1/2/2021
WILL REDDIT CHANGE THE MARKETS?
Best Choices per Asset Class now & for the next weeks to months
Stocks
BUY GAN Limited, (GAN) a recent 2020 IPO, now at 23.61 with a market cap of 860M USD operates as a business-to-business supplier of internet gambling software-as-a-service solutions to online casino gaming and online sports betting applications in the United States. It offers and licenses GameSTACK, a proprietary internet gambling enterprise software system as a turnkey technology solution for regulated real-money internet gambling, encompassing internet gaming, internet sports gaming, and virtual simulated gaming. The company also offers a range of professional and managed services designed to deploy and provide ongoing operational support for its software systems. It serves regional operators and individual tribal casino operators.
The company is very well positioned to take advantage of the coming legalization of gambling/betting in many US states. After the crisis the need for federal & state governments to fund fiscal policy & infrastructure building will push them to seek funding from gambling operations.
Besides the US market, the company recently acquired Coolbet, a sportsbook tech provider with an international footprint & very good tech know-how. The company is well run, has a brand, has a big tailwind behind it, the fundamentals are good & the price action suggests higher prices.
Our quantamental model which uses fundamental factors, sentiment & technical price action indicators as inputs has raised a flag since the start of the new year. More specifically according to our model there is a probability of 74.9% of its price reaching 35 USD within the next 12 months. This indicates a BUY investment signal for medium-term investors for a potential profit of more than 50%. The risk is 3/5 due to the industry risks & its low market cap.
Commodities
BUY Gold now at 1863
There are many reasons to support higher gold prices in the next months to some years. The main reasons are:
- the weakening of USD due to the dollar supply growth in order to support the bigger fiscal deficits.
- the destabilization & loss of confidence in fiat currencies, especially in USD
- the historical low to moderate gold price levels, compared to other assets
- the peak of the global gold production
Even though Gold may see a lot of ups & downs, eventually the central bank policies will support much higher prices.
Currencies
Sell USDCAD for the long run, now at 1.2773
Although short term, USD may exhibit some strength, we definitely expect the decline of the USD to continue on a mid to long term basis. There are many reasons supporting this scenario, the big US debt, the yield curve manipulation by FED, the fiscal expansion, the alternatives to USD gaining strength, etc. Adding to that the declining shale oil production in the US resulting in more oil imports and one of the secular trends we see is the continuous downtrend of USDCAD if we assume no special surprises from the Canadian side. Based on that we may see the USDCAD coming to the levels of 1.10 and even to parity in the next years.
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Weekly Report: Currencies, Indices, Commodities and Cryptos
General Comment
The world investment community is in the centre of the case of GameStop, an American video game, consumer electronics and gaming merchandise retail company which performed profits like 300% as a result of a war between the retail traders who got organized through Reddit (a social media site) and the professional traders– hedge funds. The retail traders, learning that many hedge funds had short positions at the GameStop company, decided to buy it in an organized manner in order to raise the price. Of course, this fact was followed by tragicomic events as many brokers put restrictions due to high volatility and many investors got upset. This was not a single phenomenon as other stocks became a matter of speculative games and during the last days there’s a new “attack” to the short–sellers at silver. The biggest silver ETF in the world iShares Silver Trust announced on Friday that there’s a flow more than $1 bn at silver, according to BlackRock. Do we enter into a new era regarding trading ή or is it just the red alert warning for an upcoming stock collapse, as New York Times stated at 27/1?
In other respects, the stock markets had an important correction because on top of the aforementioned there’s also the big concern about the COVID-19 pandemic as the problems regarding the vaccinations and the mutations still exist. USD was strong against the other major currencies while gold and oil did not perform any remarkable changes.
The current week contains important scheduled news and announcements such as the NFPs in USA on Friday and along with the above, will drive the trend and the volatility of the markets.
EURUSD (Euro vs US Dollar)
Bearish was the last week for EURUSD, which opened at 1.2170 and closed at 1.2137. USD appeared stronger as the attention of the investors fell on stock markets and on the GameStop phenomenon. Despite all, the uptrend of the pair that started since the last May, has not changed so far and a possible USD will likely return to its weakness. The price area of 1.2050 is considered to be critical and a possible bearish breakout may lead to 1.20 or even lower but prices above 1.2190 are able to establish the uptrend again. The weekly volatility can be high, especially by the end of the week along with the January job market report in USA. We’ll try buy positions this week on EURUSD.
GBPUSD (Great Britain Pound – US Dollar)
GBPUSD had another bullish week, even if it was mild compared to the previous ones. It opened at 1.3676 and it closed at 1.3699 as the outlook of the pandemic in UK is relatively improved (it’s the 3rd country in the whole world in vaccinations percentage – more than 8 million people have already vaccinated) and strengthened GBP, above the strong USD. At 1.3759 exists the high price of the last 22 months and a possible bullish breakout will cause euphoria to the investors on a possible road to 1.40. On Thursday we’ll wait to see the Interest Rates announcement in UK along with the Monetary Policy and on Friday the important speech of Bailey from Bank of England. We’ll insist on buy positions for one more week.
USDJPY (US Dollar – Japanese Yen)
Strongly bullish was the last week for USDJPY since it opened at 103.76 and closed at 104.72. It was the biggest percentage raise since last November as USD got stronger even if the 10-year US treasury yield remained almost unchanged at 1.08%. Many analysts claim that this rise may trigger the downtrend reversal as the pair is in a downtrend during the last months but a possible return of USD in its weakness is able to bring the pair to the area of 103 again. In case of the bullish reaction continuation though, especially above 105 or 105.70 then the downtrend reversal is able to stay and to establish so we’ll try buy positions this week, based on this case.
