Salem Podcast Network Announces Partnership with The Todd Starnes Podcast Salem Media Group announced that the Todd Starnes Podcast has been added to the Salem Podcast Network Research, News & Market Data on Salem Media Group Watch recent presentation from NobleCon17

Entravision Launches Fuego Radio Format in the Las Vegas and Palm Springs Markets Entravision Communications announced that its Fuego Radio format is expanding into two new owned and operated stations in the Las Vegas and Palm Springs markets Research, News & Market Data on Entravision Communications Watch recent presentation from NobleCon17

Great Bear Doubles Vertical Extent of LP Fault, Intersects High-Grade Gold Great Bear Resources announced results from its ongoing fully funded $45 million 2021 exploration program at its 100% owned flagship Dixie Project in the Red Lake district of Ontario. News & Market Data on Great Bear Resources Watch recent presentation from NobleCon17

Bunker Hill Mining Reports Multiple High-Grade Silver Mineralization Results Bunker Hill Mining announced multiple high-grade silver mineralization results as part of its ongoing silver-focused drilling program News & Market Data on Bunker Hill Mining

Is There Opportunity in the Suez Predicament? Shipping is considered one of the important post-pandemic recovery sectors as global commerce builds to a more normal pace Read More

Kratos’ Autonomous Truck-Mounted Attenuator Named Infrastructure Game Changer by American Society of Civil Engineers Kratos Defense & Security Solutions announced that its Autonomous Truck-Mounted Attenuator has been recognized by the American Society of Civil Engineers as an “Infrastructure Gamechanger” in the organization’s 2021 Report Card for American Infrastructure Research, News & Market Data on Kratos Defense & Security Solutions Watch interview with Kratos President and CEO Eric DeMarco

FDA Authorizes Marketing for Helius’ PoNS Device for Multiple Sclerosis Patients Noble Capital Markets Senior Research Analyst Joe Gomes’ report U.S. Food and Drug Administration’s press release Research, News & Market Data on Helius Medical Technologies Watch recent presentation from NobleCon17

Lineage Cell Therapeutics Announces Vitelliform Maculopathy Patient Treated With OpRegen Lineage Cell Therapeutics announced that a patient suffering from adult-onset vitelliform macular dystrophy (AVMD) had recently been treated with its lead product candidate, OpRegen Research, News & Market Data on Lineage Cell Therapeutics Watch recent presentation from NobleCon17

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Reddit, Robinhood, and Rocketships

 

Playgrounds aren’t only for the young. They’re also used by older adults to sit, watch and remember when they were at an age when they barely concerned themselves with bumps, cuts, and bruises that are part of a good day of play. Last year and continuing into 2021, the U.S. stock market has become a playground of sorts to many younger investors. While much has been written that scoffs at the carefree attitude of the subreddit WallStreetBets, Robinhood, and rocket emoji users, perhaps those sneering overlook the benefits the trading app investor is getting from their interaction with the markets and each other. The newest investor class is gaining respect, recognition, and legitimacy among traders and investors of more traditional styles.

Winning
Percentage

Staying with the playground theme; imagine it’s Sunday morning, you’ve finished going through overnight emails, just read today’s Channelchek article, and now decide to walk over to the park. You check your favorite weather app, and it reads there is a 5% chance of rain. Do you dare go out? Is it smarter to skip the potential reward of activities in the park that have been given a 5% chance of being ruined and instead stay inside so you don’t run the risk of being rained on? After all, on days like this, there is only a 95% chance that it will turn out well.

Please excuse my sarcasm, but over the past 12 months, 5% is the statistic of companies that are part of the broad Wilshire 5000 that finished 12 months ending March 23, in the red. Looking back, that was the chance of having picked a bad U.S. headquartered company stock, 5% or one in twenty.  In fact, I understated the percentage, actually, 95.9% of the 3000+ stocks in the Wilshire 5000 index had a positive return from a year ago (4.1% were not positive). The only other 12- month period that comes close was in 2004 when 93% had a positive return.  I used the Wilshire 5000 because it’s a much more inclusive, broader measure than other more reported on indexes. This makes it better for gauging the price performance of American publicly traded U.S. companies.

Chicken
Little (The Sky is Falling)

Is anyone served if someone is at the park and warning those happily playing that there’s a 5% chance of rain? Or should those benefitting from the still positive environment be left to play until the odds noticeably change? They may have forgotten that it sometimes rains? A better approach is, if there’s a long streak of fair weather, capitalize on it until there’s a change in the air. Perfect performance doesn’t exist, but we’re in a period that is experiencing as close to it as we’ve ever seen. Whatever the reason, it doesn’t much matter, even Jesse Livermore,  who is considered the greatest trader that ever lived said, “The market is always right.” 

