almost feel sorry for the hype machine known as Elon Musk and Tesla. First, the electric car field is becoming crowded with more and more players, making it tougher to stay ahead in the race to an electric future.

Then, Musk boasted about the 75-megawatt lithium-ion battery Tesla built within 100 days in Australia to help with their power shortage. That glory will fade quickly as Korea’s Hyundai’s Electric & Energy Systems Co. is building one twice as big – 150-megawatts, that will go live in about three months on the country’s southeast coast.

Finally, he rolled out Tesla’s e-Truck with much fanfare. However, more established players in the field have already beaten Musk to the punch with their version of an electric battery-powered truck. But before I delve into those companies, let me tell you about Tesla’s electric truck.

Tesla’s e-Truck

Elon Musk unveiled Tesla’s electric truck last month that has been in development for over a year. It is supposed to have a range of about 500 miles and, according to Musk, will be “impossible” to jackknife. He said that it would go into production in late 2019.

While the range is too short for long-haul drivers, the truck will still have a ready market. That’s because 80% of routes driven by truckers are less than 250 miles. Already, a number of large companies have placed orders for Tesla’s electric truck. These firms include: Walmart (15 trucks), Anheuser-Busch (40 trucks), Sysco (50 trucks) and JB Hunt (40 trucks) along with a host of other companies that placed smaller orders.

Tesla’s truck does have some nice features. It will use the same sensors as its smaller vehicles for its autopilot system. At the moment that means safety features such as automatic lane control and braking, but it eventually will allow full autonomy. The truck uses cameras instead of wing mirrors, helping its aerodynamic look.

Related: 3 Electric Car Stocks to Crush Elon Musk and Tesla

However, Musk claimed that the charge for these trucks would only take 30 minutes using a solar-powered “megacharger” that Tesla hasn’t invented yet. It is supposed to be 10 times more powerful than the current supercharger for Tesla’s electric cars.

Doubts and No Doubts

Some scientists have questioned Musk’s claims about the megacharger, saying it’s science that hasn’t happened yet. The fastest chargers today can support 450 kilowatts of charging compared to the roughly 1,500+ for Musk’s megacharger.

A U.K. consultancy called Aurora Energy Research, set up by scientists from Oxford University, estimated that the power required to charge a battery in that short a time frame would be 1,600 kilowatts. Questions arise then about the electric grid’s ability to handle that load since the scientists’ claim that’s the equivalent of providing power for several thousand homes.

While there doubts on the science side, if that is solved I have no doubt that production can be ramped up quickly.

Just look at China and e-buses.  Just a few years ago, China only produced about 10,000 electric buses. But in 2016, output exceeded 100,000 buses. Market leader BYD (OTC: BYDDY) has also begun to churn out a good number of electric garbage trucks. The company, 8.5% owned by Warren Buffett, has been assembling them for two years at a California plant and is opening another facility in Ontario, Canada next year.

The question with electric trucks is whether Tesla will be the winner or will more established players in trucking and engines triumph. Here’s look at three of them.

Electric Truck Company #1 – Cummins

The first company is Cummins (NYSE: CMI), which will not build electric trucks. But it will supply a fully-integrated battery electronics system (with the batteries coming from an unnamed supplier. It is a leading maker of diesel and natural gas engines for commercial trucks.

Without any of the fanfare of the Tesla unveiling, this summer saw a big e-trucking announcement from Cummins. It revealed a Class 7 heavy-duty truck cab (the cab was built by Rousch Enterprises) that featured an advanced 140 kilowatt battery pack, which is capable of hauling a 22-ton trailer. Cummins said it would begin selling the 18,000 pound cab (named AEOS) to bus operators and commercial trucking fleets beginning in 2019.

The battery has about a 100-mile range, so Cummins is targeting urban delivery vehicles (like a beer truck or food delivery truck) as well as other short haul trips. It can be recharged in about an hour at a 140 kWh charging station, and the company’s goal is to get that down to 20 minutes by 2020. Cummins added that current battery technology doesn’t yet make sense for a Class 8 semi tractor-trailer (an 18-wheeler).

