PayPal versus Visa

September 21, 2022 by

I am a subscriber to Seeking Alpha which during the day updates its readers with many blurbs about what the Wall Street research is telling their readers.

This morning, September 21, 2022, I received the following:

  • Bank of America has added PayPal Holdings (NASDAQ:PYPL) and removed Visa (NYSE:V) to its US 1 list, which represents the firms best investment ideas from its Buy-rated, U.S.-listed stocks. BofA keeps its buy rating on Visa.

  • In Wednesday premarket trading, PayPal (PYPL) has gained 0.6%, and Visa (V) was up 0.2%.

  • By contrast, SA’s Quant system, which historically outperforms the market, has a Hold rating on PayPal (PYPL) as well as on Visa (V).

I have charted the relative performance of PYPL vs V over the last few monthe with the results below.

The swap between PYPL and V should have happened on July 22, 2022

 

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AbbVie Earnings coming next week.

April 23, 2022 by

“Wall Street expects a year-over-year increase in earnings on higher revenues when AbbVie (ABBV) reports results for the quarter ended March 2022. While this widely-known consensus outlook is important in gauging the company’s earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on April 29. On the other hand, if they miss, the stock may move lower.” Zacks Equity Research, April 22, 2022

The following pictures of ABBV Daily and Weekly show that some expect lower results than projected. Prices are as of the close of Friday, April 22, 2022.

The weekly chart is the dominant position.  The green line indicates BUY. The RED line indicates SELL, and the BLUE line indicates CLOSE position.

As in all past posts, When and only when the Weekly indicates BUY, then if the daily is also Green, the position should be long. The BLUE line indicates CLOSE position.

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PayPal

February 7, 2022 by

Paypal has been one of the more active stocks for the last few weeks.

Obviously, someone or a group of someone had a head start on the decline.

The following graph of the weekly activity should be helpful in coming to that conclusion.

In October of 2021, the decline began.

The daily chart should through further light.

As in all previous charts, the red line signifies SELL, the Green line, BUY, and the Blue line indicates close out the previous position

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Netflix Peloton

January 23, 2022 by

Recently, earnings and comments from Netflix and Peloton have resulted in severe losses for many investors.

Forwarned is forearmed.

Attached are recent graphs of both as of the close of Friday, January 21, 2022.

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Swing Trading

November 8, 2021 by

Selecting candidates for Swing Trading positions is difficult. I have found that finding moat-type businesses make the best initial candidates. Good financial underpinnings are essential. Joseph Belmonte of Buffett and Beyond has developed a screening tool based on Clean Surplus ROE(Return on Equity). His conclusion is that “portfolios made of stocks with high Clean Surplus ROE’s outperform all other portfolios”. An example is portrayed below. Salesforce (CRM) first qualified with a higher than average Clean Surplus ROE during 2016 when the shares were trading between $70 and $80.                                                                                                                                                                                                                                                                                                                                                                                                                                                         Closing prices are as of the close on Friday, November 5, 2021.                                                                                                                                                First, find the candidates and then use weekly technicals to find the overall trend.  Use the daily as a trend decision trigger. The weekly signaled a buy decision at the end of June 2021. That is, only trade LONG from that date. The daily concurred with a long position on October 13, 2021.

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Back to the Beginning

July 12, 2021 by

In 2010 when I started this post, I recommended that one of the better methods of selecting equities was to find those sectors that were showing high relative strength with positive momentum. Selecting the highest relative strength sector with positive momentum should outperform.

I chose four sectors as illustrations.

XLE: Energy (Green)

XLY: Consumer Discretionary (Red)

XLU: Utilities (Cyan)

XTN: Transportation (Yellow)

The following chart as of the close of Friday, July 9, 2021, shows the current relative strength of these four sectors.

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High Volatility versus Low Volatility

October 5, 2020 by

There is a fascinating article in today’s Wall Street Journal in its quarterly “Investing In Funds & ETFs on page R3.: The Time to High-Beta?

Once a Quarter.

The thesis is that new research conducted says that: “high -beta stocks tend to outperform in just one week per quarter. Only in that week, therefore, does it make sense that traders bet on high-beta stocks. That week occurs in the quarterly earnings season.

The article goes on to that to test the theory, one would invest, during the first week of earnings season in a high-beta stock ETF while shorting an equal dollar amount of a low ETF.

Their example in the article regarding a high-beta fund is the Invesco High Beta ETF. (SPHV) That ETF  contains the 100 highest beta stocks of the S&P 500 index. The 100 selected have the “highest sensitivity to market movements, or beta, over the past 12 months. The fund and the index are rebalanced and reconstituted quarterly in February, May, August, and November.”

The example of low beta is the Invesco S&P Low Volatility ETF(SPLV) which contains 100 S&P 500 stocks with the lowest realized volatility over the past 12 months. It then weighs each stock based on its volatility(well, lack thereof).

I assume it is rebalanced every month, but was unable to speak to anyone at Invesco to give me that information.

The article begs the question of whether a strategy of ALWAYS having a position in being long/short SPHV versus the reverse in SPLV would be successful?

The following illustration says YES!

The green vertical lines indicate long SPHB and short SPLV. The red vertical lines indicate long SPLV and short SPHB.

 

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Swingtrader Suite for Day Trading

June 7, 2020 by

Many times I have been asked if the PerfectStorm strategy that works so well for swing trading has any use for the thousands of traders who day trade. Perhaps the following illustrations will be helpful. All graphs are as of the close of business of Friday, June 5, 2020.

The above picture is the daily results of BA versus SPY.

The top is BA, and the next security is SPY. The next line represents the relative strength of BA versus SPY. When the line is going up and GREEN, BA is stronger than SPY. When the line is going down and RED, SPY is stronger than BA.

The Vertical lines represent, when GREEN, that BA should be bought. When the vertical line is BLUE, the trade should be closed. When the vertical line is RED, BA should be short. Many hedge funds, when the trade indicates, will be short the opposite security, that is, when indicated long BA, they will be short SPY and vice versa.

 

The next picture is of BA versus SPY on a twenty-minute basis. I have left off the vertical signal lines, but a careful analysis will dictate the long/short position.

The next picture is of BA versus SPY on a two-minute chart.

There are thousands of “pairs” that can be traded in the same manner. Just ask Medallion Fund, or Citadel, or World Quant or the many other Quant funds.

I can be reached for further information at rfeit@msn.com or (516) 902-7402

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PerfectStorm Indicators

March 5, 2020 by

As mentioned in many of my posts, I have found a method of determining if an asset is rising in price, or falling in price.

The following pictures as of the close of March 4, 2020, should illustrate a partial solution.

It is of Exxon Mobile (XOM) a widely held multinational oil company that is part of the Dow Jones Industrial Average.

The Covid 19 virus has affected many parts of the economy. The price of crude oil has been reduced. As the world economy

has slowed, the demand for crude has also been reduced.

 

There are two pictures. One is of the daily price of XOM by itself. The other is of XOM as compared to the S&P 500 on a relative performance basis.

Versus the S&P 500

The red vertical lines represent a sell decision, a blue vertical line is a pause, a red vertical line is a purchase.

You will notice that since October of 2019, XOM has underperformed the S&P 500.

 

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