One derisive comment often heard in market reports or posted online is that  “…Robinhood traders are a bunch of kids living with their parents wasting their stimulus checks in the market like it’s a game.” The CARES Act was signed into law one year ago on March 27th. By mid-April, a large percentage of the first $1,200 paid would have been in the accounts of individuals. If this is part of what helped fund or add fuel to this group’s transactions, the timing was fantastic. Luck, skill, or serendipity, doesn’t matter, a large portion of the population that may never have considered any kind of investing, are now active and learning more than they otherwise would have. Certainly, market conditions will one day be negative, and most periods will be weaker than they have been, but those bumps and bruises will be the price of education, social interaction, taking chances, and even play.  

Robinhood
(High App-titude Traders)

I use the term Robinhood investors to include all trading app and online platform users that have only become active during the past five or six years amidst a period of above-average market return  – all relatively newcomers to stock buying/selling that by conventional judgment (and often their own open assessment) are doing everything wrong, yet doing pretty good. The investors/traders that post that they have no idea what they’re doing or ask the most basic questions in public forums often have remarkably good performance. The ranks of this investor class have grown substantially. There is no formal name for this group, so Robinhood is the generic moniker often used. I like to refer to them as high app-titude traders (HATs).  

The growth of this group since the advent of commission-free trades has been phenomenal. Using account growth from broker Robinhood alone, there have been years where the size has doubled and tripled.

 

 

Below we see the average dollar size of the accounts are small, so in reality, high-levels of concern for their “gambling” may be misplaced. The amount they can lose (w/o margin) is not reckless. As a group, they may not know much about stocks but they are savvy and learning.

 

 

The average Robinhood user age is 31 years old, which means most began school after the internet became widely used in homes. Many are adept at online games played on their smartphone or desktop. This may even give them an advantage not appreciated by those who learned while having to dial their broker from a landline.

 

 

Take-Away

Playground visitors practice and hone important skills. If the Robinhood style investors are treating the market like a playground, they are likely learning through their own play. This by far is more mass investment education being obtained than by any group of young adults that came before them. At a time when everyone is living longer, and many of those now approaching retirement are financially unprepared, education (even through play), with smaller sums of money, may become extremely positive for the future.

Any visit to the more popular subreddits, Facebook discussion groups, and even Stocktwits will reveal posts by people investing that openly declare they don’t know what they’re doing. There are throngs of account owners with their finger on the buy or sell button that solicit advice from others that they know could be even less informed. Yet many of the same inexperienced market participants or HATs declare almost daily they just made another $300 or more. The upward trending broad market has allowed them to not only stay alive but for many, actually thrive.

Why suggest newcomers stay away from the markets when the win percentage remains so high? There has never been anywhere near as positive of a win percentage at other “playgrounds” like a casino. Even most lotteries only return 65% to very few players. Both of these activities are accepted because we know play is its own reward. Stock trading is just as legitimate with limits.

In the case of today’s newest market participants, huge by comparison to those in their age group at any time in the past, they are becoming accustomed to being active in the stock market. This could help them.  For many, the most valuable lessons will come when the market is no longer repaying on such a high percentage of positions. When that occurs, we’ll have over 13 million, who on average have invested the same amount as they’d have invested on a couple of three-credit classes at a U.S. University. That’s very cheap for a hands-on real-world financial market education.

 Paul Hoffman

Managing Editor, Channelchek

Suggested Reading:

Stimulus Checks, Taxes, and Investments	Understanding the Robinhood Class Action Lawsuit

Will Robinhood be Sued for Gamification?	What is an ESG Score?

 

Sources:

https://www.investopedia.com/articles/basics/09/compare-investing-gambling.asp

https://en.wikipedia.org/wiki/Jesse_Livermore

https://studentloanhero.com/featured/cost-per-credit-hour-study/

 

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OSS Reports Q4 2020 Revenue Noble Capital Markets Senior Research Analyst Joe Gomes’ report One Stop Systems’ full press release Research, News & Market Data on One Stop Systems Watch recent presentation from NobleCon17

Comstock Announces 2021 Annual Meeting of Shareholders and Record Date Comstock Mining announced that the 2021 Annual Meeting of Shareholders is scheduled for Thursday, June 3, 2021 Research, News & Market Data on Comstock Mining Watch recent presentation from Comstock Mining

QuoteMedia Announces 5% Revenue Growth for 2020 QuoteMedia announced financial results for the fiscal year ended December 31, 2020. Research, News & Market Data on QuoteMedia

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Esports Entertainment Group Signs Multi-Year Deal with Denver Broncos Esports Entertainment signed a multi-year partnership with the Denver Broncos to be the NFL franchise’s esports tournament provider Research, News & Market Data on Esports Entertainment Watch recent presentation from NobleCon17

