The year 2021 is presenting unique challenges and opportunities for amateur and veteran traders alike. JC Parets, CMT and chief strategist at allstarcharts.com, joins Yahoo Finance's Jared Blikre to break down the market moves, setups and new leadership in stocks, bonds, commodities and currencies (including bitcoin) — all while leveraging the power of Yahoo Finance Premium to help inform investment decisions and portfolio management.
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JARED BLIKRE: I want to thank you all for joining our seventh Yahoo Finance Premium webinar, a Roadmap to Trading Profitably and Consistently in 2021, because what a year it's been already. I'm Jared Blikre, and soon, we're going to be joined by JC Parets. He's a chartered market technician who also founded All-starCharts.com. If you follow me on Twitter, you probably know him as well.
We're going to be breaking down the major investment themes that we've seen unfold since the election-- tons of charting, lots of shoptalk. You're going to love it. We're going to show you also how to get the most out of Yahoo Finance Premium-- how you can use it to find stocks that show signs of promising returns, use it to analyze your portfolio, and get some of the latest analysts' insights on all the big tickers that are moving today and this year.
Now, if you've been to one of our webinars before, you probably know how the Blue Jeans software operates. It's owned by our parent company Verizon. For everyone else, here's how it works. Now, you're going to be able to interact with us in real time. You can ask us questions. There is a button for that on the right hand side of your browser.
You can also participate in polls. We're going to do one of those in just a minute here. And again, that's on the right hand side of your browser. So you might want to check that out now. Also, there is a slider on the lower left. And you're going to want to check that out, because you can adjust the presentation sides. We're going to be showing you some charts, and you can also adjust the size of both me and JC. You might want to make us a little bit smaller so you can see all the good stuff that we're going to be showing you.
All right, so let's begin here with our first poll. Now, this is a little bit more complicated than we usually begin with, but this has to do with the themes that we're talking about in this webinar. So when the US Treasury yield curve expands, cyclical and value stocks tend to, 1, sell off, 2, trade sideways, or 3, rally?
All right, now I want to bring in JC. And it's great to have you here, really excited for this. And I want to just kind of begin with the layout for 2021. We've seen a lot of rotation going back to November of last year around the election, kind of pricing in things. We just had the Georgia runoff, so we kind of have a blue wave, or maybe just a blue ripple here-- not strong majorities either way. But what are you seeing in the markets, and what do you see for the year ahead here?
JC PARETS: Thanks, Jared, for having me. For me, it's really more of the same. And for us, we always like to think about what the market environment's going to look like if we're going to be proven right. And we want to think about what the market environment is going to look like if we're going to be proven wrong. And we've been incredibly bullish since April, fortunately. We haven't been fighting this trend.
In fact, you know, we've been irresponsibly aggressive is kind of how I like to put it, because, you know, really, everything was favoring stocks going much higher. So coming into the year, what are we watching to perhaps change our mind, maybe get more defensive? We want to look at those defensive assets. What are they doing?
Are Treasury bonds, are they getting a bit? No, they're making new relative lows. What about gold, are they getting a bid? No, they're making new relative lows. What about consumer staples-- are they outperforming or are they underperforming? They keep underperforming.
All of these things are classic characteristics of environments that investors are being rewarded for owning stocks, not for shorting them. Look at the currency market-- something like an Aussie yen keeps making new highs. That would most likely be rolling over if stocks are going to be under pressure. And then we keep getting expansion and participation expansion and breadth.
More stocks making new highs, more stocks getting overbought, more countries around the world breaking out of bases to new highs, not just Taiwan and South Korea, now emerging markets in general breaking out. They're not characteristics of environments that we want to be spending our time looking for stocks to short-- actually the opposite. We want to keep spending our time looking for stocks to buy.
JARED BLIKRE: All right, so let's go over a few tickers. As you were talking, I showed the bond market, TLT-- that's a favorite, also the general market, S&P 500. Tell me what you want to start with? What do you want to take a deep dive into it at this particular moment?
JC PARETS: Well, I think people keep asking me when we're going to get a correction. When is this correction coming? You know, we're due for a correction, or long in the tooth.
JARED BLIKRE: Those are always healthy, by the way.
JC PARETS: What's that?
JARED BLIKRE: I said, which are always healthy, by the way. But sorry to interrupt, go ahead.
JC PARETS: It's when they stop asking, right? Now for me, I look at something like the XLK. The United States Technology Index represents pretty much a quarter of the entire S&P 500 and has done nothing since the beginning of September. And let's remember-- Amazon, Google, Facebook-- none of these are technology stocks. None of those are in the technology index.
So if you add those, let's call technology plus those three big monsters-- and Netflix isn't technology either, throw that in there-- and the truth is, 40% of the S&P 500 has done nothing for four months. You know, you want to look for a correction, what's that?