Cummins is also offering an extended range version (available in 2020) of the AEOS. It uses an efficient diesel engine as an on-board generator, which allows for up to possibly 500 miles between charges and 50% fuel savings compared to today’s diesel hybrids with zero emissions.

You may wonder if this is the right move for Cummins and if it can remain competitive when the trend is clearly toward electric vehicles.

The history of this 98-year old company suggests the answer is yes. It was at the forefront of environmental shifts, embracing stricter clean air standards while other manufacturers dragged their heels. It also led the shift from 2-stroke to 4-stroke diesel engines and was a leader in developing after-treatment systems for nitrous oxide particulates.

With its work on electric powertrains and fuel cells for about a decade, I think it will succeed again. That means more gains for its stock on top of the 25% gain year-to-date.

The next two companies offer more direct competition to Tesla.

Electric Truck Company #2 – Daimler

Daimler AG (OTC: DDAIY) is the world’s largest manufacturer of commercial vehicles and a former Tesla shareholder. So as you can imagine, it is taking the challenge from Tesla quite seriously. To that end, it has already started initial production of its Fuso eCanter urban delivery trucks. And it expects such vehicles to be competitive with traditional diesel vehicles cost-wise within two years.

Daimler introduced the light-duty eCanter haulers in New York in September, supplying a fleet to several New York City non-profits as well as signing United Parcel Service (NYSE: UPS) as its first commercial customer in the U.S. The truck has a range of 60 to 80 miles between charges and is coming to market as customers insist on cleaner vehicles better-suited to rising delivery demand (e-commerce) in cities.

The company will start mass production of these vehicles at its Tramagal plant in Portugal either late in 2018 or early in 2019. About 10,000 of the light-duty eCanter were produced at this plant in 2017.

Daimler is also taking Tesla’s challenge in heavy-duty trucks trucks seriously. It beat Tesla to the punch when it unveiled the E-Fuso Vision One in late October. This truck can carry 11 tons of cargo up to 220 miles before recharging. Its load is two tons less than a comparable diesel model in order to accommodate the weight of the 300-kilowatt battery packs.

It will be interesting whether these moves will boost Daimler’s ADR in 2018. It is almost unchanged so far in 2017.

Electric Truck Company #3 – Volvo

Another European company that Tesla should worry about is Volvo AB (OTC: VLVLY).

You may not be familiar with Volvo – it is one of the world’s leading manufacturers of trucks, buses, construction equipment, industrial and marine engines. The car division was first bought by Ford, which in turn sold it to the parent of Geely Automotive in China.

Volvo is one of the biggest providers of electric buses and hybrid-electric buses in the world. And it is a major producer of electric construction equipment and autonomous mining equipment. This being at the forefront of electric and autonomous vehicle design is a reason why I believe the stock is up 57% year-to-date.

Related: 2 Stocks for the Death of the Combustion Engine

It is testing in Sweden an autonomous garbage truck that uses sensor to continuously monitor its path and stops immediately if an obstacle appears in front of it. It drives itself from stop to stop with the driver walking in front of it to pick up the trash.

Volvo is also working other futuristic technology including charging pads and electrified highways that will themselves charge electric vehicles. And with 600,000 connected vehicles (200,000 in the U.S.), Volvo is collecting lots of data to further improve its vehicles.

Specifically with trucks. Volvo is testing a hybrid powertrain for long-haul heavy-duty trucks that is all part of its Super Truck project working in conjunction with the U.S. Department of Energy. Here are some of its features:

• It recovers energy when driving downhill on slopes steeper than 1%, or when braking. The recovered energy is stored in the vehicle’s batteries and used to power the truck in electric mode on flat roads or low gradients.It has an enhanced version of Volvo Trucks’ driver support system I-See, which has been developed specially for the hybrid powertrain, which analyses the upcoming topography using information from GPS and the electronic map.