Enochian BioSciences up in early trading on Case Report of Complete Remission of Recurrent Glioblastoma with Innovative Therapy Enochian BioSciences reported that a 36-year old patient with recurrent glioblastoma achieved complete remission for a period of 15 months. Research, News & Market Data on Enochian BioSciences

Ayala Pharmaceuticals Reports Full Year 2020 Financial Results and Provides Business Update Ayala Pharmaceuticals reported financial results for the full year ended December 31, 2020 and highlighted recent progress and upcoming milestones for its pipeline programs. Research, News & Market Data on Ayala Pharmaceuticals Watch recent presentation from NobleCon17

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Stimulus Checks, Taxes, and Investments

 

IRA tax season and the third round of stimulus checks are inspiring recipients to deploy their $1,400 stimulus to reduce their 2020 tax burden. A deposit in a qualified retirement account could minimize 2020 (or 2021) taxes and at the same time enhance retirement – or even help with home purchase options down the road. Getting the most benefit from investing these longer-term assets is dependent on many factors, including the individual’s time horizon. The following advice from a highly credentialled investment analyst may help inform investors’  allocation options.

Robert R. Johnson, Ph.D., CFA, CAIA, is a Professor of Finance at Heider College of Business, Creighton University. He is also a co-author of The Tools and Techniques Of Investment
Planning, Strategic Value Investing, and Investment Banking for Dummies, among others. As if these credentials aren’t enough, he is the former deputy CEO of the CFA Institute and headed the CFA Program, as well as having been the President of the American College of Financial Services. Dr. Johnson is one of the most credentialed individuals in the field of finance and investment, so I asked him a question important to those that use Channelchek for insight on small and microcap investments. The answer is worth knowing for anyone that is more investment than trading-oriented.

Channelchek (PH): “Dr. Johnson, if over a long enough timeline, small-cap indices outperform large-cap. Could it stand to reason that if you’re a young saver for retirement, holding stocks that have demonstrated a greater return over time should have an allocation? Also, could individual stocks be more suitable than an ETF in the small-cap sector? What stipulations would you have for an investor buying small or even microcap stocks in their IRA?

Dr. Robert R. Johnson: You are absolutely correct in that small-cap stocks are most suitable for investors with a long time horizon. According to data by Duff & Phelps [formerly Ibbotson Associates] from 1926 through 2019, an index of small-cap stocks returned 11.9% compounded annually, while large-cap stocks returned 10.2% compounded annually. While that may not sound like much of a difference, one dollar invested in a large-cap index would have grown to $9,243 at year-end 2019. That same dollar invested in a small-cap index would have grown to $39,381 at year-end 2019. Now, those higher long-term returns come at a cost of higher volatility. Over that same time period, the standard deviation of annual returns was 19.8% for the large-cap index and 31.5% for the small-cap index.

 

“…one dollar invested in a large-cap index would have grown to $9,243 at year-end 2019. That same dollar invested in a small-cap index would have grown to $39,381 at year-end 2019.” – Robert R. Johnson, PhD, CFA, CAIA

 

Individuals need to be taught to invest for retirement and not to save for retirement. The surest way to build true long-term wealth for retirement is to invest in the stock market. Starting early is the key to successfully building wealth because of the effect of compound interest. Albert Einstein said that “compound interest is the greatest mathematical discovery of all time.” Time is the greatest ally of the investor because of the “magic” of compound interest. An IRA is the perfect investment vehicle for an individual with a long time horizon. They can weather the increased volatility of the small-cap universe.

People in their 20s should begin investing in a low-fee, diversified small-cap equity index fund and continue to invest consistently whether the market is up, down, or sideways. Dollar-cost averaging into an index mutual fund or ETF is a terrific lifelong strategy. Dollar-cost averaging is a simple technique that entails investing a fixed amount of money in the same fund or stock at regular intervals over a long period of time.

Additionally, these investors should be 100% invested in stocks and have no bond exposure. Ironically, one of the biggest mistakes young investors make is taking too little risk, not too much risk.

 

“…often that is what happens to beginning investors who buy the stock of the company they work for or the stock of a product they like. When they experience failure, they withdraw from the equity markets. Investing in a broadly diversified basket of securities is a prudent strategy.” – Robert R. Johnson, PhD, CFA, CAIA

 

For the vast majority of investors, the KISS mantra — keep It simple, stupid — should guide their investment philosophy. The idea behind index investing is “if you can’t beat ‘em, join ‘em.” Investors simply can’t afford to make oversized bets on individual securities. And, often that is what happens to beginning investors who buy the stock of the company they work for or the stock of a product they like. When they experience failure, they withdraw from the equity markets. Investing in a broadly diversified basket of securities is a prudent strategy. An interesting study done by University of Arizona professor Hendrick Bessembinder shows that only four percent of common stocks have provided a higher return than Treasury bills. In other words, the returns on the market have been driven by a small percentage of big winners. Trying to pick winners, for most, is a loser’s game. The solution is to invest in diversified funds and you don’t need to pick those winners.”

