Forget Vegas! Wall Street Legend Sees Big Wins in… (Bad American Gamblers?!)

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December 19, 2023


First up, we've got a legendary short seller doing the unthinkable: jumping ship from his cynicism and diving headfirst into the frothy sea of... gambling?


This contrarian got us betting on roulette wheels and cheering for crapshooters. Is this a case of market madness or just another contrarian coup in the mak ing? 


Speaking of dicey moves, check out the "Chart of the Day." $RIOT's got a technical tableau that could make even Mona Lisa raise an eyebrow (if, you know, she could). Is it a bullish battle cry or a bearish breakdown waiting to happen? Our resident chart whisperers will peel back the layers and reveal the market's true intentions.


Today’s newsletter is sponsored by Charles Payne, the best-selling author and TV personality who knows how to make money in any market condition. Don’t miss his exclusive included in this newsletter.


We've got market-moving news hotter than a blackjack table on a Saturday night, plus some random tidbits so juicy, they'll make even the grumpiest Grinch grin. So, grab your lucky charms, strap on your trading goggles, and get ready to dive into the day's financial fiesta. Let's do this!


Today's Market Mood: EXTREMELY BULLISH!

The Bear-Bull Meter


Daily Market Roundup: Santa Claws, Rate Cuts, and a Frothy Fiesta


Bulls stomped their hooves Monday, propelling the Dow Jones to a record-breaking fourth consecutive high, proving holiday cheer isn't just for eggnog and fruitcake. Whispers of 2024 rate cuts and a soft economic landing fueled this festive frenzy, with the S&P 500 and Nasdaq joining the party near their own two-year peaks.


Last week's inflation data, tamer than a house cat, and dovish cooing from the Fed orchestra kept the market mood buoyant. We liken the current sentiment to a sugar-high kid in a candy store, with investors gorging on the broad-based rally. However, he warned, like that inevitable sugar crash, a pullback could be lurking as holiday trading thins and frothy sentiment simmers.


Here's the market's post-sugar rush scorecard:

  • S&P 500: +0.5%, closing at 4,740.56, just a hop skip and a jump from its two-year high.
  • Dow Jones: +0.02%, settling at 37,306.02, marking another record close in its holiday sprint.
  • Nasdaq: +0.6%, wrapping up the day at 14,904.81, inching closer to its two-year anniversary cake.
  • 10-year Treasury yield: +0.02%, ticking up slightly as investors digested the Fed's potential pivot.
  • VIX: +2.0%, the market's fear gauge edged up, hinting at some jitters despite the bullish bonanza.


Energy stocks sizzled like a Yule log, fueled by a 1.7% jump in crude oil prices on whispers of Red Sea supply disruptions. Communication services and consumer staples also joined the jolly throng, while financials took a breather after last week's sprint.


So, what's the takeaway? Brace yourself for potential volatility as the holiday slowdown approaches. While the bulls might roar for now, listen for rumblings of profit-taking and avoid getting caught in the FOMO stampede.


Consider trimming positions in overheated sectors and focus on companies with strong fundamentals and long-term growth potential. Remember, even Santa needs a nap after all that gift-giving, and so might the market.


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Market Mischief: Bullish Bulls on Sugar Highs


What do you call a bull market fueled by hopes of rate cuts and holiday cheer?


A "Santa Claws Rally" with a sugar crash waiting around the corner! Just like that kid hyped up on cocoa and cookies, the market's on a sweet ride right now, but remember, even sugar fiends need a nap eventually. Keep an eye out for profit-taking tantrums and a potential pullback – it's all part of the market's rollercoaster charm. 


(Bonus trivia: Did you know the world's oldest known "stock exchange" dealt in... sheep dung? Talk about a messy investment!)**


Chart of the Day

$RIOT - Ready to Riot or Retreat?


$RIOT is looking like a fighter trapped in a corner – coiled, tense, and ready to throw an uppercut. That corner? A descending triangle pattern with its chin resting on a $20.87 resistance line.


Break that line, and watch out! RSI's not overheated, volume's pumped, and the upcoming halving is like a fight bell ringing in the background. But hold your horses – Stochastic RSI throws a wobbly jab, suggesting temporary caution.


Our game plan? Wait for a clean break above $20.87, guard your chin with a stop-loss below $8.60, and if this bull breaks free, aim for a knockout near $30.80. Remember, like any good fight, timing is key. So watch the chart, respect the signals, and this RIOT rumble could leave you cheering – not jeering.



Legendary Trader Flips Bullish on American Gamblers Bungling, Big Time!


In a twist reminiscent of a Hail Mary pass finding its mark, legendary short seller Jim Chanos has abandoned his bearish stance on US sports betting. Why the sudden switch? 


Turns out, Uncle Sam's love for a good wager comes with a side of, well, not-so-good decision-making. Chanos, once skeptical of online platforms like DraftKings, discovered a goldmine in risky, odds-defying bets that have these companies laughing all the way to the bank.


Chanos, who built his reputation on sniffing out corporate stinkers, has done a stunning 180 on American gamblers. His initial skepticism stemmed from DraftKings' seemingly unsustainable marketing spend, but a fascinating twist emerged: Americans, it seems, are terrible at gambling.


That's not exactly the tagline the industry was hoping for, but for Chanos, it's a gold mine. As gamblers get lured into riskier in-game and accumulator bets with "really bad-odd bets," as he puts it, the betting houses rake in a bigger share of every dollar wagered. Chanos smartly closed his short position, pocketing millions and leaving DraftKings to soar over 200% this year.