You know, zoom out-- zoom out, look at the Dow Jones Transportation Index, look at the Dow Jones Industrial Average-- both of those did nothing for three years. They peaked in early 2018. Dow industrials, the global 100 index, the Dow transports peaked early 2018, did nothing for three years-- broke out. So I don't know why everyone's looking for a correction, I think we're just getting going.
JARED BLIKRE: Well, you know, it's kind of easy to do that. I think people get wrapped up in the news cycle. And just one more question, then we're going to get to the poll and get some user questions here. I have to ask you-- in this particular environment, what's informing your decisions the most? I mean, how important is it for investors to just kind of focus on the price action or if they're reading fundamental reports, and just kind of not pay attention so much to the daily, if not hourly and second by second, news flow?
JC PARETS: Well, the only truth, the only facts in this world that we can count on is price. Everything else is an estimate, or an opinion, or a government release that's going to change. So when the government comes out with unemployment, and CPI, and all of this stuff, those are just estimates. We know they're going to be revised in the coming months and quarters. That's not the secret, we know that.
So we know the information that they're delivering is incomplete information, number one-- and estimates. What about fundamental research, like talk to these accountants. I encourage you guys. If you guys think I'm completely full of it, go take out young accountants, and take them out to dinner, take them out to lunch, get them drunk, buy them a bunch of booze, right, get them talking-- 23, 24, 25-year-old accountants that are doing this auditing, they don't know the first thing about the things that they're auditing. Ask them, they'll tell you.
And it's like an ongoing joke internally at these accounting firms. So by the time to sell side analyst gets this research or gets the data, who knows what they're looking at, number one. Number two, let's just assume that the accountants are good and they're getting good data, then the fundamental analyst needs to go in there and figure out what these numbers mean, and then come up with his own estimates or her own estimates.
Again, there's too many variables involved. Forget all that, you can't trust it. What about CEOs? They talk a lot, they say a lot of things. Many cases, they could just be wrong-- that happens-- or maliciously lying to you, you know, for their own selfish reasons. It could be either one of those. Both happen regularly.
So the only thing that we can actually trust, the only fact is that there's a willing buyer and willing seller at a specific price on a specific date at a specific time. And no matter what happens ever, that's not going to change. And we know mathematically-- I mean, you could use common sense by looking at charts, but we know mathematically that market returns don't fall under normal distribution. Markets trend.
That's why technical analysis works. So instead of all that other stuff in the news-- don't even get me started, I don't know how that's helpful-- they're in the distraction business. They're not in the information business. So the only truth that we can count on is price, Jared. Telling you from the bottom of my heart-- sure, there's some other stuff that might be able to help us-- maybe-- but the thing that we know will is the truth, and that's price.
JARED BLIKRE: Wise words there. And on those normal distributions that don't seem to fit to the market, I think that's why we get those 14 standard deviation moves about once or twice a year. But I want to get to--
JC PARETS: Seven sigma moves, moves that should only happen once every, like, 10 billion years happen on a weekly basis.
JARED BLIKRE: They do, especially lately. So here's the results for our first poll. When the US Treasury yield curve expands, cyclical and value stocks tend to-- in fact, they rally. Now, the sell-off answer got 39%, trade sideways 18%, rally is the number one answer at 43%. But that's something that I like to look at on a day-to-day basis.
Where is the Treasury yield, especially a 10-year, opening up? If it's up big, you can probably guess certain stocks like the value in cyclicals and the small caps are going to be bid, at least early on. If it's down, probably going to be those big mega caps. So now we're going to get to our next poll, and then we're going to take some questions from the audience here.
So poll-- what percentage of US stock volume do retail traders now comprise? Is it 5%, 10%, 20%, or 50%? We're going to keep that open for a bit now.
JC PARETS: Do you know the answer, Jared? Do you know the answer?
JARED BLIKRE: Well, just don't tell anybody just yet. They got to vote first.
JC PARETS: I don't. I don't know the answer.
JARED BLIKRE: I got this from a previous-- a previous webinar that I did, somebody sent this. And I was surprised, because it's actually increasing. And I think that has to do with the Robinhood trade. But we'll talk about that when we do the results for that in a second.
So now we got some questions here from the audience. This one's from Alton. With the political turmoil that we are going through today with the US, what impact might we see as a result? Downward effects or no change? And for me, I think this kind of gets back to my statements-- and we were talking about the news flow-- that you can't pay too much attention to it, especially on a day-by-day basis.
Because especially political disruptions, while who's in office, and Democrats versus Republicans, blue wave, whatever, that can inform sector decisions-- and infrastructure is obviously a big play right now-- volatility in the markets due to what happened last year with the storming of the Capitol, that tends to be mean reverting within a few hours or days. And we saw that. We saw price come back that same day, that same night.
So I wouldn't put too much stock into crazy political events, social upheaval. These things tend to be resolved rather quickly. Something that's much more meaningful in the market is what's happening with the economy or what people think is going to happen with the lag. But as JC said, that's all kind of baked into the price.