Take-Away

There is debate whether today’s popular cap-weighted indices represent diversification relative to a well-selected, large diversified basket of a more even weighting. A previous Channechek article is provided below that discusses this concern; it was published before the 2020 explosion of tech stocks. Last year’s uneven growth reduced their diversification even more. Investors should evaluate if the current imbalance of individual index funds is now in fact making an oversized bet. 

Professor Robert R. Johnson, Ph.D., CFA, CAIA, certainly feels strongly that there is a difference between savings and investing. Bank accounts, CDs, bonds and notes are not the path for true long-term wealth. IRAs, 401ks and other funds earmarked for retirement should be in equities if you are not soon expected to live off those funds. For those that have a longer time horizon, accepting the higher volatility of small-cap stocks for the higher probable returns could be viewed as most prudent.

 

Paul Hoffman

Managing Editor, Channelchek

Suggested Reading:

Investment Barriers Once Seen Insurmountable are Falling

Taking Stock of Index Funds

Large-Cap and Small-Cap Return Probabilities

Company Sponsored Research/Small-Cap Stocks

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Top Ten Cryptocurrencies by Transactions

 

Bitcoin, Etherium, Dogecoin, we see these names daily. But, we may not have our bearings on the amount of exchange that occurs on each of the top ten cryptocurrencies. Liquidity is important in deciding whether you want to transact in any asset. Or, in this case, exchange with any asset. If there is not a buyer on the other side when you decide there is a better place for your wealth, then you can’t easily benefit from the value that you believe you hold.

We put together a table for your consumption of the top ten digital currencies by volume exchanged along with other useful data so you may compare, contrast, and develop a better grasp of the size of the market and the individual currencies activity.

 

Cryptocurrencies Ranked by Average 3-Month Volume

Symbol	Currency Name	Last Price	Volume	Avg Vol (3 month)	Circulation
USDT-USD	Tether	$ 1.001	95.73B	109.12B	39.71B
BTC-USD	Bitcoin	$ 55,386.970	62.14B	66.91B	1,033.63B
ETH-USD	Ethereum	$ 1,715.882	25.60B	31.86B	197.61B
LTC-USD	Litecoin	$ 187.713	3.17B	8.24B	12.52B
XRP-USD	XRP	$ 0.573	9.97B	7.83B	26.02B
BCH-USD	Bitcoin Cash	$ 526.676	3.13B	5.91B	9.84B
ADA-USD	Cardano	$ 1.161	5.21B	5.50B	37.10B
LINK-USD	Chainlink	$ 27.447	1.27B	4.58B	11.38B
EOS-USD	EOS	$ 4.158	2.29B	3.73B	3.96B
BNB-USD	BinanceCoin	$ 261.175	2.59B	2.58B	40.36B
DOGE-USD	Dogecoin	$ 0.055	1.27B	2.53B	7.14B

     *Prices as of March 23 @10:15 AM

 More info on cryptocurrency investing: 

Cryptocurrency Gaining Banks Acceptance

How Close is the U.S. to Having a Digital Currency?

Small-Cap Names in a Big Crypto Market

Backed by the Full Faith and Credit of Blockchain

Visit the Company data of Channelchek to review stocks on your watchlist in the blockchain category or any other that you have been following.

Top Ten Cryptocurrencies by Transactions

 

Bitcoin, Etherium, Dogecoin, we see these names daily. But, we may not have our bearings on the amount of exchange that occurs on each of the top ten cryptocurrencies. Liquidity is important in deciding whether you want to transact in any asset. Or, in this case, exchange with any asset. If there is not a buyer on the other side when you decide there is a better place for your wealth, then you can’t easily benefit from the value that you believe you hold.

We put together a table for your consumption of the top ten digital currencies by volume exchanged along with other useful data so you may compare, contrast, and develop a better grasp of the size of the market and the individual currencies activity.

 

Cryptocurrencies Ranked by Average 3-Month Volume

Symbol	Currency Name	Last Price	Volume	Avg Vol (3 month)	Circulation
USDT-USD	Tether	$ 1.001	95.73B	109.12B	39.71B
BTC-USD	Bitcoin	$ 55,386.970	62.14B	66.91B	1,033.63B
ETH-USD	Ethereum	$ 1,715.882	25.60B	31.86B	197.61B
LTC-USD	Litecoin	$ 187.713	3.17B	8.24B	12.52B
XRP-USD	XRP	$ 0.573	9.97B	7.83B	26.02B
BCH-USD	Bitcoin Cash	$ 526.676	3.13B	5.91B	9.84B
ADA-USD	Cardano	$ 1.161	5.21B	5.50B	37.10B
LINK-USD	Chainlink	$ 27.447	1.27B	4.58B	11.38B
EOS-USD	EOS	$ 4.158	2.29B	3.73B	3.96B
BNB-USD	BinanceCoin	$ 261.175	2.59B	2.58B	40.36B
DOGE-USD	Dogecoin	$ 0.055	1.27B	2.53B	7.14B

     *Prices as of March 23 @10:15 AM

 More info on cryptocurrency investing: 

Cryptocurrency Gaining Banks Acceptance

How Close is the U.S. to Having a Digital Currency?