Margins for companies like DraftKings have ballooned, with that extra "house money" per wager climbing by 50% in just five years. Chanos saw the writing on the wall (or maybe the green on the betting slip), quickly closing his short position and pocketing a cool $10 million in the process.


DraftKings, meanwhile, has been on a tear. Since Chanos' volte-face, the stock has soared over 200%, leaving competitors like FanDuel in the dust and claiming the top spot in the US online betting market.


This unexpected turn of events serves as a reminder: sometimes, the market's biggest catalysts aren't genius strategies or groundbreaking tech, but sheer human… unpredictability.



Market Moving News


Adobe sidestepped Figma's embrace, sending shares 2.5% higher after ditching the $20 billion deal. Meanwhile, Salesforce got a vote of confidence from Alex Zukin at Wolfe Research, propelling it 0.8% on an upgrade to "outperform." The cloud space saw another boost with Snap gaining 0.6% on Guggenheim's "buy" call and upped price target.


But not all clouds had silver linings. SolarEdge faced a storm of selling from Goldman Sachs, who downgraded it to "sell" amid margin concerns, causing a 3.8% dip. SunPower's future got even cloudier, plummeting 31% after liquidity worries cast a shadow on its existence.


In the industrial sector, U.S. Steel forged a new path, agreeing to be acquired by Japan's Nippon Steel for a cool $14.9 billion. Shares soared 26% on the steelmaker's newfound strength.


Earnings whispers: Keep an ear out for FedEx, Micron, and Nike this week as they deliver their financial reports. FedEx, in particular, could offer insights into consumer spending habits, given its role in delivering everything from holiday gifts to everyday essentials.


Rate cut rollercoaster: Last week's rally was fueled by the Fed's potential "love song" to rate cuts. With whispers of a 75-basis-point drop in 2024, investors flocked to buy.


However, our research team urges caution, reminding us that inflation still dances to a different tune. We believe expectations of five to six rate cuts next year are "too aggressive," citing a resilient consumer and the risk of rekindling inflation.


The market appears to be betting on a dovish shift, with futures traders pricing in a 92% chance of the Fed holding rates steady in January, followed by a potential quarter-point cut in March.


Economic data on deck: Keep your eyes peeled for Tuesday's housing data and Friday's PCE inflation figures, which could offer further clues about the economy's tango with higher rates.


Looking ahead: While the near future might be a bit "murky," Kevin Gordon of Schwab paints a cautiously optimistic picture for 2024. He expects less market volatility as the economic path becomes clearer, potentially benefiting sectors that haven't been part of the rally since the 2022 bear market lows.


However, prolonged murkiness could see the market's breadth narrow, which means investors should still prioritize diversification and keep a close eye on individual company fundamentals.


Random Musings and the Time Machine


Random Musings


  • If you think gambling is a bad habit, you should try investing in meme stocks. They are like gambling, but with more memes and less odds.
  • The Fed’s rate cuts may be good for the economy, but they are bad for the savers. The only way to earn interest these days is to lend money to your friends and family, and hope they pay you back.
  • Netflix is spending billions on content, but is it worth it? How many shows can you binge-watch before you get bored? Maybe Netflix should invest in some interactive features, like quizzes, games, or polls. Or maybe they should just let us skip the intros and credits.
  • Solar power is the future, but it is not without its challenges. For one thing, it depends on the weather. For another, it requires a lot of space. And for a third, it is not very aesthetically pleasing. Imagine living in a neighborhood full of solar panels. It would look like a giant chess board.
  • U.S. Steel is being bought by Japan’s Nippon Steel, in a deal that marks the end of an era. U.S. Steel was once the symbol of American industrial might, but it has been struggling for years to compete with cheaper and more efficient rivals. 
  • Maybe Nippon Steel can revive its fortunes, or maybe it will just melt it down and make something new.


On this day in history, December 19:


  • On this day in 1776, Thomas Paine published his pamphlet “Common Sense,” which advocated for American independence from Britain. The pamphlet was a bestseller, selling over 100,000 copies in the first three months. It influenced public opinion and inspired the Declaration of Independence. 
  • On this day in 1849  , Elizabeth Blackwell became the first woman to receive a medical degree in the United States. She graduated from Geneva Medical College in New York, after overcoming many obstacles and prejudices. She went on to become a pioneer in women’s health and education, founding the New York Infirmary for Women and Children and the Women’s Medical College.
  • On this day in 1920, the League of Nations, the precursor to the United Nations, held its first meeting in Geneva, Switzerland. The League was created after World War I, with the aim of promoting international cooperation and peace. However, it failed to prevent World War II, and was eventually replaced by the UN in 1946.
  • On this day in 1957, the Wham-O toy company produced the first Frisbee, a flying disc that became a popular recreational and sporting item. The Frisbee was originally called the Pluto Platter, and was based on a pie tin that students used to toss around at Yale University. The name Frisbee came from the Frisbie Pie Company, whose pies were also used as flying discs.
  • On this day in 2007, Steve Jobs unveiled the first iPhone, a revolutionary device that combined a phone, a music player, and a web browser. The iPhone changed the smartphone industry, and became one of the most successful and influential products of all time. It also spawned a series of innovations, such as the App Store, Siri, and FaceTime.



The Final Ledger


That’s all for today’s edition of Traders on Trend, the newsletter that keeps you on top of the market trends and opportunities.


Remember, as Jim Chanos might say, just because Americans are terrible gamblers doesn't mean you have to be one with your investments. Do your research, diversify, and avoid getting caught in the next "bad-odd bet."


So, until next time, keep your cool, trade on, and remember – in the casino of Wall Street, the house doesn't always win. But with the right tools and wisdom, you can build your own winning streak.



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