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👟 Better Out Than In
Walgreens just got booted from the Dow. Should you buy it?
Happy Wednesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.
🟥 | US stocks moved lower Wednesday. Wall Street is awaiting the personal consumption expenditure reading for January tomorrow, which is the Fed’s preferred inflation gauge.
📈 | One Notable Gainer: Beyond Meat shares popped over 30% after the fake-meat maker announced plans to cut operating costs and other "right-sizing" moves.
📉 | One Notable Decliner: Urban Outfitter’s stock dropped 13%. CNBC’s Jim Cramer said, “it is not a stock you want to own.” Here’s why.
👟 | Tomorrow's Trade: Better Out Than In. Scroll down for more.
Plus, don't miss out on this FREE opportunity to learn how to scan and find explosive trades using A.I.
S&P 500 Heatmap. Credit: Finviz
All stocks on US exchanges. Credit: Finviz
Global ADR snapshot. Credit: Finviz
MARKET MOVERS
BMBL (-15%) Bumble to lay off 350 employees as tech industry job cuts mount (CNBC) + Deutsche Bank cuts Bumble target to $15, maintains hold (Investing)
AAP ( +3%) Advance Auto’s stock rises after upbeat guidance for 2024 offsets quarterly loss (MarketWatch)
EBAY ( +8%) EBay’s stock is on the upswing after strong results and guidance, dividend hike (MarketWatch) + Stifel maintains eBay stock's hold rating, price target at $45 (Investing)
LMND (-28%) Lemonade Drops as Q1 Forecast Disappoints (Tipranks)
RVLV (+22%) Revolve is showing signs of making a recovery. Gross margin improved in the fourth quarter and is expected to increase further in 2024. (Motley Fool)
TOGETHER WITH VANTAGEPOINT
The discourse surrounding the movement of interest rates and the instability of the treasury bond market has collided, and it’s hinting at a “Perfect Storm” market crash.
Coupled with the escalating tensions in the Middle East, the convergence of interest rate fluctuations and the treasury bond market paints a grim picture, heralding the arrival of a catastrophic event capable of unleashing a colossal market collapse.
Despite the reassurances from the Fed regarding the maintenance of "higher for longer" interest rates, our extensive experience in the market forecasting realm since the late 1980’s speaks volumes.
Dot.com bubble?
Been there, foresaw it ✔️...Dot.com crash? Indeed ✔️...Housing crisis? You bet.
✔️...2008 Banking crisis? 2020 Covid crash? 2023 Banking crisis? Check, check, and check.
If you're curious about our insights into the current market trends, don't miss out on joining the discussion here to brace yourself against the impending "Perfect Storm" market crash.
OVERHEARD ON THE STREET
WSJ: Tesla Chief Executive Elon Musk said the company intends to start shipping its long-delayed Roadster sports car next year, the latest sign it is trying to inject new buzz into the brand as competition intensifies in the electric-vehicle space.
CoinDesk: Morgan Stanley is deciding whether to offer spot bitcoin ETFs to customers of its large brokerage platform.
BBG: Federal Reserve Bank of New York President John Williams said the US central bank will likely cut its benchmark lending rate “later this year,” adding that he still expects three rate cuts in 2024 is “a reasonable starting point.”
Reuters: Bitcoin hit $60,000 on Wednesday for the first time in more than two years, as a surge of capital into new U.S. spot bitcoin exchange-traded products fuelled a rally that has reached 42% this month, on track for its largest monthly gain since December 2020.
Fox Business: A key measure of home-purchase applications fell for the fifth week in a row as mortgage rates continued to hover above 7%, throttling demand among would-be buyers.
TOMORROW’S TRADE IDEA, TODAY
Bumped From the List
Walgreens Boots Alliance (WBA) recently got the boot from the Dow Jones Industrial Average. This was the first change to the index since 2020.
The company, parent to Walgreens and UK-based Boots, was replaced by Amazon (AMZN). Walgreens lasted only 6 years on the DJIA and lost more than half its value during the same time.
Some might view this as a negative turn of events. However, history has shown that betting on stocks leaving the average could be rewarding for investors.
The Data
According to CNBC, stocks removed from the Dow saw an average increase of 23.3% the following year. Stocks that joined the Dow saw only a 2.4% gain over the same period.
Of the last 10 stocks added to the Dow, 5 have had a positive following 12 months. Of the last 10 stocks to leave the Dow, only 2 had negative returns over the next 12 months.
Of the last 10 stocks to leave the Dow, Alcoa (AA) had the most significant jump. It rose a staggering 91.01% in the year following its removal.
On the flip side, Apple (AAPL) fell 17.56% in the year following its addition to the Dow.
No Promises
The addition or removal of a stock on the Dow is not a guarantee of its future performance. Honeywell International (HON) saw a 40% increase in the year following its addition to the Dow. DuPont de Nemours (DD) fell 21.45% after being removed from the average.
The future for Walgreens stock is far from certain. But just because it was removed from the Dow doesn’t mean it’s completely Down and out
Are you bullish or bearish on Walgreens Boots Alliance (WBA)? |
TOGETHER WITH VANTAGEPOINT
The discourse surrounding the movement of interest rates and the instability of the treasury bond market has collided, and it’s hinting at a “Perfect Storm” market crash.
Coupled with the escalating tensions in the Middle East, the convergence of interest rate fluctuations and the treasury bond market paints a grim picture, heralding the arrival of a catastrophic event capable of unleashing a colossal market collapse.
Despite the reassurances from the Fed regarding the maintenance of "higher for longer" interest rates, our extensive experience in the market forecasting realm since the late 1980’s speaks volumes.
Dot.com bubble?
Been there, foresaw it ✔️...Dot.com crash? Indeed ✔️...Housing crisis? You bet.
✔️...2008 Banking crisis? 2020 Covid crash? 2023 Banking crisis? Check, check, and check.
If you're curious about our insights into the current market trends, don't miss out on joining the discussion here to brace yourself against the impending "Perfect Storm" market crash.
ON OUR RADAR
Barron’s: A 500 percent fuel price hike will take effect in Cuba this week, a month later than initially planned, the government of the cash-strapped island nation said Wednesday.
CBS: Some Coinbase customers opened their digital wallets to find zero dollar balances in their accounts, an issue the cryptocurrency exchange platform acknowledged on Wednesday.
AP: Mitch McConnell, the longest-serving Senate leader in history who maintained his power in the face of dramatic convulsions in the Republican Party for almost two decades, will step down from that position in November.
BI: Walmart's average customer is a suburban baby boomer who spent $3,578 there last year.
YF: “A successful and profitable company such as Apple has little to gain from building their own vehicle,” said Sam Fiorani of AutoForecast Solutions, a research firm specializing in the automotive manufacturing sector.
Join the conversation