Update:
It’s been a wild ride for stocks this year.
But two shining stars for you from our Bold Profits picks are Tesla and bitcoin.
This week, TSLA topped $1,500! (And some doubted our $1,000 call…)
This is great news for you! And congratulations if you’re in!
On top of that, bitcoin is setting up for its post-halving rally. We’ll tell you what you can expect and how to best position yourself for profits with a bitcoin stock.
Paul and I talked about how these two plays and today’s market are tailored for you in this IanCast we recorded a while back.
It rings true, especially today — which is why we want to remind you about 2020’s Main Street bull market.
And how you can set yourself up for more gains ahead in Tesla and bitcoin! Keep reading for the full scoop!
IanCast Highlights:
- The triple witching hour is here for options, futures, and expirations. See Ian and Paul’s secret weapon for investing in this market.
- Penny stock cryptos are pointing to bitcoin’s post-halving rally.
- TSLA hits $1K milestone! What’s next…
- Pot stocks’ crazy run and the marijuana ticker for our 2020 outlook.
Up, down, up ….
“Paul and Ian — What’s going on with the market?!”
Well today, we’re going to tell you. Somethings happening called “triple witching” that involves options, futures and expirations.
But the even bigger movement we’re seeing is disruption.
Think of the Dow Jones Industrial Average today. It’s junk!
But what’s clear is that the small stocks are making their move — disrupting the big ones in the Dow and all over the markets.
It’s America 2.0.
And it’s awesome for Bold Profits readers! The Big Money can’t play. The stocks are too small for them. But we are IN.
This is a market for Main Street — for you.
The companies that we’ve recommended across our services are tailored for this Main Street bull market. And our stocks are going to shoot up like crazy!
Make sure you’re ready for these profits by watching today’s IanCast:
Welcome to another edition of The Iancast.
Yesterday the stock market was down. The big indices like the Dow and S&P were down 6%. It’s can be unnerving when you see the market down that much in one day, especially after March when we saw that a lot.
Triple Witching Market Impact
One of the big things that people don’t follow too much that could be one of the big reasons the market was down so much yesterday was that coming up next Friday we have what’s called a “triple witching” in the market.
It’s when futures expire as they do every month, options expire and the options on futures expire all on the same day. There’s a lot of big activity going on in derivatives, which is a multi-trillion-dollar industry. A lot of people buy futures and sell futures all the time. Same with options.
That can have a big impact on the price of big indices like the S&P 500, as well as bigger stocks like Apple and Microsoft in the S&P 500. When a lot of people have a lot of futures contracts and options contracts outstanding, they are betting on the stock market being on a certain price by expiration.
When you have the market go up like it has so far after the past couple weeks up until yesterday, people are ready to take profits. When you have all those people selling the futures and selling their options, it can really drive things down.
Just like when you have people buying into those things it can drive things up very quickly. A lot of big institutions use futures to hedge their positions. They could have huge, multi-million-dollar positions in this that they clear out all at one time.
The S&P 500 futures for example is the most traded asset in the entire stock market. It’s a really popular thing people buy. A bunch of people just happened to sell it ahead of this triple witching date, which is the third Friday on the last month of each quarter. It happens in March, June, September and December.
We’re always looking for big moves around this time because it’s not uncommon that you get a lot of people buying or selling their big futures positions to roll ahead and buy whatever the next expiration is they want to buy, which is probably September.
One of the ways you can get a lot of money into the market is to buy into futures contracts. Then you would sell the futures contract as you built exposure in the stocks you wanted.
There’s a very natural dynamic there. Also, if you wanted big exposure in any single stock, the option markets are a way to get in. All of that must be balanced out at the end of every quarter. People’s books are marked, for sure, daily. However, the quarter end matters because many companies must report publicly.
That puts pressure on people to close positions out. As you said, there is the time pressure. People say, “I’m going to take my profit now. I’m not going to wait until next Friday.” No one is going to wait until the last day or the day before.
We’ve seen this before or after any big move. There’s always counter volatility relative to the direction driven by this triple witching action. Given the size of the move and the violence of the move, it’s something that was in the cards one day or the other.
The Main Street America Stock Market
In five to seven years, the entire Dow is going to be remade. That’s clear because half these countries are going to be shrunken. Some of them will have merged because of weakness. A few will have gone out of business.
Going back to the year 2000, General Electric was the highest market-cap company in the 1999-2000 bull market. And today, the company’s stock is way down.
At the top of the 2007 market, another top company in the Dow in terms of market capitalization was Exxon. Another company that is way down today.
