold).
A key idea in the estimates for SDIG should be noted here. The company is slated to lose $1.56 for the full year 2023 but estimates are calling for the company to be profitable in 2024 by earning $0.08.
Accelerating Growth
This year the company is looking for 21% topline contraction in 2023, but the story changes in 2024. The consensus estimate for revenue is calling for 47% year over year growth in 2024. Accelerating growth on top is a great signal.
Valuation
The forward PE works out to be 82.5x, which might scare some investors off, but the probability of estimates increasing down the road will probably serve to help lower the forward PE. The price to book of 0.76x means that at current prices, investors are buying the stock for less than the assets on the books. Value investors love to see a low price to book multiple. Price to sales of 0.9x suggests that the market doesn’t fully value the sales of the company, but with Bitcoin set to surge thanks to the probable approval of ETFs and the halving, that should change dramatically.
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The S&P 500 Reached 4800. Multi-year Top?
By: Dr. Arnout Ter Schure | January 3, 2024
• Last week, the SPX reached $4793, close to our ideal $4800 target anticipated in October. Now, the index may have put in a multi-year top.
First, we wish all our readers, old and new, a Happy New Year. Second, to those new to our work, we reviewed our forecasts since August in our last update of 2023, showing we anticipated most market moves correctly, albeit sometimes inevitably missing the finer nuance.
In that update, we noted that since the October 27 low at $4103, “no pullback exceeded -1.2%. …Hence, the current rally is a significant outlier that is unforeseeable when it starts. However, and therefore, it smells of a 5th wave. Thus, our primary expectation is for the index to top out, as we forecasted it could almost two months ago, at $4750-4795.”
However, the decline from the December 28, 2023, $4793 high is now the deepest and longest since that October low, strongly suggesting the rally has ended. Allow us to explain with Figure 1.
Figure 1. Daily SPX chart with detailed EWP count and technical indicators
Five Waves Up May Have Been Completed
In an Elliott Wave impulse pattern, we expect a correction to the downside to unfold after five completed waves. Five green waves completed at the December 2023 high in this case. The first warning level for the Bulls to confirm this thesis is below the blue dotted line at last Wednesday’s low: 4695. The 2nd warning is the grey level at $4610. At this stage, the Bears haven’t even broken price below the blue level yet but have broken below the equivalent level on the NAS, NDX, and SOX, telling us these indexes are already further along with confirming their “the top is in.”
Now the question is: what kind of top? We already discussed this in our December update, but let’s recap. Figure 1 shows the blue Wave-B (W-B) and black W-3 labels. The former suggests the index has completed its counter-trend rally from the October 2022 low as a regular B-wave and is now ready to embark on a devasting C-wave to $2700-3500. However, it will ultimately require a break below the red warning level, October 2023 low at $4103, with a severe warning below the orange 3rd warning level at $4535, to tell us this potential is the case.
The latter suggests the index has “only” completed the black (major) W-3, is now in black W-4 back down to ideally $4417+/-144 before the black W-5 to ideally $4883-5026 kicks in. From there, we can then anticipate the aforementioned more significant decline. It requires a break below $4535 while staying above $4103 to allow this potential.
Our alternative scenario is in Figure 2 below.
Figure 2. Daily SPX chart with detailed EWP count and technical indicators
Namely, as stated in our last update, “Since the October 27, 2023, low, the price pattern … is truly out of the ordinary for stock markets, which renders the smaller wave structures less clear.” We can, therefore, interpret the current decline as a potential green W-4 to ideally $4650+/-20, followed by another green W-5 to ideally $4483+/-20. This option will be invalidated below $4560 as the decline will then be too large to reliably assess it as a smaller degree (minor) 4th wave.
Thus, our primary expectation “for the index to top out, as we forecasted it could almost two months ago, at $4750-4795” was correct. As such, and as stated in December, our primary expectations remain
1. either a long-term top (blue W-B) and set course for $2700-3500 or
2. a drop to ideally around $4417+/-144 for the black W-4?, before a final rally to as high as $4983-5026 for the black W-5?. Our alternative is
3. for a mild correction to around $4560+/-20, from where a rally to $4883-5026 can materialize.
Unfortunately, at this stage, we can’t discern between A), B), or C). We always wish things to be more transparent, but we are not dealing with a linear environment. We are not prophets. Nobody is; we can never be certain and cannot tell you which way the market will go every day. Still, we certainly can provide the most likely scenarios and the parameters, i.e., price levels to look for, so you will know what to expect.
Thus, the final statement in our last update, when the index was trading 30p higher than now, remains relevant, “Hence, at this point, it would be appropriate to assess the short- to long-term risk/reward at current price levels, and the warning levels above can be used as one’s insurance policy to prevent havoc on one’s portfolio.”
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Gold’s Retreat: Assessing Support Levels Amidst Ongoing Price Symmetry
By: Bruce Powers | January 3, 2024
• Gold retraces, testing support at 20-Day MA and raising questions about the depth of the near-term retracement. Key levels and rising trend dynamics are under scrutiny.
Gold retraces 50% of the prior advance and finds support for the day at 2,031. A successful test of support at the 20-Day MA also completed today at 2,034. Today is the second test of support at the 20-Day line, while the first was on December 15 (C). It remains to be seen whether support will hold and turn prices higher. There are no signs of that yet. Therefore, the expectation in the near-term is for a deeper retracement, but maybe not by much.
If Gold Keeps Falling It Targets 61.8
There is likely support around the lower uptrend line, whose price will vary depending on when is reached, and the 61.8% Fibonacci retracement at 2,017. A little lower is the 50-Day MA at 2,008. Either of these levels may see demand increase. It seems like if gold is going to make a run for new highs in the foreseeable future, ideally, we would want to see the price structure of higher swing highs and lows retained in the rising trend channel.
Symmetry Between Swings
Gold is currently within the third leg up in a rising trend begun from the early-October swing low of 1,810. There is both time and price symmetry between the first two moves, which may provide clues to the upside target for the third move. The first advance from the October low saw the price of gold rise by 199 points or 11% in 15 days, while the second upswing was 203 or 10.5% in 15 days. This doesn’t mean that the third leg up in the trend will match the prior moves, but it could, or at least have some degree of mathematical relationship.
Price Symmetry Points to 2,176
The third advance, that started from the recent swing low of 1,973, successfully tested support at the 50-Day MA. Given that the current leg up is on its thirteenth day, a match in time looks unlikely. However, a similar move in price can be represented by the rising ABCD pattern where the CD leg equals the AB leg. That pattern completes at a target of 2,176. If reached, it will show a mathematical relationship between all three recent advances.
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AI-generated Buy and Sell signals
By: Hedgeye | January 4, 2024
• This is free access to our brand-new AI-generated buy and sell signals.
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