13 must-see charts, plus an $875 mini bitcoin-mining rig

Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through the current market and investing landscape. Here’s what’s on the docket:

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13 must-see charts for the 2nd half of 2021

An employee views trading screens at the offices of Panmure Gordon and Co

The first half of 2021 in the stock market has been full of once-in-a-decade events. We asked 5 strategists from leading institutions to outline the most compelling charts informing their outlooks for the second half. Here are their top 13.

Read the full story here:

13 must-see charts for navigating markets in the second half of the year, according to strategists at 5 top investment banks and asset managers


Check out this $875 mini bitcoin-mining rig

This is a photo of Idan Abada, a crypto TikTok influencer and miner, holding a mini bitcoin mining rig. He's wearing a black t-shirt.

Idan Abada has gone viral on TikTok with an $875 mini bitcoin-mining rig. He explained to us how mini miners are generally used, what people usually hope to accomplish, and which limitations can impede success.

Read the full story here:

An $875 mini bitcoin-mining rig is viral on TikTok. The video’s creator told us 3 reasons why it’s an appealing alternative for crypto traders, and explained its limitations.


An interview with Grayscale’s CEO

Michael Sonnenshein

Grayscale Investments has launched a DeFi index fund in collaboration with CoinDesk Indexes. The market-cap-weighted index fund is Grayscale’s 15th product and tracked 10 tokens as of July 1. Grayscale CEO Michael Sonnenshein told Insider why they’re launching the DeFi fund now.

Read the full story here:

The world’s largest crypto asset manager is launching a decentralized finance index fund. Grayscale CEO Michael Sonnenshein told us why the firm is betting on DeFi amid surging demand from institutional investors.


Stock pick central

Seeking experts who are willing to name names? Look no further:

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The stock market’s fear gauge spikes the most since February as the S&P 500 tests a crucial technical level

trader nyse
A trader works during the Fed rate announcement on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2019.


A 2% decline in the stock market on Monday sent Wall Street’s fear gauge soaring the most since February as investors grow concerned about the spread of COVID-19’s Delta variant.

The Volatility Index, also known as the VIX, soared as much as 34% on Monday to above the key 20 level, which is often monitored by CTA and Quant funds as to when to add or remove leverage from their portfolio and in-turn buy or sell stocks. Monday’s move in the VIX failed to outpace the fear gauge’s 46% surge on February 25.

The move higher in volatility comes as the S&P 500 tests a crucial technical support level that could determine the future direction of stock prices. The stock market’s 50-day moving average stood at 4,239, just below the S&P 500’s price of 4,242 at time of publication.

Moving averages are a lagging trend-following indicator that technical analysts use to smooth out price movements and help identify the direction of the current trend in place.

Traders view the the 50-day moving average, which is the average daily closing price of a stock over its previous 50 trading sessions, as a short-term moving average that often represents areas of support or resistance for a security.

If the stock market notches decisive and consecutive daily closes below the 50-day moving average, investors will likely look to the 200-day moving average as the next key support level. The 200-day moving average for the S&P 500 currently sits at 3,894, representing potential downside of 8% from current levels.

Conversely, if the S&P 500 is able to decisively close above its 50-day moving average, that would tee the market up to retest its record highs made last week at 4,393, suggesting potential upside of 4% from current levels.

Year-to-date, the S&P 500’s 50-day moving average has successfully acted as support five separate times amid market sell-offs.

Technical analyst Katie Stockton views the current sell-off as a “healthy pullback” that could represent a solid buying opportunity for investors.

“I would be looking for opportunities to add exposure (and, cover shorts) in the coming days assuming the signal gives way to stabilization,” Stockton told Insider on Monday.

Meanwhile, Fundstrat’s Tom Lee thinks stable bond yield spreads suggests that the stock market won’t stage a deeper sell-off, and that the rising fears of COVID-19’s Delta variant set risk assets up well for a rally in the second half of 2021.

“We don’t expect this period of chop to lead to a larger 10%-like decline for markets. Sure, a 3%-5% sell-off, even to S&P 500 4,100 is possible,” Lee said.

The S&P 500 is currently down about 4% from its record highs reached last week, and is up about 13% year-to-date.

S&P 500 stock chart
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The latest stock sell-off is a ‘healthy pullback’ and investors should refrain from panicking, according to one technical analyst

NYSE Trader
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 9, 2020.

