[Charts] Three Market Records to Trade Around
Dear Wall Street Daily Reader,
It’s that time again – the long winded analysis is out. (Hallelujah!)
And some carefully selected charts are in. (Amen!)
I’ll shut up now and get to the pretty (and telling) pictures.
Zoom Boom and Bust
It’s a fundamental law of public company economics:
Management teams expand overhead way too fast during boom times to try to get ahead of the growth.
The only problem? When the growth slows down or stops, they never act as swiftly to right-size operations.
In other words, hiring fast happens. But firing fast doesn’t.
As you can see below, this is another reason I believe shares of Zoom Video Communications, Inc. (ZM) are doomed.
The company grew headcount too fast. And in the face of an all but guaranteed post-Covid sales decline, the extra overhead means margins are destined to get squeezed, too.
As I’ve been telling you, since share prices ultimately follow earnings, look out below!
Zoom’s stock is off another 20% or so in the last month, and a staggering 45% from its pandemic high. (It’s never going to see those highs again.)
While the trends for Zoom are definitely headed lower, here are two trends that are looking up…
Back-to-Back for SPACs
Last year was a record year for special-purpose acquisition companies (SPACs).
And this trend has lots of legs, too, which is why I predicted a few weeks ago that 2021 would be another record year for it.
And less than three months into the year… it already is!
As of a few days ago, total SPAC proceeds surpassed the $79 billion high-water mark.
Keep your eyes peeled right here for more info on SPACs, as we’re refining a novel trading strategy to safely and handsomely profit from this boom.
The Biggest Risk for Stocks
You don’t need to stay at a Holiday Inn Express to know there’s only one way for interest rates to go from here.
It’s just a matter of when this starts to happen, which as we learned in recent weeks, is the biggest fear gripping the markets.
The Fed is adamant that we still have a few more years of low interest rates.
But it never hurts to start thinking about where we should look to allocate our portfolios in a rising interest rate environment.
With that in mind, I’ll be starting to share some insights and investments here in the coming weeks and months.
Ahead of the tape,
Editor and Founder, Trend Trader Daily