I want to get to cryptocurrency. We got to get there, because it's been on fire. So we've got a question from Leit-- what is your outlook on investing in cryptocurrency for 2021? I'll let you kick this off, JC. What are your thoughts on Bitcoin and the rest?
JC PARETS: Yeah. Well, first of all, getting back to the political turmoil-- fair to say, when is there not political turmoil? If it's not in this country, it's in another country-- China-- I've been doing this for 20 years. There's always political turmoil. This is not anything new, the market doesn't care.
I mean, the market might care a little bit, it might be a small factor, but there's so many more other important factors taking place than that little quote unquote "disruption" that's going to be the big news of the day. But the news of the day and what the market cares about that are structural trends are two completely different things, right? I just want to touch on that. As far as cryptocurrencies, I don't know if you noticed, but the trend is up, right? I mean, that is--
JARED BLIKRE: I noticed that.
JC PARETS: I think 47,000 is next. Where's Bitcoin now? Bitcoin's sitting right around 36,000, right? So we're pretty much in between-- think the floor has been 30,000. I think that's still the case. Ceiling for right now is 45. That's the next target. If it's below 30, I think then it's in trouble, and then there's a lot more risk, in my opinion, if you see Bitcoin below 30.
Above 30, and I think that that's a respectable level, and 45 is next-- 45 to 47, something like that based on our math.
JARED BLIKRE: Yeah, and just real quickly, I think this is kind of how you tend to see the market with these levels that just evolve by the price action that you see in candlestick charts, but you also use Fibonacci extensions. What other tools do you use to help you view the market? And just for the audience, there's no one right answer. You have to do what works for you. But I'm asking you, JC, how are you seeing things here?
JC PARETS: Yeah, you know, there's never been an asset in history where there's no fundamentals like this, right? There's not a company, there's no earnings. It's just fu-gay-zi, fu-gah-zi, right? It's just an idea. So because of that, it doesn't mean you can't make money, there's just no fundamentals.
So you have no choice but to analyze the behavior of the market and market participants-- that's technical analysis. As it turns out, boy, oh, boy does this thing trade-- you can really visualize the supply and demand dynamics that are taking place in this. You know, when we got back up to those former highs, it sold off. Like, that resistance was there.
When we broke out above resistance, it shot up. You know, when it came back and retested it, it tested it successfully and went on. Like, this thing-- you read, like, this is like-- stocks don't trade technically so cleanly, and futures even less-- and currencies don't even get me started. Like, this is, like, chapter one of, like, technical analysis kindergarten class.
Like, this is, like, going back to the basics helps unbelievably in cryptocurrencies-- more so than any other asset class. And I do this all day. I read through 5,000 charts a week, so I'm telling you.
JARED BLIKRE: Well, I know your favorite time is the end of the month here when you get those monthly candlestick bars. And I just want to point out in Bitcoin, that chart we had up showing a 27% decline, which means nothing for Bitcoin. They've had at least four 80% to 90% drawdowns. I'm not sure we're going to see that again given the institutional participation-- whatever that is-- but you got to be able to withstand the volatility.
And if you're trading in the futures market with leverage, good luck. That's why I don't trade it in the futures market. I do want to get to a clip we have of Mike Novogratz. We interviewed him earlier today on our live shows. He's talking about Bitcoin and the prospects for a Bitcoin ETF. So let's take a listen.
MIKE NOVOGRATZ: We have a de facto ETF in the Grayscale Trust. And if you think about what the SEC is supposed to do to protect the little guy, they've now allowed a $20 billion kind of faith ETF, right-- it's a closed-end fund, a trust to be retail's outlet, where retail is buying Bitcoin anywhere from a 15% to 30% premium and paying high fees.
And so it's kind of crazy that the SEC thought they did their job stopping an ETF when they actually allowed various business to get started-- this Grayscale Trust. It should have been the exact opposite. And so I think you will see an ETF come soon.
Again, what is soon? It's probably within the year, because it takes a while when you get to a new job and process this whole thing. A lot of the ETF discussion was around good pricing on the index. Right now, the CME future trades with tons of liquidity. You can argue it's great pricing. And so I think we'll see an ETF, like I said, within the year.
JARED BLIKRE: All right, ETF within the year-- been a long time. And I just want to show this real quickly to show people what he's talking about in case you didn't know. This is the Grayscale Bitcoin Trust. And if you're a US investor, you have to trade it on the OTC, not an official-- it's not listed on any of the major exchanges here, but it has been quite liquid. And people are noting those inflows into the Bitcoin Trust and out of gold.
All right, so let's take another couple questions from the viewers here before we go into the next section. Let's see-- we've got a Tesla question. We've got to do that. Do you believe the valuation this far, example, Tesla, lots of stocks seem to have gone crazy due to retail investors and not true valuations. This comes from Sid. You know, what's the true valuation? And then I know we're kind of getting into the fundamental side, and that's not what you look at, JC, but there's a lot of--
JC PARETS: There's no fundamentals. They don't make money. There's no fundamentals in Tesla. That's not a thing.