  • The ongoing sell-off in the stock market represents a “healthy pullback,” technical analyst Katie Stockton said in a note on Monday.
  • The S&P 500 is down about 3% from its record high, with losses accelerating in Monday’s trading session.
  • “We think the pullback will be short-lived, maturing later this week,” Stockton said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

A sell-off in US stocks accelerated on Monday, with the S&P 500 falling as much as 2% amid investor concerns about rising COVID-19 cases due to the Delta variant.

But technical analyst Katie Stockton of Fairlead Strategies views the sell-off in stocks as a “healthy pullback” that will likely be short-lived and could present a buying opportunity, according to a Monday note.

The S&P 500 fell below its 20-day moving average on Monday for the first time since June, when a four-day pullback took hold in the market.

“But we think [this] pullback will be similarly short-lived, maturing later this week with the McClellan Oscillator and daily stochastics having already fallen to levels associated with the June low,” Stockton explained.

The McClellan Oscillator measures market breadth, which has been deteriorating in recent weeks as mega-cap tech stocks like Apple and Amazon led the market higher. Meanwhile, the Stochastic Oscillator is a momentum indicator that helps identify overbought and oversold levels of a specific security.

Stockton sees support for the S&P 500 at its 50-day moving average, which sits at 4,240 at time of publication. So far, that support has held, with the S&P 500 hitting an intra-day low of 4,239.82 before paring its losses.

“I think the market is getting flushed out here,” Stockton told Insider, adding that she is seeing lots of extremes in certain market indicators. Stockton said the S&P 500 e-mini futures flashed a DeMark “13 buy” signal, which hasn’t occured since June 21.

“I would be looking for opportunities to add exposure (and, cover shorts) in the coming days assuming the signal gives way to stabilization,” Stockton said.

Stockton isn’t alone in thinking that the current sell-off in stocks may be limited. Fundstrat’s Tom Lee argued in a note on Monday that the COVID-19 Delta variant represents “more bark than bite” and that the current sell-off sets stocks up well for a rally in the second half of the year.

S&P 500 futures stock chart
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A big sell-off in the stock market is unlikely for these 2 reasons, according to Fundstrat’s Tom Lee

Tom Lee
  • A large sell-off in the stock market is unlikely for 2 key reasons, Fundstrat’s Tom Lee said in a note on Monday.
  • Recent weakness in stocks can be largely attributed to rising COVID-19 cases, according to Lee.
  • “July chop ultimately a great set-up for risk assets to rally in 2H2021,” Lee said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Recent weakness in the stock market will likely be short-lived and won’t extend into a large decline for two key reasons, Fundstrat’s Tom Lee said in a note on Monday.

The stock market saw a steep drop to start this week, but Lee is maintaining a bullish outlook on steady bond yield spreads and a stable VIX term structure, according to the note.

Bond yields being stable relative to Treasuries is a positive signal for stocks, while the VIX term structure usually inverts when a correction looms. Right now, the VIX term structure, which is the difference between four-month and 1-month VIX contracts, remains flat, according to Lee.

As of Monday morning, the S&P 500 is down nearly 3% from its record high. According to Lee, the decline is tied to the recent uptick in daily COVID-19 cases due to the fast-spreading Delta variant among unvaccinated individuals.

But the rising COVID-19 cases represent more bark than bite, according to Lee, who doesn’t expect the decline in stocks to extend into a meaningful sell-off.

“We don’t expect this period of chop to lead to a larger 10%-like decline for markets. Sure, a 3%-5% sell-off, even to S&P 500 4,100 is possible,” Lee said.

Instead, Lee expects the current weakness in stocks to ultimately be “a great set-up for risk assets to rally” in the second half of 2021, especially as the ongoing rise in COVID-19 cases likely peaks sometime in August, according to the note.

“If India saw cases peak within 4-6 weeks from initial surge, we expect USA, UK and Israel to see similar trajectories,” Lee explained.

To take advantage of the potential rally in stocks later this year, Lee suggests investors focus on buying epicenter stocks that are poised to benefit from the ongoing reopening of the economy, as well as mega-cap tech stocks.