For long hauls, it is estimated that the hybrid powertrain will allow the combustion engine to be shut off for up to 30% of driving time.

Bottom line for you — a new age in trucking is right around the next bend in the road and there are a lot of other purer-play companies besides Tesla for you to profit from in this sector.

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I’m a natural contrarian … and today, I’m going to contradict myself.

Last week, I wrote that it’s imperative to plan your future based on value, not price.

But prices matter too, especially in the short term. For example: Is bitcoin so valuable that it deserves a price of $11,000?

Are U.S. corporations worth so much that they deserve the second-highest Shiller price-to-earnings (P/E) ratio in history?

Do those corporations deserve a price-to-sales ratio 75% above its historical average?

In all three cases, the prudent answer to the question is no. The prices of bitcoin and stocks are out of line with their value.

But I’ve been saying “no” to another price-related question for the last nine years … and prudence tells me it’s time to change my answer.

It’s time to get ready for consumer price inflation. Are you?

Looking for Inflation in All the Wrong Places

For nearly 10 years, I’ve listened in frustration as people, who should know better, predict that central banks’ “quantitative easing” (QE) policies would produce consumer price inflation … and of course, the fabled “dollar crash.”

No inflation. No crash. Just as I predicted.

Why not?

Monetary theory says that the average level of prices is set by the total money supply divided by the real output of the economy. If money supply grows faster than output, inflation ensues.

Given the big gap between the growth of the economy and the growth of liquidity, we should have inflation.

But contrary to the misleading slang term, central banks don’t “print” money. Instead, they create reserves for the commercial banking system.

Money is only created when banks make loans against those reserves — say, $10 lent out for every $1 in new reserves.

If those loans aren’t forthcoming — or if they go to something other than consumption or investment — there’s no new money in the real economy, and no inflationary pressure.

At least not in the consumer economy.

Inflation Staring Us in the Face

What the dollar-doomsday crowd didn’t get is that QE is a peculiar sort of liquidity.

QE involved central bank purchases of bad debt held by banks from the pre-2008 housing bubble. Taking those debts off the banks’ balance sheets had the effect of boosting their reserves.

Of course, banks could have used this improved position for consumer or corporate investment loans. That’s what the politicians and bankers kept telling us.

That would have created more real-world money, and increased consumer inflation.

But, in the case of lending, supply doesn’t create its own demand.

With interest rates at historic lows, banks didn’t go out of their way to lend money (except where they could jack up lending rates, like credit cards and auto loans.)

On top of that, consumers were deleveraging, paying down old debt instead of buying new stuff. New regulations made it harder to get “liar loans.”

On the other hand, weak consumer demand meant corporations had no interest in borrowing to fund investment. In fact, corporations used the financial crisis to cut costs — firing workers and foregoing investment — which boosted their profit rates and gave them loads of cash, even as sales were flat.

So where did all that cash go? What about the QE money? What happened to inflation?

Here it is:

 

Since QE money wasn’t going to Main Street, it went to Wall Street instead. The average annual return of the S&P 500 is 7%, net of dividends. Since 2009, it’s been about 15.5%.

There’s your inflation, folks.

I Predict Inflation … Both Kinds

Things have changed since 2009. The economy is growing at 3% and nearly at full employment. After a decade of trying to claw it out of Wall Street and corporate coffers, ordinary people are finally starting to get their hands on some disposable income.

Accordingly, seasonally-adjusted consumer inflation just hit 2.0%, the Fed’s target.

Given that, here’s what I predict:

1. Tax cuts will fuel inflation, not investment. There is already talk of workers at U.S. corporations demanding the wage increases promised by President Trump and the GOP. More money in the consumer economy will increase demand, leading to more hiring, and thus wage inflation. Wage inflation will lead to price inflation, and vice versa.

2. The Fed will raise interest rates more rapidly than it would have without the tax cuts. But it will be under intense political pressure to limit those increases to keep the economy hot. Fixed-income investments will continue to perform poorly, even as your cost of living rises.

