All posts by Nicholas Chahine

Is Now the Best Time to Own Qualcomm Stock?

Qualcomm (NASDAQ:QCOM) has had an incredible ride this year. Earlier in the year, QCOM stock was up 50% year-to-date, but now it’s up only 17%. While this sounds like a disaster, it is still double that of the S&P 500, the Invesco QQQ Trust(NASDAQ:QQQ) and Apple (NASDAQ:AAPL).

Is Now the Best Time to Own Qualcomm Stock? QCOM stock

Source: Shutterstock

Stocks that show relative strength in times of trouble are the ones that I like to bet on. Qualcomm is outperforming the markets despite the general sentiment and its own headline troubles. So it is like the bears are throwing the kitchen sink at it and the stock refuses to die. Imagine what it can do if the bad headlines abate.

If you’re already long Qualcomm stock, I suggest holding it. It’s also a good time to take an upside bet on it for 2019.

Fundamentally, it’s not cheap as it sells at a price-to-earnings ratio of 37, but this might be misleading here because of its potential future business with Apple. They recently reached a settlement where Apple becomes a QCOM client. While the deal is not yet set in stone because of outside factors, eventually it’s likely to happen. Even then, QCOM is not too bloated, so owning it for a trade here is not likely to be a major financial debacle.

In early May, I wrote about how investors should not panic out of QCOM because of the short-term volatility. But I also noted that “[t]he better entry points into the stock would be at pivot zones and those are at $80, $76 or $68.” We are at that opportunity now.

It had great momentum going into earnings but then dipped on the headline. Then this whirlwind of bad Wall Street sentiment took QCOM stock back to the bottom of the massive gap it left after the headline settlement with Apple. So those fast profits are now gone and this makes for stronger hands holding the stock.

Furthermore, there is a lot of premium that came out of all stocks, especially the tech industry, so there is much less overall froth in the system now than a month ago.

More importantly, yesterday we had a virtual bloodbath in the tech world where the FANG gang stocks collapsed. Stocks like Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB) fell 8% on regulatory headlines. Even AAPL is now on the authority hit list.

How to Approach QCOM Stock Today

The good news for Qualcomm is that it was only down 0.25% when the Nasdaq QQQ was down 2.2%. QCOM again showed relative strength and further suggests that it has already shed most of its fat and that bulls are ready to support it at these levels.

These are still dangerous times for stocks for the short term. We are expecting new tariffs to hit Mexico in six days. The problem gets bigger when we see the other regulatory agencies also attacking the biggest and best U.S. companies. They are doing this while the U.S. is busy fighting a global economic tariff war. So clearly we have to assume that politicians have weaponized U.S. stocks to benefit their agendas.

Remember that the FANG gang has already declared war on China years ago when they pulled out of it. Instead of rewarding them, the U.S. government wants to punish them when they are most vulnerable, especially GOOG, Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB).

This saga is still ongoing, so we cannot assume that the absolute bottom is in. But true to my statement in early May, this here is definitely a viable tactical trade.

The legislators are unpredictable, so I don’t suggest taking full-sized bets all at once. Rather, I suggest doing it in tranches and keeping my stops tight. Also there are important lines to know for the short-term risk.

If the bears can break below $64.50, they could trigger another $5 sell signal. There the support zone is even stronger. QCOM here is near a confluence of pivot zones that date back to the dot come bubble. These tend to be magnetic, but nevertheless, the recent wild and wide moves make it difficult to set a functional stop loss level, so I’d use personal risk appetites.

Conversely, the bulls can use $69.30 and $72 as rally triggers, but they will likely need the help of the overall market sentiment to improve.

Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room free here.

  [FREE REPORT] Options Income Blueprint: 3 Proven Strategies to Earn More Cash Today Discover how to grab $577 to $2,175 every 7 days even if you have a small brokerage account or little experience... And it's as simple as using these 3 proven trading strategies for earning extra cash. They’re revealed in my new ebook, Options Income Blueprint: 3 Proven Strategies to Earn Extra Cash Today. You can get it right now absolutely FREE. Click here right now for your free copy and to start pulling in up to $2,175 in extra income every week.