We’re in a period of even more change. There is a definitive fracture between America 1.0 and America 2.0. This whole crisis period has made that very clear.
A lot of those companies that are being disrupted are still worth hundreds of billions of dollars, which is just foddered to feed the smaller companies. When people sell out of the ones being disrupted, over time they end up buying the ones that are disrupting. They end up taking that market share.
It’s also going to take the market cap of those companies. You have a few companies worth $100 billion to $200 billion and all these other companies that are growing like crazy disrupting them that are worth $5 billion to $10 billion. Those are going to even out over time.
There’s an enormous shifting of market capitalization going on right now from America 1.0 to America 2.0. This is a market that the big money can’t play because some of these companies are so small.
They have so much money they have to wait until Main Street investors. They can come with their billions and participate. However, for the next three years to five years, this is a Main Street market.
This is for small investors, regular investors, mom-and-pop investors — whatever you want to call us. Main Street America, this is for you. These companies are so small, for the most part the big money cannot play.
Smaller stocks at $5 billion or less in market cap trade maybe $10 million to $20 million a day at most. If you are a big hedge fund and you have billions of dollars and want to put $10 million into a stock, you have to either wait or spread it out in really small amounts.
You will see the buying effect over time, but if they tried to buy in all at once it would make the stock go up 100% in a day.
It’s part of the pouring down effect. In other words, many of the companies our readers have known for many years are slowly going to start to become multiple-billion-dollar companies. At that point in time, the big-money investors can finally start to put 1% or 2% into it. As they come, they will bid it up even higher.
We have stayed bullish, optimistic, positive through what was a brutal crash. However, the underpinnings of the America 2.0 bull market never changed.
Companies that are disrupting are starting to come public, but a lot of the really disruptive companies are still private. This is going to feed the market even more as these important, high-growth, disruptive companies start to come public.
The Dow futures is being used by the media to scare people. Their business model drives off fear and panic. If they can get you to click, that means higher click rates for their ads. The media and what they represent today is completely different than what it was 15 years ago when its primary role was to inform. Today it is for them to make as much money as possible.
Cryptocurrency Projected to Hit New Highs
A positive for Bitcoin and crypto in general is that it’s like the stock market where we’ve said if we see a small stock go up it’s a good sign because people tend to take more risk bidding up the smaller stocks.
For crypto it’s really similar. There are these tiny alt-coins. A lot of them are like very speculative penny stocks or very small companies. Recently, I have seen a lot of these go up 30% or 50% in a day. There’s a lot of action going on behind the scenes in crypto and not just in big things like Bitcoin and Ethereum.
Those are also looking good, but these other small ones, some of them are up 300% to 500% over the past couple weeks. That’s a very good sign to me. It shows that people are willing to buy up the smaller ones. They are bullish on crypto. The same thing happened, but I haven’t seen it happen on this scale, since March and April of last year.
Bitcoin made that big run from $3,000 to $14,000 within the space of a couple months. At the beginning of that we started to see these tiny alt coins go up really fast. It was weird because everything had been crashing for a long time. So to see that activity was really positive.
Then Bitcoin followed through with that huge 300% to 400% rally. I think that’s still entirely possible for this year. I think the second half of the year is going to be huge for crypto. I still think Bitcoin could hit $50,000 for this year. Once it breaks above $20,000, the bullishness is going to be off the charts.
Just like it did when it broke $2,000, $2,500 or whatever it was the last time it broke its all-time high. It went all the way up to $20,000. Once it breaks $20,000, $50,000 is right around the corner.
I would also say that I believe one reason some of the alt coins are moving is that it’s taking forever to get a transaction done on Bitcoin. That’s completely predictable post-Halving. The reward has been halved. As a result of the reward being halved, a bunch of miners, like the more marginal miners, sell as soon as they mine, then they are out of business..
Now a whole new set of miners are going to have to come into play based around the new economics around Bitcoin. The fees are going to have to go up, the price is going to have to run up. For sure, I feel like just like we said Tesla was going to hit $1,000 and people said we were crazy, I felt it’s a no brainer.
The nature of Bitcoin or crypto demand has a different structure to equity markets. The vast majority of crypto has a truly finite supply.
Crypto also has a way smaller market cap. As of a couple days ago when I worked this out, the entire market cap of all crypto excluding the top four — Bitcoin, Ethereum, XRP and Tether — was $48 billion, which is one-quarter of Tesla in the entire crypto market.
It’s not going to take much for these or for Bitcoin to run. The entire crypto market, even with those four, is still around $250 billion. It’s so small. It’s not going to take too much for it to run up. It was over $800 billion at the top of the 2017 bull market. As of now, things are still cheap there.