3. Gutting the Consumer Financial Protection Bureau (CFPB) will lead to more reckless lending, and thus more money in the real economy, adding fuel to the inflationary fire.

4. The enormous firehose of cash from slashed corporate tax cuts, tax cuts at the top of the income ladder and repatriation of foreign profits will continue to push the most dangerous inflation of all — the stock market bubble — to new heights. Until, one day, it doesn’t.

Inflation, weak fixed income performance and a growing asset price bubble. Are you ready for that?

If not, you need to consider a safer strategy now.

Kind regards,

Ted Bauman

Editor, The Bauman Letter

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Source: Banyan Hill

You’ve heard it a thousand times: Past performance is not a guarantee of future performance.

Yet, past performance is all we have to forecast the future. This is true everywhere. If you play fantasy football, you make decisions for next weekend based on past performance. When hiring or promoting someone, managers make decisions based on past performance.

So, it makes sense to consider the past when thinking about the future for the stock marketand how to invest your money.

I use several mathematical tools based on the past to forecast the direction of price moves. And my tools tell me 2018 could be a challenging market environment.

My 2018 Stock Market Forecast

The chart below shows my 2018 forecast for the Dow Jones Industrial Average.

The forecast shows the direction of the expected trend, not price levels. For prices, I expect new all-time highs for major stock market averages in the first months of 2018.

This forecast is based on a combination of the recent price action and longer-term cycles. For example, one of the cycles is the presidential cycle. This is a recurring four-year pattern related to the president’s term in office.

According to a recent article in in The Wall Street Journal, the second year of a president’s term has the lowest average return. That includes data going back to 1896.

This is a great example of why you shouldn’t believe everything you read in The Wall Street Journal. The 20th Amendment to the Constitution moved the presidential inauguration from March 4 to January 20. That means the presidential cycle shifted slightly in 1937.

In the chart above, I combined the presidential cycle since 1937 with other cycles and then accounted for recent market action. The result is generally a more accurate roadmap for the year ahead than simpler models.

How to Invest Your Money in a Difficult Market

In 2018, we should expect a difficult stock market. The chart shows a trading range is likely to develop in the first months of the year. This will likely include at least one pullback of 5% or more.

Between April and June, a drop of 10% or more is likely. Treat that as a short-term buying opportunity. But be ready to sell quickly in September, where there is a high probability of a decline.

It’s too early to tell with certainty, but the decline I expect in September could be the beginning of a bear market.

A bear market beginning next fall fits with my forecast that the Federal Reserve is set to trigger a recession at its December meeting. I explained why in an earlier article.

But, as I noted then, the stock market tends to climb before a recession. The S&P 500 rose an average of 22% in the year before the past three recessions triggered bear markets.

The roadmap confirms my Fed recession indicator. This all means that now is the time to buy stocks, with a plan to sell next year when the bull market finally ends.

Over the next few weeks, I’ll go into more detail on my 2018 forecast.

Regards,

Michael Carr, CMT

Editor, Peak Velocity Trader

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Source: Banyan Hill 

The unemployment rate is probably the most widely watched economic indicator. In part, that’s because the Federal Reserve ties its policies to the rate.

That makes the unemployment rate important to the bond market. Interest rates affect the fair value of stocks. In the stock market, traders buy or sell immediately after the monthly update to the number.

Economists also watch the numbers. Many of them try to forecast changes in unemployment. One of the tools they use is data on the amount of money employers pay in taxes.

As you know, employers withhold money from your paycheck. They deposit these payroll taxes a few days after they pay employees. The Daily Treasury Statement offers real-time data on the amounts of deposits. This indicator shows unemployment could be rising.

(Source: MathInvestDecisions.com)

The chart shows the change in deposits compared to a year ago. Data is seasonally adjusted to account for swings in hiring and firing. For example, the school year requires an adjustment. Otherwise, employment data falls off when classes end, and then jumps when students go back to school.