JARED BLIKRE: Hey, they made an adjusted profit over the last, what, four or five quarters? You're rolling your eyes, but I see exactly what you're saying. But let's actually pull a Tesla here. I'm going to share my screen in a second, and maybe you can help me with the technicals here, JC.
And here we go with Tesla. All right, so what do you do with a stock like this? We can see some nice consolidation in certain areas. Specifically, I'm looking at this in here. And this is what Tesla has done many times before. It's based, and then it's broken out.
You could call this kind of a base in here-- maybe we're forming one now. But do you jump in? Do you wait? How do you attack this, JC?
JC PARETS: Yeah, no, we've been bullish for sure. Our targets actually were just getting hit over the last couple of weeks, so now I think it's time to sort of shy back a little bit, or a lot. This isn't for us right now. It's had a heck of a run. We're thrilled about it. The consolidation you're pointing to from September, October, November, that-- speaking of classic technical analysis, like, that is-- pick any uptrend ever, right, on any time frame ever, you know what you're going to find? You're going to find those.
You're going to find things exactly like that-- a sideways consolidation, sort of a series of higher lows, a series of lower highs, sort of approaching an apex, and ultimately a resolution. That resolution tends to happen many more times over in the direction of the underlying trend, not reversing in the opposite direction. And this time, obviously, was no different-- consolidated perfectly, obviously within an ongoing uptrend, result higher.
So it shouldn't be a surprise to anyone, unless you were just, like, looking at the chart upside down or blindfolded or something, right? So it was pretty obvious here. Our target is 900, we're basically there. So now I think we let it chill out.
Listen, I think this thing can go to 1,500, I just don't think it's going to get there tomorrow. I think we let it chill out. Let's say we get another one of these consolidations over the next few months, then we buy the next breakout. And that could take a while.
JARED BLIKRE: Tesla $1,500 for the second time. All right, this is going to help us answer the previous poll. And we can see this tracks retail investors-- how much they comprise of the trading in the stock market. This goes back to 2010. You can see it's up to 20% now, and I think a lot of that has to do with the rise of Robinhood and all the retail traders that came into the market over the last year, for obvious reasons.
So just to get back to the poll, yeah, people got it right. 20% got the biggest share of the votes, 56%. 14% said 50%, 21% 10%, and then 9% said 5%. So most people got that right. I think we might have used that one a few webinars ago.
All right, so we got to talk-- actually, yeah, we have to talk about Yahoo Finance Premium. So just give me a second, I'm going to bring up my screen, and I'm going to share this with everybody and just kind of go over some of the basics of how to use our service here. And you can also, by the way, get a free 14-day test drive with it.
All right, so you should be able to see my screen. And we're looking at-- and I'm going to get back to our dashboard-- this is a research reports page, which I was just looking at. As soon as you come in, you're going to see your portfolio performance. You can load this in with custom tickers you want. You can sync it with your brokerage account so it knows exactly your positions and the timing of them.
I just have an arbitrary portfolio here that I constructed some time ago. But you can click on these different tabs. We have insights here-- so they'll give you insights on valuation. It says five of 13 stocks are overvalued. You can look at the risk profile-- moderately aggressive.
That, again, shows you the annual performance. And then it shows you the diversity of your portfolio. You see communication services here are heavily weighted. I didn't mean to click that. And we'll just go back here for a second.
And then as you scroll down the page, you can see we have research reports, and we get into some of those in a second. You can see what's at their value. Company outlook-- we even have an ESG ranking, which is becoming increasingly important to a lot of longer term investors-- and shorter ones as well. And then technical events-- this is my favorite, go over some of these technical events and various stocks.
And we'll just start with something that happened today. We got this-- over the last two days, Intel has been a hot stock. And I was looking at what happened this morning. They were up about 10%-- pretty impressive movement to get rid of the CEO and change that out in such a big stalwart company. Let's do this. Research reports.
If I can get my mouse working-- there we go. So I looked for the latest research report-- probably not going to have too much from the Street until later in the day or tomorrow. But only yesterday, they came up with a report because they were at the CES delivering one of the addresses, getting into some new areas. And I was able to download it.
And this is the kind of report that you're going to see. Intel's Mobileye calls for commercially viable autonomous vehicles by 2025. Mobileye really the leader in that space-- Intel bought them about three years ago for $15 billion. And today, they have that CEO switch probably at the behest of these activist investors. So I'd be expecting a note on that over the next 24 hours.
But just getting back to the service here and how you can use it for investment decisions, I like to go straight to investment ideas. And this has both fundamental and technical reports. I actually just did a segment on HPQ-- this call a couple of hours ago on our live program. This outlines how HP is really getting back, where people are now in a replacement cycle for their now dusty PCs and printers.