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How to spot short squeezes, plus 27 must-read crypto books

Hello everyone! Welcome to this weekly roundup of Investing stories from deputy editor Joe Ciolli. Please subscribe here to get this newsletter in your inbox every week.

GettyImages 1230440907

Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through the current market and investing landscape. Here’s what’s on the docket:

If you aren’t yet a subscriber to Insider Investing, you can sign up here.

Have thoughts on the newsletter? Just want to talk markets? Feel free to drop me a line at jciolli@insider.com or on Twitter @JoeCiolli.


How to spot short squeezes

Reddit WallStreetBets WSB

GameStop shares have skyrocketed this year after a meme-fueled short squeeze shocked Wall Street. Hedge funds continued to short the stock even after the initial whirlwind, which further fueled the trend. Longtime GameStop analyst Michael Pachter shared with us how investors can spot squeezes – and also successfully short stocks themselves.

Read the full story here:

A GameStop analyst shares how to successfully spot the short squeezes that send meme stocks to the moon – and warns of a common shorting mistake to avoid


27 must-read crypto books

A collage of crypto book recommendations from experts

The sudden rise of cryptocurrencies has dominated headlines in markets both this year and last – and it’s caught some investors off-guard. We asked 15 crypto experts for their top book recommendations to help you get smarter on crypto, and ended up with 27 prime recommendations.

Read the full story here:

Your ultimate crypto reading list: 27 books that experts say everyone should read to better understand digital currencies and invest in them profitably


99th-percentile strategy

trader celebrate

The Balter Invenomic Fund has beaten 99% of peers over the past year, and is in the 95th percentile over 4 years. The fund’s managers told Insider about their highly diversified approach to stocks, which includes both long and short bets.

Read the full story here:

The managers of a high-flying value fund that’s crushing the market and beating 99% of its competition this year told us how they’re doing it – and the vital role that betting against stocks plays in their process


Stock pick central

Seeking experts who are willing to name names? Look no further:

Read the original article on Business Insider

Investor bullishness is at a 3-year high but concerns about inflation have soared, E*Trade survey reveals

NYSE TRADER
  • 65% of active investors said they are bullish about the current market in a recent E*Trade survey.
  • Meanwhile, the number of investors who said inflation is a top concern skyrocketed from the previous survey.
  • Inflation data released Tuesday showed prices increased more than expected in June.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

A small survey from E*Trade reveals that investors are growing more optimistic about the stock market, but are also significantly more concerned about inflation than they were a few months ago.

In a July survey of 898 self-directed active investors, 65% of respondents said they are “bullish” about the current market. That’s up from 61% in the previous quarter’s survey and marks a three-year high.

Meanwhile, concerns about inflation skyrocketed 21 percentage points from the previous survey, with 35% of respondents selecting inflation as one the top two risks they see to their portfolios. Market volatility (27%), coronavirus (23%), and a recession (17%) followed behind.

In the previous quarter’s survey, only 14% of respondents selected inflation as one of the top two portfolio risks.

On Tuesday, inflation data reflected in the Consumer Price Index showed that prices roses more than expected in June. CPI increased 0.9%, the largest one-month change since June 2008. Core inflation has now exceeded 0.7% for three consecutive months, though many on Wall Street and the Federal Reserve insist that inflationary pressures will be transitory.

“The headline CPI numbers have shock value, for sure; however, once you realize that a third of the increase is used car prices, the transitory picture becomes more clear. Inflation is rising, but things are well behaved and have not changed materially,” said Jamie Cox, managing partner for Harris Financial Group.

The survey was conducted from July 1-9 2021 among an online US sample of 898 self-directed active investors who manage at least $10,000 in an online brokerage account. The survey has a margin of error of ±3.20 percent at the 95 percent confidence level. It was fielded and administered by Dynata.

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SIGN UP FOR INSIDER INVESTING: How to mine doge, plus a playbook for trading meme stocks

Hello everyone! Welcome to this weekly roundup of Investing stories from deputy editor Joe Ciolli. Please subscribe here to get this newsletter in your inbox every week.

GettyImages 1299388500

Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through the current market and investing landscape. Here’s what’s on the docket:

If you aren’t yet a subscriber to Insider Investing, you can sign up here.

Have thoughts on the newsletter? Just want to talk markets? Feel free to drop me a line at jciolli@insider.com or on Twitter @JoeCiolli.