The trend in payroll taxes is down. This means employers are paying less to employees.

The chart shows that there is serious weakness in the employment market. There are several possible causes for the decline.

One possibility is that employers aren’t hiring as much as they were a year ago. Data shows the pace of hiring slowed over the past year.

It’s also likely employers are paying employees as little as possible. Federal Reserve datashows consumers are spending more on necessities and have less income for other items. This confirms wages are growing slowly, if at all.

This is something to watch for stock market investors. Bear markets begin after unemployment starts rising. We aren’t there yet, but we need to be watching for a change in the unemployment rate.

Regards,

Michael Carr, CMT

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill

Now is a great time of year to be a short-term trader. That’s because seasonal trends are showing buy signals in stock markets around the world.

Seasonal trends are well-known in the United States. In the U.S., traders who follow the advice to “sell in May” know the best six months just started.

However, end-of-year trends exist in markets outside the U.S., too.

Strong Seasonal Trends

Charts show strong seasonal uptrends are beginning in Germany, Sweden and Japan. ETFs allow U.S.-based investors to benefit from these trends.

An ETF, or exchange-traded fund, is an investment fund that tracks an index. The manager will buy or sell whatever’s required to deliver the same performance as an index.

To find trades, I looked for seasonal uptrends in charts of global indexes. There were many. But not all trends were up. The chart above in the lower right corner shows a strong downtrend.

The chart in the upper left corner is the seasonal trend in the iShares MSCI Germany ETF (NYSE: EWG). This is an ETF that tracks the DAX Index, a benchmark index for German stocks.

I created a simple trading strategy for this and the other ETFs. If the seasonal trend is up and the ETF is above its 200-day moving average, buy call options on the ETF.

A call option gives the buyer the right, but not the obligation, to buy the ETF at a specified price at any time before the option expires. You won’t have to exercise the option to collect a gain. You could simply close the option with a sell order.

Options offer defined risks. You can never lose more than what you paid for the option. This means risks are small in dollar terms since options usually trade for just a few hundred dollars or less.

or EWG, traders could buy January 18 $33 call options for about $100. This is the right to buy 100 shares of EWG at $33 any time before January 18. If EWG trades at $35 before the end of the year, gaining about 6%, this option will deliver a gain of at least 100%.

So, the risk is $100, and the possible gain is more than $100 on the trade. But how likely is it that EWG will gain 6%?

Well, in the past 20 years, EWG gained an average of 9.5% in the last two months of the year. Of the 12 trade signals, 11 were winners (91.7%).

Larger Potential Returns

The iShares MSCI Sweden Capped ETF (NYSE: EWD) is also a reliable trade. Call options expiring in March offer a way to benefit from this trend. In the past 20 years, there were 11 buy signals and 10 winners (90.9%). On average, EWD gained 8.2% in the last two months of the year.

There’s another strong seasonal trend in Japan. Here, the WisdomTree Japan Hedged Equity ETF (NYSE: DXJ) is the best ETF to use. This ETF hedges currency risks and closely duplicates the performance of stocks in Japan.

DXJ gave just four buy signals over the past 10 years, but each one was a winner. The average gain was 8.2%.

There are also some downtrends at this time of year. You can see the iShares JPMorgan U.S. Dollar Emerging Markets Bond ETF (NYSE: EMB) in the chart above in the lower right corner. This ETF has a strong downtrend, falling more than 80% in the last two months of the year.

Put options allow us to benefit from downtrends. They increase in value when a stock or ETF declines in value. Puts also have limited risk, sell for a few hundred dollars or less and offer larger potential returns in percentage terms.

A January put option in EMB offers exposure to the ETF’s expected downtrend.

To learn more about using options to turbocharge your portfolio, you can watch the special video presentation for my Peak Velocity Trader service.