And I love the technical events too. I was looking at, I think, A&F is in here recently-- Abercrombie and Fitch. So it poses-- when you click on this, it's going to show you that this stock has formed a pattern called upside breakout, provides a target price for the intermediate term, and it tells you what it is. And what I really like is you can look at the chart-- you can see exactly the technical pattern as it's being identified. This is kind of algo-driven, but this is kind of textbook inverse head and shoulders pattern that we're seeing here.
So this is just one of many ways you can actually use this service. And it shows you on the right panel here exactly what this upside breakout-- what the components are, what it means, event description. And in fact, you have all of these. If your time horizon is medium term, you can click on that. You can look at what the long term technical events are, and it'll show you that.
Price crosses over, moving average-- it'll automatically switch to a weekly chart. This is just to give you ideas as to what's possible. It's not like every single one is going to work out, but this is a potential starting point to filter for looking for some technical formations-- and in the case of these research reports, fundamental considerations that you may want to have for getting into a stock.
So we're taking a question now on Yahoo Finance Premium from Jason. Hi, does Yahoo Premium offer SMS price alerts for both equities and options?
I don't think we have the options in our-- I don't think we've taken that on just yet. It's something that we're looking at. But I believe you can get alerts for the equities and for your tickers. Whether they're SMS, I'd have to check on that. But we're constantly developing new functionality within the Premium service, and we're rolling out new features all the time.
So now I want to get to our poll numbers. Excuse me, I think this is our third poll. What percent of IPOs increase 100% in the first year? So I'll give my producers a second to get that on the screen. What percent of IPOs increase 100% in the first year-- is it 10%, 20%, 50%, or 80%? And I'm going to take it back to JC.
I want to ask you about methodology, about good habits as a trader, trading psychology. We've seen this huge increase in volatility, record volatility last year-- never had any spike like that in the VIX. And things just get priced in more quickly.
And for me, it means you've got to have-- you've got to tighten up your trading rules-- maybe you should tighten up your stops. How do you approach trading in this current environment, JC?
JC PARETS: Yeah, no, I think it's important to recognize what type of environment we're in, right? So, like, a lot of investors that I've noticed is that people, like, have their strategy or, like, what they like to do. And then they always do that no matter what type of environment we're in. That doesn't make any sense.
And I learned this-- I learned this from Jeff DeGraff, my opinion, one of the best technicians out there-- has been for a while-- and he taught me, first, identify what environment we're in. Then you can figure out what tools to use. Like, for example, we're not going to brush our teeth with a hammer. That doesn't make any sense at all.
We have a toothbrush for that. We have a different tool for that particular environment. Then when the wife calls and she wants me to hang a mirror on the wall, I'm not going to get my toothbrush. I have a different tool for that. We'll first identify the environment, then the tools.
Some tools are better in trending environments. Some are better for range-bound environments and are useless in trending environments, right-- all of those things. And then volatility-- higher volatility, do you want to be just buying premium and spending all that money on volatility? Or do you want to be financing your options trades, taking in that income to pay for those trades?
So first the environment, then we're in. We're in a lower volatility environment, stocks are trending higher, you're able to get cheap premium, and go out five, six months in some cases because of that. So you don't need four lags on an options trade. You can just buy the calls and call it a day, because that's the environment we're in, right? That's how I approach it.
JARED BLIKRE: Yeah, I just want to point out, we have the VIX on our screen here, and we still have relatively elevated volatility. I mean, if you look at the prior trading epic, that's kind of how I think about the markets is that over a period of years, you just kind of have these whatever market environment tends to be the dominant ones. So back a few years ago-- back a few years ago, we had something that looked like this, which was relatively low volatility.
And then all of a sudden, we spiked higher, and now we kind of have this floor at 20. So until we start trading below 20 in the VIX, or at least until it starts reflecting the options market that way, I think we're going to have these rapidly priced-in events like we've seen over the last year. And some of that's a function of liquidity.
There are secular trends there too that we went over with Jay Woods in our last webinar with the rise of electronic trading, diminishment-- and basically there are no pit traders anymore participating during the day, even less so on the closing options than there used to be. But all that kind of fits together that we are in a different trading environment right now, especially with new leadership.
So I want to get to a couple more questions. And I'm just looking through them right now. How are the markets going to behave in the coming months? Can we bet on a bull market with Biden in the office? That comes from Birken. And a lot of people ask these kinds of questions, and they're perfectly fine.
I just want to emphasize that we have current market leaders. We've seen rotation into value, and cyclicals, and small caps. We've seen bond yields rising. And I would expect these trends to continue until they don't. And when is that going to be? There's going to be some exogenous event.
Maybe the vaccines don't work out well. Maybe there's a new mutant strand, or maybe something happens politically. Maybe something happens with China-- we don't know. But the markets are going to inform us of that. And, JC, any thoughts on that?
