This morning I stumbled upon an interview on YouTube that resonated with me. This interview from yesterday was done by anchor/producer David Lin of Kitco News (twitter: @davidlin_TV). David interviewed Gareth Soloway, technical analyst/head master trainer (@GarethSoloway). Mr. Soloway’s opinions on the state of the stock market, based on his technical analysis, were discussed.
I have watched various technical analysts give their opinions on the stock market in the past. It’s funny how two analysts can look at the same chart and provide completely different viewpoints. Some look at a stock chart and give valid reasons why the stock will go up, and another trader will give valid reasons why the stock will go down. So it is up to the viewer to make their own conclusions. Gareth’s points resonated with me and my style of trading. Other traders will have their own views that differ. With this disclaimer stated, let’s get started.
Below is the 25 minute video. No, you do not have to view it. I’m including it for my own benefit.
With so many sectors and stock prices still very high, it is difficult to find clear-cut buys right now. At least that is my opinion, and that of Mr. Soloway. As a side-note, there are now many stocks that have fallen from their highs. More and more it appears that a certain percentage of big name stocks are holding up the market, as these big name stocks are weighted heavier on the stock market indexes. Mr. Soloway provided three stock buy recommendations in the video, plus one additional stock in a recent tweet.
Here they are:
Baidu (BIDU), Alibaba (BABA), Viacom (VIAC), Las Vegas Sands (LVS).
To be transparent, I purchased all four of these stocks this morning. I bought just a small number of shares for each. If these stocks continue to drop, I may pick up more shares. Or, alternatively, once technicals reflect a solid base and shares begin ticking up, I may add more shares.
China Stocks: BIDU and BABA
China stocks have been under heavy pressure, with valuations cut roughly in half this year due to an ongoing government crackdown on high-tech China stocks. “Antitrust regulators issued new rules aimed at banning unfair competition. The new rules, proposed by China’s State Administration for Market Regulation, affect various areas, including false advertising and the handling of consumer data.” (source: Investors Business Daily).
There has always been greater risk investing in China stocks due to possible communist government interference. However, China tech stocks have enjoyed the same stratospheric rise in stock prices as U.S. companies until this year. And as Gareth Soloway states in the video, his long-term view is that China stocks will emerge out of this regulation, and prices will grind higher. He recommends buying small quantities of stock now from Chinese companies like BIDU and BABA. He is down in his own positions, and these stocks may drift lower before beginning their uptrend within about six months.
BIDU – Baidu, Inc. provides internet search services (and other services) primarily in China. Here is a 1-year stock chart (source: tastyworks).
What Baidu does can be compared to Google (GOOGL). Baidu has a $48 Billion Market Cap, compared to Google’s $1.8 Trillion Market Cap. Google is bigger, yes. But Baidu is big too.
Here is Google’s 1-year stock chart (source: tastyworks). See any differences between the two charts? Baidu is down, Google is up.
A similar comparison can be made between Alibaba (BABA), a China-based company ($451 Billion Market Cap), and Amazon (AMZN) ($1.6 Trillion Market Cap). They both sell goods online. Again, yes, AMZN is bigger. But BABA is big also.
Here is a 1-year chart of BABA (source: tastyworks)
Here is a 1-year chart of AMZN (source: tastyworks). Amazon actually dropped in late July 2021 after reporting quarterly earnings.
Late addition… Since I wrote the China section above, this morning, Mr. Soloway published two new tweets this afternoon. Here they are:
VIAC operates as a media and entertainment company worldwide. Its 1-year chart below reflects a huge drop in March 2021.
After a huge run-up in VIAC stock price to $102, per a Forbes 4/1/21 article, “The management decided to take advantage of the boom in the stock price by offering additional shares to raise close to $3 billion. This issue was priced at $85 per share, which was a 15% discount to where the stock had been trading on 22ndMarch. Along with the fact that the new issue would dilute the existing shareholders’ value, commentary from influential Wall Street research firms that the company’s management itself does not think that the recent rally of the stock to $100 is justified, led to a sharp reversal in fortune. This led to the stock tanking 50%. Additionally, the equity swap fiasco at Archegos Capital Management led to the hedge fund selling 30 million shares of VIAC stock in an apparent move to liquidate the fund, thus exacerbating the fall in the stock price.”
Per Mr. Soloway, two drivers may help the stock get moving back up. First, per Zachs’ 8/19/21 article, “ViacomCBS VIAC and Comcast CMCSA have announced a partnership to launch a new streaming service called SkyShowtime that will be available in 20 European markets. ViacomCBS and Comcast plan for the service to launch in 2022, pending regulatory approval. SkyShowtime will be set up as a joint venture between Comcast and ViacomCBS, giving them equal control.”
Second, a headline in an 8/19/21 Investors Business Daily article states, “Does ViacomCBS Video Streaming Deal Portend Bigger Transaction?”. Mr. Soloway predicts that VIAC may be bought out, and that it could in fact be Comcast that does it, based on their recent streaming partnership. He sees a $60 per share buyout possible, with the stock currently at $40 per share.
Las Vegas Sands (LVS):
“Las Vegas Sands Corp., together with its subsidiaries, develops, owns, and operates integrated resorts in Asia and the United States.” (source: Finance.Yahoo.com)
Mr. Soloway’s tweet from yesterday, below.
I chose these stocks because their stock prices have been hit hard, and the stories behind the big drops offer a good risk-reward. Will these four stocks go up from here? Only time will tell.