Source: Investor Place

3 Financial Stocks to Buy While They’re Cheap

Source: Shutterstock

This morning stocks are rallying on the back of good news from the G20 meetings. China and the U.S. struck a deal to halt the tariff rhetoric so that they can negotiate a long-term trade deal between the two countries.

The fear that the U.S. and China would bog down global growth with tariffs has driven a lot of market volatility this year. There is a lot on the line for all economies and this morning’s news is a relief to the markets.

Year-to-date — while not a financial disaster — equities have been under pressure and in see saw from one headline to the other. This is especially disappointing to financial stocks. This year was supposed to be when bank stocks flourished. The U.S. Fed is in a rate hike cycle and the idea was that banks would profit from the higher rates. This hasn’t worked out that way so far. In fact, coming into today the Financial Select Sector SPDR (NYSEARCA:XLF) is down 3% in 2019, lagging behind the S&P 500 and the Nasdaq which are up 4% and 11% respectively.

As a result, bank stocks are now even cheaper, so there is value in most of them, and they should be part of a healthy portfolio.  At some point this general macroeconomic malaise will pass and the sentiment selling will abate. There is a lot to like in these financial stocks and they are worth accumulating.

The Value Investment: Bank of America (BAC)

This Sell-Off Could Be Your Best Chance to Buy Bank of America Stock

Source: Shutterstock

First on my list of financial stocks is Bank of America (NYSE:BAC). BAC sells at a trailing P/E of 13.6 — a ratio which is cheap in both absolute and relative terms. At these levels, BAC stock sells at almost price-to-book, meaning that investors give it no credit beyond the assets on its books.

Buying BAC here is likely very safe. Bank of America has a strong management team. They were able to navigate out of the worst financial disaster and save a few other banks along the way. In short, if the stock markets move higher in the next few years, then BAC stock will too. In addition, it mainly operates in the U.S. so it has little exposure to China headlines.

The Momo Run: Square (SQ)

square stock SQ stock

Source: Via Square

Momentum stocks rarely give investors clear entry points. That is the case with Square(NYSE:SQ). Unlike Bank of America stock, SQ stock is far from cheap. But this is a fintech stock so I don’t give the same amount weight to value as I would for a standard financial center. Case in point, even though SQ has fallen 20% in the last three months, it’s still up 80% in 12 months.

This is a stock that should to be part of a complete portfolio. SQ has solid fundamentals as it begins to compete with the likes of Visa (NYSE:V) and Mastercard (NYSE:MA). Recently SQ stock was dragged lower by the bitcoin crash. Part of the rise of Square was tied to its foray into the blockchain arena. So like Nvidia (NASDAQ:NVDA), SQ suffers on the way down with bitcoin too.

Both BAC and SQ are financial stocks technically poised for spikes. They are now re-approaching pivot zones and if the bulls can prevail in retaking them they can shot 7% higher on momentum alone. Since SQ is a fast mover, its breakout will be faster and longer than that of BAC, but they should both do well.

The Gamble: Goldman Sachs (GS)

Source: Shutterstock

Last on my list of financial stocks to buy today is Goldman Sachs (NYSE:GS) . GS stock has grossly under-performed in absolute terms  and relative to the sector. GS is down 24% in 12 months.

Recently Goldman Sachs has been in the news over issues with their potential involvement in the Malaysian bond fraud event. I don’t now how this scenario is going to play out but it’s worth a small bet for a positive resolution. Usually Wall Street is too quick to overreact and it’s too early to call GS stock dead for good. As a result of its massive fall, GS now sells at an 8x forward P/E.