How to mine doge

This photo is of Dason Thomas, a crypto miner. He is wearing a white hoodie standing front of the exterior of a building.

Dason Thomas says he began mining crypto in his garage to earn altcoins like doge and litecoin. He then converts the mined altcoins to cryptocurrencies he prefers like ether, or buys more miners. Thomas breaks down how he got started with a $700 rig, and how he’s set up now.

Read the full story here:

How to mine doge: An 18-year-old TikTok influencer shares his process for earning crypto without directly buying via a $700 rig – and explains how it works for other altcoins including litecoin


A playbook for meme stocks

Reddit WallStreetBets WSB

Morgan Stanley strategist Boris Lerner argues that investors should look at the patterns of retail traders to gain an advantage. He says heavy retail selling is a good predictor that a stock will underperform in the next month, and lays out six popular bets for day traders.

Read the full story here:

Morgan Stanley shares a meme-stock playbook that average investors can use to profit from the Reddit-driven market revolution – including 6 specific areas day traders love


Top 10 shorts ahead of earnings season

New York stock exchange trader

Stocks have been on a hot streak but a variety of factors could stoke volatility heading into the third quarter. Ahead of a hotly anticipated earnings season, the founder of TradeZero America lays out the 10 most-shorted stocks above $10, which could either continue to face pressure, or be squeezed higher by retail traders.

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TradeZero’s co-founder shares the top 10 stocks above $10 traders are shorting on the online brokerage ahead of a potentially volatile earnings season – and explains why they are either primed to become meme stocks or profitable shorts


Stock pick central

Seeking experts who are willing to name names? Look no further:

Read the original article on Business Insider

The S&P 500 could jump 9% by year-end as a reversal in interest rates drives a rebound in the struggling reflation trade, Fundstrat’s Tom Lee says

Tom Lee

The stock market is on track to continue its uptrend and surge as much as 9% by year-end, Fundstrat’s Tom Lee said in an interview with CNBC on Friday.

Lee said the S&P 500 could surge to 4,700 by year-end as “strong markets stay strong,” representing potential upside of 9% from Thursday’s close. That move higher will likely be driven by cyclical stocks as interest rates drift back towards their recent cycle-high of 1.75%.

Since the start of June, the 10-Year US Treasury rate has fallen to as low as 1.27% as investors question the durability of the post-pandemic economic recovery and expectations of higher inflation. The drop in rates helped fuel a rotation out of value and into growth stocks, but according to Lee, rates and growth stocks could begin to rise together as they become “detached” from their often inverse relationship.

“I think FAANG is going to detach itself from interest rates, meaning they’re going to have a great second half, not because rates are going to fall, but because these are great companies that almost did nothing during the first half [of 2021]. We think if the S&P 500 ends the year up 25%, and a lot of these FAANGs are up 5%, they could be up 20% in the second half, that makes them an overweight,” Lee told CNBC.

While Lee believes mega-cap tech stocks in the “FAANG” group can continue to perform well, epicenter stocks tied to the physical reopening of the economy will be best positioned for more upside.

“Epicenter stocks will rally strongly, as they are the most sensitive to rising rates,” Lee said in a note on Friday.

Chart of interest rates and epicenter stocks

And within epicenter stocks, Lee has the most conviction on the energy sector, as bullish divergences between energy stocks and oil prices continue into the back half of the year. Lee sees a potential squeeze in the supply of oil occuring just as the economy gets back on its feet and demand is high, likely leading to a continued uptrend in prices.

“[Oil] Supply will get even tighter into 2022 as the $300 billion in shortfall in capex past 24 months robs future production capacity,” Lee explained. Those potential supply constraints come as OPEC members fail to reach a deal on an expected production increase.

“Bottom line: If interest rates reverse, buy epicenter which is gonna rally most,” Lee concluded.

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US stocks have further to run after 7 straight days of record highs as readings of investor euphoria remain in check

nyse trader
  • The stock market is within striking distance of breaking the record of consecutive closes at all-time-highs.
  • But investors don’t seem fazed, with various sentiment indicators showing no signs of euphoria.
  • Sentiment often follows price, with “greed” readings found near market peaks and “fear” readings found near market bottoms.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The S&P 500 notched its seventh consecutive close at all-time-highs on Friday, putting it within striking distance of breaking the record streak of eight consecutive closes at new highs.