JC PARETS: Yeah, I mean, listen, the market's not going to go up because of Biden, or despite Biden, or because of Trump, or despite Trump. Like, depending on what side you're on, you're going to use those words differently. It doesn't matter. The market has so many more important things to worry about than the president of one country on Earth. Like, you know, to over-think that is just, I think, incredibly irresponsible.
JARED BLIKRE: Yeah. And we're getting a question about cannabis stocks. I do want to hit a couple of those. Is now the time-- this comes from Keith-- and I think we have the Canopy Growth CEO. We have a clip of him that I want my producers to get ready, we'll hit that in a minute. What do you think about the cannabis space, JC? And I'm going to get some charts up. Give me a ticker that you might be looking at or not.
JC PARETS: Well, like CRON.
JARED BLIKRE: Cronos?
JC PARETS: Yeah, I mean, that's one. Canopy Growth, as you mentioned-- right? CCGC.
JARED BLIKRE: Yep. Anything that you're seeing technically? I'm showing the chart here. And first, I just want to point out that these stocks have gotten obliterated-- absolutely obliterated-- over the last couple of years. This is a five-year chart. If you drill down to a one year, it looks like more of a road to recovery here. And I'm seeing, at least in the short term, higher highs, higher lows-- that all suggests that we at least have a short maybe intermediate uptrend in place.
But looking back, this still has quite a while to do-- quite a ways to reclaim some of those prior levels. So how are you viewing this stock, Cronos Group, right now, JC?
JC PARETS: Yeah, look at that base throughout late 2019, early 2020. I mean, these things are absolute garbage. If you got on that train in 2017, 2018, you made money, great. If you didn't get out, shame on you. There were so many opportunities to get out of these messes.
This has been one of the biggest disasters in the history of the US stock market. Now, with that being said, it has built in that bottom. I mean, zoom in to that base, you know, call it a head and shoulders bottom, call it a Kardashian bottom-- whatever it is you want to call it-- Edwards and Magee would call it a saucer bottom-- that's what it looks like to me.
But I think it's only valid-- by my work, it's only valid if we're above $9. So if we're above $9, you got my blessing. I think this thing goes to $12 next. That's the next level. If we're below $9, let it go to $0. Leave it alone.
JARED BLIKRE: Got you. I'm just going to kind of chart what you may be seeing in terms of support and resistance. I'm seeing this at about $9. And then I think you mentioned $12 to the upside-- that's going to take us into this price action in here, maybe a little bit higher. But that's why I love candlestick charts, because you get that look-- you're able to see supply and demand on these charts in a way that you just kind of don't with the line charts, just because of lack of granularity.
All right, so I want to get to the results of our poll here. There's going to be a quiz at the next webinar on everything that we learned here today. What percent of IPOs increase 100% in the first year? Most people said 10%. That is a wrong answer. The right answer is 20%-- 34% of people got that right.
And then 25 votes for 50% and 7% for 80%. So there you have that. And we're going to do one more poll here. And this is the best Cuban sandwich in Miami may be found at Sergio's, Pollo Tropical, Joe's Pizza, El Palacio de los Hugos, some food truck in Flagami. And of course, we're both from Miami.
We both grew up there, and we're going to-- and by the way, there are some wrong answers. I wish there were no wrong answers to that question, but some of those guys don't make Cuban sandwiches. So we'll get the results of that in a second. But back to the cannabis stocks. I want my producers to be able-- I'd like you guys to play that clip that we have of the Cronos Group CEO now.
- The thing that we have that I think differentiates us is we have this pre-wired acquisition of the multistate operator Acreage which we can immediately close on a transaction and take control of that company upon a permissibility event. The Moore Act is definitely one of those permissibility events. And again, Zack, we feel pretty bullish that some variant of the Moore Act, maybe with some changes versus the one that made its way through the House in December, will get passed this year. And then for us, that's a great opportunity, because we would immediately be able to bring our balance sheet, and our brands, and our innervation to the US through that Acreage acquisition.
JARED BLIKRE: Yeah, and the big thing about cannabis, just looking at the macro picture for it, is getting it legalized in the US. Because right now, these companies really can't use the banking system. And so as that potentially changes-- and it's going be hard to change it with a 50-50 Senate right now, even with the vice president as a tie breaker. Joe Biden hasn't really been pro-cannabis in the past.
So we'll have to see how this all works out. But I think incremental steps are being made here. And that could be why we're seeing the price react the way it is. But at the end of the day, you know, only price pays. And I think everything you need to know is basically in the chart-- at least if you're a short term investor.
I do want to point out-- I was just looking through our Yahoo Finance Premium site for information of fundamental reports on Canopy Growth, and this is what we're looking at here. So we got this Morningstar weekly summary. This is from last week, January 8. We got an analyst report on Canopy Growth. You can download that here if you're within our site-- so lots of value added there.