Regards,

Michael Carr, CMT
Editor, Peak Velocity Trader

In this exciting NEW VIDEO, Wall Street legend and former multibillion hedge fund manager Paul Mampilly pulls back the curtain on the biggest investment opportunity in the market today. What insiders are calling “The Greatest Innovation in History,” this revolution will mint more millionaires and billions than any technology that came before it. Right now, the current market for this technology is just $235 billion, but given how fast this technology is moving experts predict it will soar to $19 trillion by 2020. But 8,000% growth is just the beginning—and now’s your chance to get in on the action. [CONTINUE TO VIDEO]

Source: Banyan Hill

“What’s the stock market?”

If you’ve ever had a kid, you’ll know my preteen daughter wanted an answer now. Not three seconds from now. NOW.

Under such enormous pressure to impart professional expertise to my offspring, I told her it’s where people buy and sell shares in companies. Inevitably: “What’s a share?”

Eventually she had interrogated me to her satisfaction. But now I had questions.

Every day, I use the S&P 500 as a shorthand for “the stock market.” Like most major indexes, the S&P 500 is weighted by the value of each company’s total shares outstanding. That means it assigns a proportionate weight to each of its constituents with giants like Apple Inc. (Nasdaq: AAPL) having the greatest influence on the index.

But why, Daddy?

That means SPY, or any other traditional index-tracking ETF, is skewed toward moves in mega-cap stocks.

Why should we consider that top-down approach to be “the stock market?” And what would happen if we didn’t?

Playing With Weights

Over the past decade, investors have been pouring money into index-based ETFs. These typically hold the stocks in the underlying index, ranked by their size.

But did you know that most of the time, the largest stocks tend to perform worse than the average stock in their sector? Historically, the biggest firm in any given sector underperforms the average stock in that sector by 3.5% a year over time.

Scaled up to the level of an entire index, that discrepancy means you might be missing a lot of gains if you stick with plain-vanilla ETFs like SPY.

What happens if you change the weighting of the stocks in an index?

The chart below shows the normal S&P 500 (black line) compared to an index that weights each company equally (red line) — i.e., 0.2% to each company regardless of size.

From 2013 to July this year, the equal-weighted index beat the S&P 500 almost all the time. In fact, if you’d invested $10,000 in an equal-weighted index ETF in 2003, you’d have earned 33% more than a conventional ETF like SPY by now.

Equal-weighted indexes like the Guggenheim S&P 500 Equal Weight ETF (NYSE: RSP, above) have been around for a while. But now someone wants to go even further and launch a reverse-weighted ETF.

Even Stranger Things: The Upside-Down ETF

The Reverse Cap Weighted U.S. Large Cap ETF (NYSE: RVRS) launched last week. It holds all the components of the S&P 500 but flips their weighting, so that the proportions of its components are determined by the inverse of their relative market capitalization. Apple is the largest stock in the S&P 500, but it is the smallest component of the new fund.

By contrast, the smallest stocks in the S&P — Navient Corp. (Nasdaq: NAVI), Chesapeake Energy Corp. (NYSE: CHK) and Patterson Cos. Inc. (Nasdaq: PDCO) — are the largest components of the fund. Combined, they are worth just 0.4% as much as Apple.

In back testing, this “upside-down” ETF outperformed both the normal S&P 500 and an equal-weighted model over the last 10 years.

What’s It For?

If you follow the ETF industry as I do, you’re probably tempted to think that the guys who design these things are running out of ideas. C’mon … an upside-down ETF?

But the back testing figures don’t lie. Both the equal-weight and the reverse-order ETFs beat the market over time.

But that’s the operative term: over time. ETFs like the new reverse-weighted RVRS are designed to take advantage of known relationships between variables over longer periods. RVRS outearns conventional indexes because, as I said above, large caps typically underperform smaller caps over time. The reverse is therefore also true.

Respect the Fourth Dimension

Allocating part of your portfolio to a proven, time-based strategy like alternative-weighted index ETFs is essential. The tested long-term relationships underlying them practically guarantee they will beat the market. They won’t win every month, but they’ll safely generate excess returns over time.