Nevertheless, Goldman Sachs stock still carries a high ticket price at $190 per share. So one can use options to speculate on a rebound into the first quarter of 2019 instead of risking the face value of the stock. Options offer lower entry costs for a chance to profit on a rebound. In addition to the fundamental news, GS stock is also at a technical disadvantage. Losing the $220 level triggered a bearish pattern that may still be unfolding. There is further risk below if $185 zone also fails.

Pay Your Bills for LIFE with These Dividend Stocks

Get your hands on my most comprehensive, step-by-step dividend plan yet. In just a few minutes, you will have a 36-month road map that could generate $4,804 (or more!) per month for life. It's the perfect supplement to Social Security and works even if the stock market tanks. Over 6,500 retirement investors have already followed the recommendations I've laid out.

Click here for complete details to start your plan today.

Aurora Cannabis Stock Hasn’t Reached Its Peak Yet

marijuana stock

Source: Shutterstock

The marijuana stocks have been smoking hot in 2018. Some of the wildest trades of the year happened in Tilray (NASDA:TLRY) for example. This is a sector that exploded on to the market and has immediately amassed a die-hard fan base. But trading pot stocks has not been for the faint of heart. These are momentum stocks and they move even faster than Amazon(Nasdaq:AMZN) and Netflix (NASDAQ:NFLX). Aurora Cannabis (NYSE:ACB) is no different. ACB stock as seen several moves over 50% in either direction. So it’s never going to give investors an easy point of entries or exits.

For decades, pot was taboo, so it has never was a topic of conversation on Wall Street. But now that legalization of marijuana is becoming more ubiquitous, the concept of commercializing its uses is a valid thesis. There are several companies that have attracted mainstream investments like Constellation Brands (NYSE:STZ) did with Canopy Growth (NYSE:CGC). They invested $4 billion dollars so they can tap into the market.

Canada has been at the forefront of this movement. Some states in the U.S. have also been there but the big one would be at the federal level. Until that happens the risk in those stocks is still high. Therefore, I would only consider investing in ACB as a speculative thesis within a conservative portfolio.

From an evaluation perspective, the company sells at an 82 price-earnings ratio, which is almost Amazon territory. But unlike Amazon, its future is not as set in stone yet. But therein lies the opportunity.

This Canadian-based company is a legitimate competitor in the field. They are well diversified within it and already are in 20 countries. So it’s a matter of time as the legalization expands before they grow into their potential.

There’s not much expert opinion out on these companies, and in any case, I don’t think there are too many experts yet as the field is still too young for Wall Street to entirely grasp. So it’s a matter of picking a few of the potential winners and holding them for the long term.

In lieu of picking winners, one can invest in an ETF like the ETFMG Alternative Harvest ETF (NYSEARCA:MJ). But sometimes a targeted investment in one company or two is perhaps a smarter decision than a blunderbuss approach.

Technically, ACB stock failed at $12 per share but has so far found hard support around $4.5 dollars per share. This is a wide range of short-term pricing. However, the bulk of the action has been around $7 per share with supports the concept that somewhere in the middle of two extremes lies the truth.

When committing to a long-term thesis, I don’t worry about pennies in order to snipe the perfect entry point. I learned long ago that I don’t aim to pick the very best point of entry in momentum stocks. As long as my thesis is correct over the long-term the goal will come.

So if the marijuana trade is a viable one, and if ACB stock market does not crash in the mid-term, Aurora Cannabis stock should be higher in 2019. For now, investors will have to contend with the headline threats that loom.

We have a tariff war between the U.S. and China, we also have a U.S. Fed that’s in a tightening phase, which could hamper equity investments into 2019. But still, the macroeconomic environment looks conducive for more upside.

Get up to 14 dividend paychecks per month from safe, reliable stocks with The Monthly Dividend Paycheck Calendar, an easy-to-use system that shows you which dividend stocks to pick, when to buy them, when you get paid your dividends, and how much.  All you have to do is buy the stocks you like and tell them where to send your dividend payments. For more information Click Here.