But investors don’t seem to care, based on various sentiment indicators that show no signs of euphoria in the stock market. This dynamic sets stocks up for further gains ahead, as there is plenty of room left for investors to get excited about stocks before hitting levels of greed and euphoria.

“Kinda dull. But you don’t sell a dull market,” Bank of America said in a Friday note, summing up the steady grind higher in markets over the past week.

Investor sentiment often follows price, with readings of “greed” or “euphoria” found near market peaks, and readings of “fear” found near the bottom of a market sell-off. This dynamic is why the indicators are considered contrarian, as it often pays to take the opposite view of the sentiment readings.

No signs of euphoria with the stock market at record highs suggests that there is further upside ahead for equities, as the market continues to climb a wall of worry and win over unconvinced investors.

Read more: RBC: Buy these 19 stocks that should outperform in the 3rd quarter on the way to upside of at least 20% over the next year

Sentiment indicators that have shown no signs of euphoria or greed among investors include the CNN Fear & Greed Index, the Bank of America Bull/Bear indicator, and the AAII Investor Sentiment Survey.

The CNN Fear & Greed Index remains below 50, stuck in the “Neutral” zone over the past month. The index closed at 46 on Friday, and was only slightly higher than its “Fear” reading last week of 44. The index had an “extreme greed” reading of 99 in January 2020, just prior to the fastest bear market in history, and hit an “extreme fear” reading of 1 in March 2020, right around the pandemic bottom, lending credibility to its use as a contrarian indicator.

CNN Fear and Greed Index

Meanwhile, the BofA Bull/Bear indicator has continued to fall in recent weeks to a reading of 6.4 from a cycle-high of 7.7 in February. A contrarian “sell” reading is generated once the indicator crosses eight, suggesting there is plenty of room left for investors to get bullish on the stock market.

BofA sentiment indicator

Finally, bullish readings from the AAII Investor Sentiment Survey rose to 48.6% this week. While the survey shows a rise in bullishness that is well above its historical average of 38%, the reading is still below the April high of 52.7%, signaling there is still room for upside.

AAII Sentiment Indicator

It isn’t the case, though, that investors have nothing to worry about when it comes to stocks. Rising inflation, higher interest rates, and a potential increase in taxes have served as overhangs for the market this year, and uncertainty regarding second quarter earnings results could also be weighing on investors.

But historically, when investors have been this bearish on the market when stocks traded at all-time highs, it’s usually been a solid contrarian indicator to buy stocks.

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These are the stocks to own in the second half of 2021 as markets navigate higher interest rates, according to Goldman Sachs

NYSE trader

Investors should not expect another strong six months for stocks after the S&P 500 finished the first half of the year up about 15%, Goldman Sachs said in a note on Friday.

Instead, the stock market is likely to consolidate sideways for the next six months as investors navigate higher interest rates. With the 10-year US Treasury yield currently at 1.43%, Goldman expects it to climb to a cycle-high of 1.9% by the end of the year.

That expected surge in interest rates will likely weigh on high growth stocks and benefit cyclical stocks, the bank said. To benefit from the market setup going into year-end, Goldman recommends investors buy stocks that have short duration, high growth investment ratios, and pricing power, according to the note.

While long duration growth stocks have outperformed their short duration value stock counterparts in recent weeks, Goldman expects this trade to reverse, especially if its forecast for higher interest rates materializes.

Some well-known stocks in Goldman’s short duration basket include Ford, CVS, Intel, and AT&T.

“Companies that have consistently invested for growth have outperformed the S&P 500 year-to-date and are best positioned to continue growing despite the expected slowdown in economic activity,” Goldman said.

Some well-known stocks in Goldman’s high growth investment ratios basket include Facebook, Alphabet, General Motors, and Costco.

“We recommend investors focus on stocks with high pricing power as demonstrated by their high and stable gross margins. High pricing power stocks outperformed in 2018 – 2019 as wage growth accelerated and profit margins declined,” Goldman explained.

Some well-known stocks in Goldman’s high pricing power basket include Activision Blizzard, Etsy, Procter & Gamble, and Adobe.

Goldman outlined its expectations that while the S&P 500 will end the year at 4,300, it will jump 7% to 4,600 by the end of 2022 as the unemployment rate falls to 3.5%.

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