It’s such a small asset class. It’s like the size of a big bank. It’s still incredibly small. It will not take much once it gets going to run up way higher than it is now.
Alt coins going up are very much in line with the way that I have experienced other bottoms. If you go back to March 2009, because liquidity can affect smaller companies in a much more significant way, that’s often the signs of a bull market.
Money pushing in, even a small amount of money, into a liquid alt coin is going to push it higher. This is why you’re seeing that. Then that creates additional demand from other people to either buy that same alt coin or find what the next one is. That waving effect is the essence of a bottom being formed in the new bull market.
Bitcoin is going to go to new highs this year. $50,000 I feel is a solid target for Bitcoin overall. The last thing to say is that people keep writing in to ask me about gold.
Store of value is getting to be a way more legitimate claim. Grayscale and Square are buying half of the newly mined Bitcoin.
Over time, there’s really no reason it can go down from here in a big way or a sustained way. It moves quick up or down daily. Ignoring that short-term noise, there’s nowhere for it to go but up.
Tesla Benefits from Electric Vehicle Demand
As we anticipated, Tesla hit $1,000. I believe even bigger gains are coming for Tesla. I don’t know if it will get to $2,000, but it can get higher than $1,000 for sure. Then he had an announcement about the next leg.
It was a tough ride for a while for Tesla, but now reality is starting to set in in the stock market. They are not going to go bankrupt. They have a great electric car business. They have a great autonomous software business. They have a great battery business.
The Model Ys are being delivered now. They just announced there’s huge development in their semi-truck, which would be the first all-electric semi-truck on the road. That’s huge for the trucking industry. They have their Cyrbertruck coming out next year, I think they said late 2021.
Most importantly, the whole lockdown didn’t really push back their business at all. It didn’t really delay anything by more than a week or two. In the big scheme of things, they have been on it. They haven’t been affected by this. We are going to see their numbers continue to be strong.
The battery business, the car business, the software business, the solar business. I’ve been getting invitations to put their Powerwall up. I stupidly installed solar and didn’t wait another year. I have a battery from a competitor. I can tell you I really wish I had the Tesla product.
It allows you to use sunlight as it’s generated versus what I currently have which is a pure storage solution. I believe the take-up there is going to be huge. No one really talks about that or the fact that their autopilot software is one year away from them — at least on a small scale — be able to introduce their robotaxi business.
That’s going to be another industry they are going to be the first mover in. That’s even more great news for their stock, especially.
$1,000 is now here. I know it’s under $1,000 today. However, we have little doubt it will go back over $1,000 and continue to go back up. Everything is really doing extraordinarily well for Tesla. EV demand is accelerating.
Cannabis Stocks Will Rebound
This past earnings season we saw a lot of stocks in the marijuana industry go up. They were hit hard yesterday with the overall market. When a shock like that hits the overall market a lot of small stocks sell off the most.
I think that was the all-time low, especially for MJ which is the ETF I recommended before. It’s still a great time to buy into that. We’re finally seeing solid demand for these marijuana stocks for the first time in over a year. April was the first positive month for MJ in nine or 10 months.
It was a crazy run there. I think the bottom is in. Peak bearishness hit a few months ago in these stocks when they were caught in trouble trying to expand too fast. A lot of those companies have restructured their whole business in order to stay salient and to stay alive.
It set things back in terms of sales growth a little bit. We’re still seeing a lot of them grow 30%, 50% or some of them 100% year-over-year growth. They are still strong. None of them really failed. I haven’t seen many marijuana bankruptcies at all. That’s surprising.
It shows there’s demand for their products. In turn, we will see demand for their stocks as people continue to see that there is a legitimate business in a lot of these companies. They are not going to go out of business. That’s the first thing people need to see.
Then after that people will see the momentum come into the stocks, which will of course drive even more momentum and more buying going forward.
We are still bullish on cannabis. I believe there’s going to be a massive bull market for that as well as part of the America 2.0 movement. In other words, market capitalization from wine, beer, sprits and cigarettes will start to flow into cannabis.
Regards,
Ian Dyer
Editor, Rebound Profit Trader
P.S. Paul and I use a secret investing weapon for this market during times of the triple witching we talked about in today’s IanCast. Earlier this year, members had the chance to grab a 50% gain in just six days. Meaning within one week, you could have scored a $2,500 payout for every $5,000 invested. But with our Rapid Profit Trader method, these kinds of high-speed returns are not that unusual. See all the details here.