Small-Cap Names in a Big Crypto Market

Backed by the Full Faith and Credit of Blockchain

Visit the Company data of Channelchek to review stocks on your watchlist in the blockchain category or any other that you have been following.

Top Ten Cryptocurrencies by Transactions We put together a table for your consumption of the top ten digital currencies by volume exchanged along with other useful data so you may compare, contrast, and develop a better grasp of the size of the market and the individual currencies activity.

Noble Capital Markets Initiates Research Coverage On Helius Medical Technologies Senior Research Analyst Joe Gomes reports that Helius Medical’s PoNS device and treatment program may offer a first mover advantage in reducing symptoms of neurological disease or trauma Research, News & Market Data on Helius Medical Watch recent presentation from NobleCon17

Seanergy Maritime Reports Financial Results for the Fourth Quarter and Twelve Months Ended December 31, 2020 Seanergy Maritime Holdings Corp. announced its financial results for the fourth quarter and twelve months ended December 31, 2020 Research, News & Market Data on Seanergy Maritime Watch recent presentation from NobleCon17

Chakana Discovers Second High-Grade Breccia Pipe within Huancarama – Soledad Project, Peru Chakana Copper announced the discovery of a second high-grade breccia pipe within the Huancarama Breccia Complex at the Soledad Project in Ancash, Peru Research, News & Market Data on Chakana Copper Watch recent presentation from NobleCon17

Siyata Mobile Announces Strategic Acquisition of ClearRF, LLC Siyata Mobile Inc. announced it has entered into a definitive share purchase agreement to acquire all the issued and outstanding shares of ClearRF, LLC (ClearRF), a producer of cellular amplifiers for commercial and industrial M2M applications. News & Market Data on Siyata Mobile

PLBY Group Reports Fourth Quarter & Full Year 2020 Financial Results PLBY Group, Inc. announced financial results for the fourth quarter and full year 2020 News & Market Data on PLBY Group Watch recent presentation from NobleCon17

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Allegiant Gold Announces Participation in Noble Capital Markets Virtual Road Show Series Allegiant Gold announced their participation in Noble Capital Markets’ Virtual Road Show Series, presented by Channelchek, scheduled for March 25, 2021. Research, News & Market Data on Allegiant Gold Watch recent C-Suite interview with Allegiant Gold CEO Peter Gianulis

ProMIS Neurosciences Completes US$7M (CDN$8.75M) Financing ProMIS Neurosciences announced the completion of an US$7M (CDN$8.75M) private placement of convertible unsecured debentures Research, News & Market Data on ProMIS Neurosciences

electroCore Announces Exclusive Distribution Agreement with Silvert Medical Nv-Sa. electroCore Inc. announced it has entered into an agreement whereby Silvert Medical will serve as the exclusive Western European distributor of the gammaCore Sapphire non-invasive vagus nerve stimulator Research, News & Market Data on electroCore

Lineage Cell Therapeutics Presents Additional Interim Data On Opregen For Dry Amd With Geographic Atrophy Lineage Cell Therapeutics announced new positive interim results from its ongoing, 24-patient Phase 1/2a clinical study of its lead product candidate, OpRegen Research, News & Market Data on Lineage Cell Therapeutics Watch recent presentation from NobleCon17

Comstock and MCU Commence Philippine Mercury Remediation Operations Comstock Mining announced that its first international remediation and extraction facility is now in production Research, News & Market Data on Comstock Mining Watch recent interview with Comstock Mining CEO Corrado De Gasperis

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Gevo Hires Dr. Paul Bloom as Chief Technology Officer and Chief Innovation Officer Gevo announced that Dr. Paul Bloom has joined Gevo as its Chief Technology Officer and Chief Innovation Officer. Research, News & Market Data on Gevo Watch recent presentation from NobleCon17

Comtech Telecommunications Corp. Awarded Follow-on Order for More Than $1.0 Million for Military X-band SSPAs Comtech Telecommunications announced it received a contract valued at more than $1.0 million for X-band SSPA/BUCs for transportable military satellite communications ground systems. Research, News & Market Data on Comtech Telecommunications Watch recent presentation from NobleCon17

