In my weekly segment where I take a look at recent trade ideas from across the web and give some of my own picks, I’m lining up a mix of cryptocurrencies and stocks…
1. Watch out for the Winklevoss’ bitcoin ETF
Bitcoin is shooting higher again this morning and looks well poised to surpass it’s highs as traders begin to focus on the upcoming final decision on the Winklevoss Bitcoin ETF. Due on the 11th of March, this decision could see big moves for both the fund and the digital currency itself.
Approval has been given a low probability by several investment and research firms, but there’s a still an attractive risk-reward which is why some traders are positioning themselves into the currency now.
Bitcoin continues to make its way into the mainstream slowly but surely, as several top financial institutions themselves are tapping into the cryptocurrency’s blockchain for applications aside from payments. The Winklevoss brothers have taken several steps to ensure compliance so it might only be a matter of time before this gets the green light.
Note: Get $10 of free bitcoin with this link.
2. Market momentum will slow without share buybacks
Ever since the US economy started clawing its way out of the recession around 2009, share buybacks have been helping to push prices higher but this market behavior could fade soon.
According to analyst Eric Parnell, buybacks have created the illusion that the US market is doing much better than it actually is and stocks are becoming increasingly overvalued. Earnings are also looking worse on an inflation-adjusted basis yet premium valuations are spread all over the entire market. Parnell is just one of a number of analysts who have turned bearish on the market and it’s only a matter of time before we get a pullback.
3. DryShips secures another financing round (DRYS)
DryShips entered into another $200 million stock purchase agreement with Kalani Investments and based on the earlier offering, this could lead to a 90% tumble in share prices on dilution according to analyst Henrik Alex. In the previous arrangement, the company took nearly a month to raise $200 million from Kalani and the terms of the new agreement mirror the very same one.
DRYS has gained a reputation among the small cap community as a pump and dump type stock. It is despised by many and should be avoided on the long side.
4. Looking at Pandora’s post-earnings action
Pandora reported another disappointing quarter, as the company is finding it more difficult to compete with the likes of Spotify and Apple Music. It’s worth noting that the company shifted from reporting revenue per subscriber to revenue per 1000 listening hours, indicating that management may be simply trying to dress up their figures to prevent showing a completely downbeat story. On a somewhat upbeat note, Pandora shares have drawn some support from rumors of a buyout but this has yet to materialize and further details have yet to be disclosed.
After reading an excellent write up from Ioannis Tsoutsias, short Pandora is my favorite pick this week, although the expected price declines could take a while to play out.
Thank You For Reading
Please make sure you are aware of the potential high risks involved in financial trading, especially when shorting stocks on margin and trading with leverage.