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Buy the Post Bubble Collapse

Posted: 21 Jun 2019 01:50 PM PDT

America to Legalize Weed in 2020

Something just happened in the marijuana industry that flew largely under the radar.

Yet, the implications are earth-shattering – both for the pot market as a whole and for investors who take notice early.

You see, just a few weeks ago, the largest cannabis company in the world entered into a multi-billion dollar deal with a well-known American cannabis firm.

Of course, deals like this happen all the time in big business.

But this one was different…

Because this deal is set to take effect only after the U.S. federal government repeals marijuana prohibition.

And with billions upon billions of dollars at stake, it's pretty easy to see that someone out there knows something.

In short, it's extremely likely that the end of marijuana prohibition in the United States is much, much closer than originally thought.

In fact, it could happen by next year.

Click here to learn which stocks you should be watching right now.

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Posted: 21 Jun 2019 03:07 AM PDT

S&P 500 Index Hits All Time High

Posted: 21 Jun 2019 03:00 AM PDT

Stocks, gold, and oil all surge higher Thursday.

Markets made another run at all-time highs on Thursday. The S&P 500 index hit new highs during intraday trading.

The move shrugged off geopolitical events, such as Iran's shooting down of a U.S. drone, in a clear escalation of conflict between the two countries. Bullish earnings and some big public offerings helped send markets higher, but stocks moved off their highs as President Trump made belligerent comments regarding Iran.

The real push came following Wednesday's Fed meeting, as nearly 80 percent of traders surveyed now see the likelihood of interest rate cuts before the end of the year. A majority now sees a rate cut as early as next month.

While the Fed has yet to fully commit, its bullish comments in recent weeks have moved markets higher, even as economic data suggests an economic slowdown. While a slowdown in growth may move things closer to a recession, the United States still remains on the growth side.

The dovish comments moved other assets higher as well, with gold rallying near 3 percent to hit $1,380. That is a five-year high for the metal in U.S. dollar terms. Geopolitical events led to a large rally in oil prices as well on Thursday. It is unusual for all these assets to move higher at once.

Unusual Options Activity: Snapchat (SNAP)

Posted: 21 Jun 2019 03:00 AM PDT

Traders bet on rise in social media company.

A bullish bet is being made that shares of Snapchat (SNAP) will continue to rally in the next few weeks.

On Thursday, over 11,700 contracts of the July 12th $15.50 call options contracts had been traded, against an open interest of 106, representing a 110-fold surge in volume. This bet, with shares currently at $14.70, implies that shares will rally by at least 5.4 percent in the next month.

Shares of the social media giant have been rallying in recent weeks along with the rest of the market. Shares hit a 52-week high of $15 per share in trading on Thursday. Operationally, the company has struggled in the past year amidst a slowdown in user growth, but has been working on ways to increase user time on the Snap app.

Action to take: With the contracts trading around $0.38, this is an inexpensive bet on Snapchat shares heading higher—and an inexpensive trade to bet on an overall market rally as well.

It could easily double in price, although if shares of Snapchat fail to clear the strike price of $15.50, the option will go to zero. With only 22 days left to expiration, however, traders may want to pay a bit more to get a January 2020 or later option to follow this trade.

Slack Joins IPO Club

Posted: 21 Jun 2019 03:00 AM PDT

Software company sees shares soar over 40% in debut.

Cloud-based team collaboration software company Slack (WORK) went public on Thursday, joining a busy field of companies making the move to stock exchanges after years or being privately-held.

Shares of the company were originally priced at $26, giving the company a rough valuation of $15.7 billion. However, trading began around $36-37, indicating that shares gained about 40 percent from their open.

Unlike many companies going public for the first time, Slack pursued a direct listing, skipping the typical IPO process involving a series of underwriting banking partners. The move saves millions in fees that would otherwise go to investment banks.

Slack was launched in 2013 as a side project to improve team communication for a game company, but quickly rose to become a widely-used tool for staying in touch with coworkers.

Action to take: While there are plenty of IPOs to invest in, early trading can be highly speculative with big gains, and big losses. Without profitability, determining a solid valuation is impossible, but it is likely below the estimated market cap of $22 billion based on where shares traded following the IPO.

Company insiders typically have a lockout period the first few months of trading. Investors would best sit this one out as well, at least until the insider lockout period ends, as there could be selling pressure then.

Insider Activity: Scientific Games Corp (SGMS)

Posted: 21 Jun 2019 03:00 AM PDT

Shares of gaming technology company are down over 60 percent from 52-week highs.

Billionaire investor Ron Perelman bought 120,000 shares of Scientific Games Corp (SGMS) on Wednesday, June 19th. The total cost came in at over $2.34 million. Perelman is already a director at the company, and also a 10 percent owner as well.

The Las Vegas-based company develops technology related to the gaming industry, including physical gaming machines, video lottery systems, and related hardware and software.

With data showing a slowdown in tourism to Las Vegas, and with gaming revenues down, shares of the company have been hit hard in the past year, down over 63 percent. Shares currently trade near $20, against a 52-week high of $54.

With a company that's barely been profitable and has over $10 billion in debt, it's easy to see why shares have suffered.

Action to take: Shares look like a bit of a gamble based on the company's debt right now. However, buying heavily indebted companies and profiting from them is a classic Perelman move.

Nevertheless, most investors may not have the patience to sit through the time it will take for such a trade to play out. Investors would be better served in one of the other gaming-related stocks with insider buys of late.

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Posted: 21 Jun 2019 12:59 AM PDT
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