All right, well, I think we have the results of our last poll. I'm not sure if it's still open. And it looks like-- yes, we do have some answers here. So some food truck in Flagami got the number one answer to the best Cuban sandwich in Miami. Many of you found that. 34% of you said that. El Palacio de los Hugos, 32%. 7% said Joe's Pizza, they don't make it.
Pollo Tropical, 13%-- they don't make it, because it's not chicken. And Sergio's-- if you're from Miami, Sergio's pretty good restaurant. They got a bunch of locations. I make nothing off this plug right here. But that got--
JC PARETS: Go to Sergio's. Those are my friends' parents. I grew up with the-- I played baseball with the kids, Luis and Carlos.
JARED BLIKRE: In Flagami?
JC PARETS: No. Later on in life-- in high school and stuff like that. And college-- I played against them in college.
JARED BLIKRE: I was West Kendall optimist all the way. All right, I want to get into some of our hot tickers now. We had some questions about IPO stocks before, so let me bring up a chart of Airbnb that I've prepared. I happen to use Anchored VWAP. It's something I've used as an indicator for 11 or 12 years now.
Brian Shannon of Twitter Fame, he uses it. And here is a 30-minute chart of Airbnb going back to its IPO day. And the reason I'm using a 30-minute chart is because the daily candles just don't really provide enough information yet. But Anchored VWAP is basically an average-- instead of being moving, it's anchored to a particular price-- could be a psychological event, a high, or a low.
And I like to anchor these for an IPO from the first bar of trading, then from the low, then from the high, and see how it develops. And we're seeing here price got below a little bit-- managed to get above-- maybe this was a short here, because this was potential resistance. But it didn't come down that much.
And then you see this volume spike-- you're starting to break out from this upper VWAP curve. And it breaks out really nicely. And so I found with IPOs and just about anything-- but especially IPOs-- that's a good way to approach this kind of work. JC, if you have any thoughts on Airbnb, happy to share them with us, or we can move on to Peloton, because I know you're tracking that stock as well.
JC PARETS: Yeah, no, I like Airbnb. I like the break-out. And most importantly, I like the break-out off the IPO high, right? So that's always a key pivot for me. Remember as technicians, we analyze the behavior of markets, liquid markets, and it hasn't been a liquid market very long. So there's not that much data.
But I have found that that former peak is an important one. Let's call it-- what are we going to call it-- we're going to call it 165. If we're above 165, we had a little failed breakout at the end of the year-- if we're above 165, that's the IPO high. I like it long. I think it goes to 192. That's the next level.
JARED BLIKRE: Got you. What about Peloton here? And I've kind of marked up the charts the way you had it when your slide looks. But just tell me-- this is another just building bases and going higher, kind of like Tesla.
JC PARETS: Yeah, that's exactly right. So this isn't, like, a new name for us. It was actually-- I think it was our biggest winner of 2020, I have to go back and check. But needless to say, it was a monster-- call options, the whole thing worked out really well.
Now, our target near 150 had been hit. We've consolidated sideways in a very healthy manner. And now I think it's ready to take off again. So if we're above 150, I like Peloton long. I think it goes to 232, that's where I think it goes next.
But if it's below 150, I think you leave it alone. So below 150, leave it alone. Above 150, I like it long-- pretty binary as far as I'm concerned. And like I said, I think--
JARED BLIKRE: Yeah, it sounds like that you have a really nice reward to risk-- potential reward to risk ratio on that. Is that something that you look at before you get into a trade?
JC PARETS: Yeah. I mean, at the end of the day, it's all that matters. You know, you can have all your conspiracy theories as to why a stock's going to go up, but at the end of the day, the only reason you're buying a stock is because you could think that you can sell it to somebody else at a higher price. If you didn't think that, you weren't going to buy it, regardless of who the president is or whatever ridiculous things you come up with.
At the end of the day, you're only buying a stock because you think you can sell it down the road to somebody else for a higher price. Now, you also want to be able to identify where you're wrong. So I don't really care how high you think it goes, I want to know what the market needs to do to prove that thesis wrong. And by my work, it's very well defined. In this case, the number is 150. If we're not above 150, the bullish thesis is simply incorrect.
JARED BLIKRE: Yep, got you there. I do want to get to a couple more questions here. We're supposed to end in just three minutes. We usually take a little bit more time, so maybe we'll extend this by a few minutes. My producers can tell me if I'm going way too over.
But here we go-- yeah, what about inflation pressure on stocks and real estate in 2021? I'll field this. Kind of macro look here-- inflation expectations have shot up. A lot of this has to do with the government spending more money. There's probably going to be another stimulus bill here. And all of that points to potential higher inflation.
Now, how does the Fed react to that? That's what you got-- and I know, JC, we were talking before the show, you said, you put in your contract that you don't get to talk-- we don't have to talk about the Fed. So that's why I'm taking this one.
JC PARETS: Oh, it's you.