EURJPY (Euro – Japanese Yen)
It was the second strongly bullish week in a row for EURJPY, which opened at 126.28 and closed at 127.10. The pair returned to the price area of 127 which is a strong resistance of a further rise as the price of 127.50 is a two years high price. Obviously, the trend of the pair is bullish and despite that the resistance is strong in the area of 127 – 127.50, we’ll try buy positions.
EURGBP (Euro – Great Britain Pound)
It was a bearish week for EURGBP, since it opened at 0.8892 and closed at 0.8858, exactly on the long run support of 0.8860. This price area is extremely critical: either we’ll see a bearish breakout of 0.8860 which may drive the pair to 0.85 (perhaps with a stop at 0.8670 support) either it will return above 0.8860 and it will return back to its road to 0.90. Early this week though, the pair has reached the area of 0.8830, favouring the first scenario, so sell positions is what we’ll try this week.
USDCAD (US Dollar – Canadian Dollar)
It was a week of bullish reaction for USDCAD as it opened at 1.2706 and closed at 1.2777. USD appeared stronger and the consolidative oil prices did not give to CAD the extra boost. There are certain reasons for USD to return to a downtrend: the debt, the fiscal expansion, the yield curve manipulations are some of them. If we take under account the oil production cuts that may affect the oil prices and accordingly the CAD, we may see the pair into a heavy downtrend during the next period so sell positions is what we’ll open.
USDCHF (US Dollar – Swiss Franc)
Bullish was the last week for USDCHF which opened at 0.8851 and closed at 0.8907. USD was strong but there is a strong resistance during the last weeks close to 0.8925, which may be combined to a possible return to USD weakness and finally we may see the pair lower, to the price area of 0.8830. By following this scenario, we’ll try sell positions this week.
AUDUSD (Australian Dollar – US Dollar)
It was a bearish week for AUDUSD since the pair opened at 0.7715 and closed at 0.7644. USD got stronger but there are also certain concerns for a comeback of the COVID-19 pandemic in Australia as they found cases of the UK and the South Africa mutations. Early this week, we saw the Chinese Caixin PMI having a result worse than expected and the pair is dropping because USD is temporarily strong too. If USD turn to weak, we may see the pair above 0.77 again and by trusting this scenario, we’ll try buy positions.
SP500
Last week passed by with a strong correction for SP500, as it closed at 3,697 points, while the losses touched 3.5%. The unprecedented situation of the retail traders’ association through social media in combinations with the increased uncertainty due to the pandemic expansions, caused massive sells even if the big companies results that announced during the last week were not negative at all. Early this week, the futures of the Index are in a profitable area but it takes a recovery above 3,740 points in order to offset the correction of the last week. On the contrary, below 3,650 points μονάδες (which is two months low price) we may see much heavier corrections. Trusting the first scenario, we’ll try long positions on SP500 this week.
DAX30
Heavily bearish was the last week for DAX30 which closed at 13,416 points with losses more than 3%. Early in the current week, the Index is moving above 13,500 points and this is surely a positive fact for its future direction. Below 13,300 points though, the correction scenario will get some extra points but we’ll prefer long positions this week too.
FTSE100
It was the 3rd bearish week in a row for FTSE100, as it closed at 6,330 points, performing losses close to 5%. The Index starts having a downtrend and the price area of 6,260 points is the next major support. The downtrend of the Index during the last month, needs a bullish reaction above 6,630 points in order to be interpreted as a downtrend reversal and we believe that this is something possible so we’ll try long positions this week.
Gold
Consolidative, more or less, was the last week for gold by closing at $1,850 with mild losses like 0.30%. The USD strengthening and the upside-down situation on the stock markets caused a balanced stability on the gold prices which may turn into an uptrend very soon if only USD return back to its weakness. The fears regarding the pandemic, the updates on the stock markets and Indices as well as the critical news & announcements of the week (NFPs mostly), will be the dominating factors on the gold prices. Above $1,880 a further rise is favoured but below $1,800, there is a higher probability for a strong correction. The first scenario seems more possible to us so we’ll prefer long positions.
US Oil
Oil has consolidations for the 3rd week in a row, as the next month’s oil futures closed at $52.13 with a mild profit of 0.33%. The deteriorating situation of COVID-19 and the vaccination delays have caused certain concerns and doubts regarding the demand recovery while the recent production cuts and the lower numbers in US inventories seem to have been absorbed by the existing price. Below $51.40, there is a high probability for reaching the area of $50 while there are serious analysts that predict prices close to $45 too, if things cannot get better regarding the COVID-19 expansion. We should have a solid bullish reaction in case of a bullish breakout above the two-year high price at $53.90 but this seems as a low probability scenario so we’d prefer short positions for the current week.
Bitcoin
It was a week of a mild bullish reaction for Bitcoin after two bearish weeks. Bitcoin closed at $33,141, performing profits a bit more than 2.5%. The volatility remains very high since we saw during the week prices below $30,000 while it was more than enough for Bitcoin to perform a 30%, a single tweet by Elon Musk. After the two weeks correction, Bitcoin seems able to keep its heavy uptrend, especially above $35,000 and of course above last week’s high at $38,620. In the south direction, the first support exists at $32,200 and of course below $30,000 things are getting much worse. We’ll try long positions this week.