But there’s another strategy using time-tested statistical relationships that can achieve that same level of safety with even greater returns over time. It’s called the Smart Moneysystem, and it’s part of my monthly Bauman Letter newsletter.

Besides the underlying mechanics, the big difference between the Smart Money system and these alternative-weighting ETFs is that Smart Money beats the S&P 500 over time … and in the short term. For example, the Smart Money system is up 24% this year versus just 16.7% for the S&P 500.

Over the last 10 years, Smart Money’s returns were 125% higher than the S&P 500. That’s waaaay higher than the excess gains from the alternative-weighting ETFs.

So, if you’re interested in achieving solid, safe, long-term gains that beat the market, by all means play with alternative-weighting ETFs.

But if you want to do that and make serious money, follow the Smart Money system.

Kind regards,

Ted Bauman
Editor, The Bauman Letter

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Source: Banyan Hill 

Stock prices are elevated, and volatility is depressed. What more could a bull ask for? The S&P 500, along with virtually every other major index, closed last week at yet another all-time high. But despite the broader market gravitating higher nearly every single day, there is quite a bit of rotation going on. And that works out to the favor of spectators seeking stocks to buy.

Indeed, pattern spotters had a fruitful weekend. Their bags are teeming with attractive setups, from retracements and breakouts to flags and pennants.

Three such setups will be on full display today. They’re all liquid and potential candidates for options trading as well. Check out these three stocks to buy. 

3 Stocks to Buy: Delta Air Lines (DAL)

Delta Air Lines, Inc. (NYSE:DAL) shares recently returned to an uptrend during a rousing, high-volume breakout that delivered shares back above all major moving averages. Traders unwilling to chase will be happy to note, however, that DAL stock just fell back to a pivotal support level, providing an attractive, low-risk entry.

What we’re seeing is a re-test of the breakout area ($49.50). And if old resistance becomes new support, we should see buyers step up to kick-off a new advance. If options trading is your gig, the implied volatility is still slightly elevated, so short premium strategies are worth a shot.

If DAL stock trades above Friday’s high ($50.69) then sell the Dec $48/$45 bull put spread for 53 cents.

3 Stocks to Buy: Johnson & Johnson (JNJ)

Johnson & Johnson (NYSE:JNJ) shares boast one of the cleanest pullback setups on the Street. They recently broke out of a three-month base on heavy volume. The catalyst for the surge was an earnings report which gave shareholders something to cheer about.

Last week’s profit-taking ushered JNJ back to its rising 20-day moving average, and now a low-risk entry is in the offing. With an implied volatility rank of 57%, options in JNJ remain pumped even more than DAL.

To profit from continued strength, sell the Dec $135/$130 bull put spread for 58 cents. If the stock remains above $135 for the next month, you’ll capture the max reward of 58 cents.

3 Stocks to Buy: Nike (NKE)

Nike Inc (NYSE:NKE) shares have been locked in a trading range all year long. Earnings reports have sent the stock ping-ponging back and forth every quarter making it difficult for a directional trend to take root. With the recent upside breakout, buyers have once again wrested control, and I think NKE is worth trading to the long-side.

Last week’s pullback carried the stock right back to support, and Friday’s bullish reversal candle confirmed dip buyers want in. To join them, buy the Jan $55/$60 bull call spread for $3.40. You can more than double your money if NKE can rise above $60 over the next two months.

Source: Investor Place

“Don’t be mad.”

Interesting first words to hear when you walk into your girlfriend’s house. To top that, the first thing I saw was her holding a piglet.

It turns out that she had just bought a pig. To my surprise, she bought it with the intention of keeping it as a pet, rather than frying it. That was a little over a year ago, and we still have Charlotte, who has grown from a 10-pound piglet to a barrel-shaped, 150-pound bundle of joy.

As a pig owner, I have done some research on having them as pets. And one specific thing that I’ve read multiple times is that, despite being so well-insulated, they get cold very easily. This is because they don’t have a specific gene, called thermogenin, that is used to generate heat in the body without shivering. This results in millions of pigs on farms freezing to death every year.