JARED BLIKRE: Yeah. You know, inflation is usually good for real estate stocks. And you already have this boom we're seeing XHP-- that's the homebuilders ETF at record highs. And I think KB Homes reported after the bell yesterday tons of new orders-- $3 billion worth of new orders to be built in this year-- so anchors away for inflation.
And then we have, are government bonds a good bet for the next two to three years? I'll tell you what, we've seen over the last couple of months, and especially accelerating within the last few weeks, is that yields are going to the upside. They're breaking up, which means that bonds are selling off.
I don't know that bonds are the best environment, given what we've seen and the price action over the last couple of months, combined with the political agenda that everybody is expecting. Now, you have the Fed, which is probably not going to want those yields to get too high. So they'll put a floor on bonds. But we're not there yet, and nobody really knows where that floor is.
So we've got to look at TLT and the bond market, and it'll tell us when to get back in. Oh, JC, this is one for you. We are going to Miami on Friday, tell us where we should eat. This comes from Carrie.
JC PARETS: Man, I haven't been in Miami, like, in a year. And I don't even know what's open or what's not. You know what I do know is open-- Arbetter's. I used to work at this hot dog joint 20 years ago, 21 years ago, and they make the best chili dogs in the world. Go to Arbetter's, tell them JC sent you. They won't have any idea who I am-- been a long time. The kids there weren't even born when I worked there.
But if you want some hot dogs, I do know they're open, because I follow them on Instagram. But that's the truth, I don't know-- I don't know who's open. Sorry. I don't have time, you know?
JARED BLIKRE: You might want to check out Frankie's Pizza-- it's right by Arbetter's.
JC PARETS: Order [INAUDIBLE]. [INAUDIBLE] is open. Get some [NON-ENGLISH SPEECH] and some [NON-ENGLISH SPEECH]. Have some [NON-ENGLISH SPEECH]. You'll be fine.
JARED BLIKRE: This makes me homesick here. All right, let's round out with a couple more questions here. We've got a couple of minutes. What's the outlook for video game stocks? Oh, golly, GameStop is just in a massive short squeeze today. And they sell-- this is more of a retail story, just kind of grabbed my attention. I'm going to put this chart up here.
So here's GameStop having its biggest one-day advance ever-- I got some Anchored VWAP lines. And just to show you-- this-- you know, stocks, if you look at Anchored VWAP as kind of an equilibrium point-- so you have a matching of buyers and sellers. They're at the same average entry price at a particular VWAP curve, well, you know, as soon as we got out of this one, which means that there were more people in the green than in the red, basically, since that prior high, we just took off.
And all it took was a little bit of news-- I think it was activist investors. But it doesn't really matter. As far as gaming stocks, I think, you know, a lot of them benefited from the work from home environment in 2020. I think it's going to be more selective.
The high growth stocks that we've seen, we're going to see some winners and some losers. Peloton probably one of those winners, but not everything from last year that did well during the work from home environment, the lockdown, I think it's going to be more selective this time around. Any thoughts on it, JC?
JC PARETS: Well, GameStop, like you said, is a major short squeeze. I mean, huge, huge short squeeze. If you're going to be looking at the video games, the Activision has already broken out above the 2018 highs. So that's the one I like. You guys who have known me for a while know for me, relative strength is a very important signal.
This one's showing relative strength compared to the others. So for me, if Activision is above those 2018 highs-- let's call it $85-- I like it long. For below $85, leave it alone. It's somebody else's problem. But above $85, I like it long. $112 is next-- the ATVI.
JARED BLIKRE: ATVI. I'm just going to take a quick look at that.
JC PARETS: Activision.
JARED BLIKRE: Yeah, Activision Blizzard here we go. So what were those numbers one more time for the audience here?
JC PARETS: I think $84, $85 is probably a good level, right? $85 to keep it safe. If we're above that, I like it long. Below it, leave it alone-- goes to $120-- excuse me, $112.
JARED BLIKRE: Gotcha. And yeah, with the candlesticks, you can see those support and resistance levels kind of baked in right there.
JC PARETS: Because the-- sorry to interrupt. The thesis is that we are now breaking out of a multi-year base, right? That's the thesis. That it's taken 2 and 1/2 years to absorb all of this overhead supply, and now prices can move on, because there's more demand than supply. If we're not above those former highs, we can't make that argument. It invalidates that thesis-- just so the viewers can understand the thought process.
JARED BLIKRE: Yeah. And in general, what I've noticed with the indicators that I like the most, they all have something in common. And that's that investors like to get out of break-even, to their detriment. So we're looking for equilibrium levels. And prices going above multi-year resistance, that could be one form. Anchored VWAP another-- and then even moving averages, I don't see them as powerful, but they kind of do the same thing.
All right, I want to thank everybody for coming today-- JC, especially. Really had a lot of fun with you, hopefully people know a little bit more about Miami. And check us out in three Wednesdays from now, February 3. That is our next webinar. And we are back to a monthly schedule, first Wednesday of every month. Again, thank you, everybody here.