Bunker Hill Announces Updated Mineral Resource and Identifies New Silver Exploration Targets Bunker Hill Mining reported a significant resource increase at Bunker Hill Mine located in Idaho’s Silver Valley, USA. News & Market Data on Bunker Hill Mining

Energy Fuels Announces 2020 Results Energy Fuels announced its financial results for the year ended December 31, 2020. Research, News & Market Data on Energy Fuels Watch recent presentation from NobleCon17

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The Ultimate Guide to Stock Market News

 

When stocks make sharp price moves, the natural inkling is to search for any news that may be driving the volatility. It’s just human nature to try to explain what is causing the action. Since news comes out all hours of the day, it can be overwhelming trying to filter and determine what impact if any can be attributable to specific price moves. For this reason, it’s important for traders to optimize their time and efforts when analyzing stock market news.

Types of Stock Market News

Not all news applies to all stocks. Being selective is possible once you understand the different types of stock market news and the potential for making a material impact on stock prices. It helps to categorize news items to quickly filter through the noise and get to the “meat”. Here are some general categories and specifics of how they can impact the underlying stocks.

Company Press Releases

These are official news items announced by the company through press releases which get distributed through the various newswires and media outlets. Not all press releases make a material impact on share prices. A lot of them are just fluff and have no bearing on immediate price action. Here are the more significant types of press releases to pay attention to:

Earnings Releases are the most significant and material press releases. These are usually reported four times a year, represent quarterly performance results and potential forward guidance.

The Fourth-Quarter Release is often combined with the annual report which sums up the cumulative performance of the company for the year. Earnings releases are binary events that can cause share prices to gap up or down in the after-hours and often generate heavy relative volume the following trading day.

The focus on whether the company beat or missed the analyst forecasts for earnings-per-share (EPS) and revenues for the recent quarter as well as color on forward-guidance can determine which way the stock price gaps. However, the price reaction can be swayed by different selected metrics that may have improved or devolved during the quarter (IE: monthly average users (MAUs)). The key is not to predict or explain the results but to trade the reaction.

Deal News

Companies often issue press releases pertaining to deals. These can pertain to winning large business contracts or forming partnerships with other companies. The impact on stock prices relies on how large the contracts are relative to current revenues.

Partnerships with large halo companies can help boost share prices just from the association. Companies that acquire smaller companies can result in falling stock prices from the potential dilution of shares unless the deal is accretive or plays into a consolidation theme where market share will improve dramatically. Companies can also get a spike in share prices when they issue a press release stating they are “exploring strategic alternatives to raise shareholder value” or hire an investment banker, which implies the potential for putting itself up for sale.

Product Launches

These types of press releases don’t impact shares too much unless it’s something that wasn’t anticipated. Announcing the next upgrade cycle of products is something that is usually anticipated and factored into share prices ahead of the actual launch date. However, when a company schedules a launch event ahead of time, it can become a binary event causing shares to rise into the launch event and promptly sell-off when news is released.

Legal Rulings

These press releases can be significant if the lawsuits relate to the core business or intellectual property (IP) patents. Oftentimes, patent lawsuits result in a settlement or ongoing royalties which can have a significant material impact on the bottom line. This is of course assuming both parties agree to a settlement and not continuing to pursue appeals.

 

 

Clinical Trials and FDA Decisions

These are very material to biotechnology and pharmaceutical companies with costly drug pipelines. Positive clinical trial data can surge share prices whereas negative trial results can tank shares. FDA approvals which are often preceded by FDA advisory panel decisions can also impact shares significantly. Be aware that an FDA Response Letter is usually a request for more information, which can initially tank share prices since it often implies having to initiate more clinical trials that take more time to see the drug through approval if it can be approved.

 

 

Secondary Offerings

When a company decides to raise funds in the equity markets, it can file for a secondary offering. Usually, these types of press releases cause stock prices to fall in anticipation of share dilution for existing shareholders. Stocks often tend to rise in a “peculiar” manner ahead of the secondary offering news and promptly fall afterward. After the completion of the offering, the company may issue another press release stating a successful offering and even provide pricing details. The pricing details can eventually form a theoretical “floor” for the stock.

 

 

Opinion Pieces

As they say, everyone has an opinion. In the financial markets, some opinions are more important than most. It’s important to distinguish an opinion versus actual company news. Opinions range from impactful analyst upgrades/downgrades to newsletters and paid promotions to social media posts.

Paid Promotions are sneaky press releases often distributed by a third-party that’s tilted towards lifting a company’s share price. Many companies will hire marketing firms that specialize is “awareness campaigns” to promote the company’s prospects in an effort to lift its share prices. The resulting price “pump” is often temporary and tends to “dump” after the promotion campaign is completed. Low-priced micro-cap stocks are notorious for pump and dump price action and best to avoid these companies and stick to nationally listed companies on the NYSE, NASDAQ or AMEX exchanges.