But now, with the discovery of a new technology called the CRISPR-Cas9 system, there’s a way to fix that. With this technology, which MIT Technology Review has called “the biggest biotech discovery of the century,” there is a way to add or remove genes to or from any living thing.

Simply put, the CRISPR-Cas9 system is something that occurs naturally in every living thing as a mechanism to fight off potential viruses. CRISPR is basically the method that bacteria use to identify and destroy viruses that have previously occurred in the body. And then Cas-9, a protein that’s part of the CRISPR system, cuts out and degrades that viral DNA.

But what does this have to do with pigs? Recently, scientists in China used CRISPR to edit pig cells, which successfully edited those pigs’ DNA to carry that one gene. Not only does it help the pig stay comfortable, the internal heat that it produces is also a natural fat burner. This produces less fatty meat, making for a healthier product.

Right now, there are several publicly traded companies that dedicate their entire business around this technology. Although these companies are very speculative at this point, they are part of the future of the treatment of diseases. In fact, this entire industry is going to explode over the next eight to 10 years.

Some Extremely Impressive Things

This year alone, CRISPR has been used to accomplish some extremely impressive things. One recent major discovery was the elimination of HIV infection in live animals.

A well-known, dangerous trait of the HIV virus is that it can lie dormant in someone’s body before suddenly activating. But with CRISPR, the DNA that carries this virus, both active (acute) and dormant (latent), was successfully removed from the animals’ genomes.

Another breakthrough was made when this technology was used to battle cancer in mice carrying prostate and liver cancer cells. The actual gene that was targeted to be removed is called MAN2A1-FER, and it is present in humans as well. In fact, it has been found in aggressive forms of cancer in the prostate, liver, lungs and ovaries.

To combat these cancer cells, CRISPR-edited genes were injected into some of them. As a result, the mice injected with the CRISPR genes saw a tumor size reduction of up to 30% with a 100% survival rate, while the mice that were not given the CRISPR genes did not survive.

If these tests continue to be successful, this form of therapy could be the long-awaited cure for cancer, or, at the very least, an alternative to chemotherapy that does not involve the harmful side effects.

The Breakthrough in CRISPR Technology

Last year, the entire CRISPR-Cas9 market’s revenue was $361 million. But by 2025, that revenue is expected to be about $6 billion. That’s over 1,500% of growth in just nine years.

And a stock in this industry that really caught my eye is Crispr Therapeutics (Nasdaq: CRSP).

Crispr Therapeutics is a small company that has only been publicly traded for about a year. However, it is completely dedicated to this highly anticipated field of gene editing. Of course, this is an industry in its beginning stages, so right now everything that Crispr does is still in the testing phase; it has no commercialized products.

However, it does have some very important projects in the making. Its most advanced treatment right now is called CTX001. Crispr’s goal is to be able to use it to treat blood disorders called beta-thalassemia and sickle cell disease.

Both diseases are cause by mutations in the same gene. Together, they are found in almost 400,000 births per year, require major and frequent amounts of treatments, and have high mortality rates. By the end of this year, Crispr is on track to begin clinical trials to test this treatment on beta-thalassemia.

Crispr also has two very important partnerships with pharmaceutical giants Bayer and Vertex — these companies are worth tens of billions of dollars and have plenty of money to fund companies like Crispr’s operations. In fact, Crispr has received over $5 million last year and is on pace to receive $14 million this year through collaboration revenues from these companies.

While revenue at this point in Crispr’s life cycle is not a big deal, it’s still very important to note that it is receiving this type of funding. In addition to this, it has $272 million of cash in the bank.

The breakthrough in CRISPR technology could also serve as an important method of treatment in precision medicine. For more information on precision medicine, you can watch Paul Mampilly’s introductory video by clicking here.

Regards,

Ian Dyer
Internal Analyst, Banyan Hill Publishing

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Source: Banyan Hill