Short Activism is performed through newsletters, research reports, or websites operated by short-sellers that profit from falling prices in the underlying shares. Many of these short-sellers seek to expose companies for fraudulent and/or questionable practices with the intent of causing prices to collapse. While not all short activism may be accurate, some of the best-known short-sellers have gained notoriety for exposing very real frauds that ultimately trigger financial market regulators to further investigate. Be aware that short-sellers derive their income from falling share prices so options will be negatively biased.

Social Media is a popular platform where certain posters can have an impact on share prices. It’s prudent to be skeptical and do your own analysis and research before taking any posts too seriously. Many short-sellers have large social media followings which can impact near-term share prices but can also result in getting squeezed on reversions if timing is off.

 

 

Industry and Market News

These are general financial news items that report on economic data, sector and industry trends. They impact on a macro market level often causing S&P 500 futures prices to react which then impacts the underlying stock prices. These can be distributed via news wires, a government organization, or on financial networks.

Government Economic Reports

These are government-issued reports that highlight specific economic data. The unemployment report can be significant based on how well it beats or misses estimates. Press releases from the Federal Reserve carry significant impact as monetary policy and the narrative provided triggers immediate reaction in the S&P 500 futures and then drives the trend.

Sector and Industry Reports

Reputable research firms release sector and industry reports that can impact companies within those categories. For example, if a gaming association reports the trend of video game sales trends doubling during the holidays, it can impact the shares of video game stocks.

News Sources

Financial news is disseminated through a number of sources. The type of news can range from general to company-specific based on the underlying news sources. Here’s a breakdown of the sources and where news can be pulled.

Newswires are a direct source of financial news and press releases. Most trading platforms have news feeds connected to some of the most popular newswires. The main difference between newswires is the speed at which company news is distributed and the depth of news that can be pulled.

News Aggregators are free sources that traders can refer to get company-specific news. These can range from search engines to social media sites, but can require manually filtering through advertisements, paid promotions, and various other “noise”.

Trading Platforms can be used to pull relevant news items to the trader. General news items tend to be accessible through conventional trading broker platforms. When you want to filter for company, theme, keyword news items, a direct market access (DMA) trading platform is a prudent choice for relevancy, speed, and being able to link alerts.

News Scanners are usually subscription services that filter through general financial news to alert subscribers to “tradeable” and relevant news that can materially impact stock prices. These are premium services that tailor its news towards traders and investors.

Considerations for Trading the News

So now that you have access to stock market news and can immediately access it to find the underlying catalyst driving stock prices, how do you trade it? First of all, make sure you have a firm trading methodology. The news may be a catalyst, but managing the trade relies on preparation and prudent execution of a sound game plan. Here are some things to keep in mind

Focus on The News and Market Reaction

Based on the aforementioned types of news, be sure to categorize the news to gauge its significance. The material impact of the news is evident in the price reaction. If the reaction is large, then it’s materially significant (IE: earnings release and raised guidance). Don’t try to rationalize the news.

Consider the News Itself

Ask yourself some quick questions when reading the news.

Is the news accurate? Check the source. If it’s a company press release then likely so, if it’s an opinion from a short-seller research report, then be skeptical.

Does it have a material impact on the company? If it’s a patent ruling and ongoing royalty settlement that adds 25% more revenues to the bottom line, then yes. If it’s a minor legacy product upgrade, then probably not.

Was the news expected? If the news was a surprise contract win with a major social media platform using the product, then yes. If the news was the launch of a next-gen mobile phone with all the features prominently detailed ahead of the event, then watch out for a sell the news reaction.

Consider the Reaction

When it comes to analyzing the significance of news, too many traders make the mistake of trying to game or rationalize the price reaction. Rather than fight the reaction, accept it and game plan trading the reaction and not prediction. Ask yourself if the market has already reacted in anticipation of the news. Are share prices already overbought or are they oversold? If oversold, then the news could be a catalyst to trigger a reversal enabling a first-person advantage to get into position. If overbought, then the news could trigger a sell-off.

 

 

Sell the New Reactions

When anticipated and expected news is release following a stock price run-up, the resulting reaction can be a sell-off. While this can take many traders by surprise, the reality is that when full transparency is unveiled, there are more sellers than buyers. This can be obvious by watching the magnitude of the price gains ahead of news releases to gauge if it’s too late to chase.

 

 

Prepare a Trading Game Plan

After analyzing the news and the market reaction, prepare your trading game plan implementing a trading methodology. If the news generates an overextended move, then target the most solid support or resistance levels to consider scaling into a position and setting stop-loss levels. The market isn’t always right in the near-term. Oftentimes, an initial reaction can provide opportunities for longer trends. For example, if a company reports a weak earnings miss, causing shares to drop but upgrades its next quarter’s forecast, you may watch for entry levels in anticipation of a reversion bounce.

In conclusion, keep in mind that news is often a laggard catalyst. If it’s made the news, then it’s already happened. Don’t impulse trade headlines and don’t try to justify or rationalize the price reaction with the news. Accept that the reaction can diverge from the anticipated reaction. Be flexible and disciplined in preparing and executing your trading plan when trading the news.

Reprinted with permission from Centerpoint Securities

Suggested Reading:

Workcations Add a New Class of Traveler

Money Supply Drives Stock Market Performance

Is it Smart to Avoid Brokers that Sell Trade Orders?

Class Action Lawsuit Against Robinhood

 

Special Thanks to CenterPoint Securities for use of this article.

CenterPoint Securities is a direct market access broker catering to active, sophisticated traders and those striving to be full-time traders.

 

 

Can Wall Street Giants Put Crypto on the Menu?

 

As powerhouse financial firms such as Visa, Goldman Sachs, JP Morgan, and just this week BNY Mellon invest, trade, or accept payment by Bitcoin (BTC), one has to expect that full acceptance and recognition of the currency is getting close. After all, these are the financial world’s trendsetters. On Wednesday (3/17/21), Morgan Stanley, a large, well-respected money manager, took a giant step further than the others with their plans to offer funds that trade and hold Bitcoin. The company is the first major wealth manager or banking institution that is making available for its client’s cryptocurrency. The plan limits the offerings to those with the highest tolerance for risk.

Morgan
Stanley Takes the Lead

Now that Morgan Stanley has broken the ice, it’s expected that competing institutions will follow by also providing access to their WM clients of managed funds with cryptocurrency holdings. Or, at least those clients deemed to have the ability to withstand high volatility and the ability to lose money without lifestyle impact.  

Two of the funds Morgan Stanley will offer are run by crypto firm Galaxy Digital. The
Galaxy Bitcoin Fund, LP has a minimum investment of $25,000 (current BTC exchange rate is $58,578.70) and the Galaxy
Institutional Bitcoin Fund, LP, which has a $5 million minimum.  The third fund, called NS NYDIG Select Fund, will be overseen by a new partnership (created 2/18/21) between FS Investments and NYDIG. That investment option also has a minimum investment of $25,000. Morgan Stanley clients with at least $2 million may be allowed to invest up to 2.5% of their net worth into these funds.

Tipping
Point for Acceptance

Options for gaining exposure in digital currencies are expanding for investors and this week seems to have been a tipping point. Digital currency asset manager Grayscale also announced this week that it began offering five new digital currency investment trusts. This brings its total number of trusts investing in single-asset investment products, available to eligible individuals and institutional accredited investors, to 14. Also this week, JPM Chase filed with the SEC a structured note offering tied to stocks with Bitcoin allocations.

While large institutions are one by one opening Bitcoin to their trading desks and wealth management clients, your neighborhood investment advisor is not likely to have a regulated option to show clients anytime soon. Financial advisors run the risk of having to demonstrate suitability which can be a high hurdle for a relatively new and highly speculative financial vehicle such as cryptocurrencies. This has caused many smaller investment advisors to shy away and continue with a more traditional money management approach.

Take-Away

Now that Morgan Stanley has opened the door for other firms to offer this still speculative asset class, they have also provided a template as to how. The inclusion also seems to provide a lead to other firms on ‘how’ to frame cryptocurrency offerings. If competing firms weren’t motivated before with Bitcoin recently reaching new highs, they will now be as cryptocurrency is a clear differentiator in the services offered by one of their rivals.

Paul Hoffman

Managing Editor, Channelchek

 

Suggested Reading:

Small Cap Names in a Big Crypto Market

Can Small Investors Compete With Wall Street?

Does the Accredited Investor Rule Ensure an Uneven Playing Field?

Backed by the Full Faith and Credit of Blockchain

 

Sources:

http://www.globenewswire.com/news-release/2021/03/17/2194615/0/en/Grayscale-Investments-Launches-Five-New-Investment-Trusts.html

https://fintechforadvisers.com/fintech-virtual-summit-2021/

https://nydig.com/about-nydig/news-press-releases/fs-investments-and-nydig-announce-partnership/

https://www.investmentnews.com/morgan-stanley-to-offer-bitcoin-funds-to-ultra-rich-clients-204104

https://www.galaxydigital.io/

http://www.globenewswire.com/news-release/2021/03/17/2194615/0/en/Grayscale-Investments-Launches-Five-New-Investment-Trusts.html

https://www.investmentnews.com/jpmorgan-plans-to-expose-investors-to-bitcoin-friendly-stocks-203850

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