GLD/GDX SELL signals 2.11.19

Not surprisingly, were picking up SELL signals in the GLD complex-  both GLD/GDX are firing SELL signals …

…I know- I know, inflation is rampant and GLD can’t come down now…

If This Isn’t Stock Manipulation, I Don’t Know What Is

There is a growing chorus surrounding the topic of stock buybacks and whether they should be banned. Most recently, Chuck Schumer and Bernie Sanders wrote a piece for the New York Times arguing that buybacks are nothing more than corporate self-indulgence that leads to long-term harm to both companies and the economy. This may be true and, with equity valuations at or near all-time highs, buybacks certainly appear uneconomic at current prices but this is no reason to ban them. Companies should be allowed to throw money down the drain if they so choose. It’s a free country, as they say.

That said, there is a very good reason for banning buybacks and it’s the very same reason they were banned for decades before the Reagan administration allowed them to recommence in 1982: They are nothing more than stock manipulation on a massive scale.

As John Authers recently pointed out, “For much of the last decade, companies buying their own shares have accounted for all net purchases. The total amount of stock bought back by companies since the 2008 crisis even exceeds the Federal Reserve’s spending on buying bonds over the same period as part of quantitative easing. Both pushed up asset prices.” Let me rephrase that: there have been essentially no other buyers of equities over the past decade besides the companies themselves and they’ve spent over $4 trillion at it, even as liquidity has fallen to record lows.

So it’s not hard to understand how valuations have gone to the moon. Without that $4 trillion in stock buybacks and in a market where trading volume has been falling for decades they never would have been able to soar as high as they have. The chart below plots “The Buffett Yardstick” (total equity market capitalization relative to gross national product) against total net equity issuance (inverted). Since the late-1990’s both valuations and buybacks have been near record highs. Is this just a coincidence? Considering all of the above I think it’s safe to say it’s not.

If This Isn’t Stock Manipulation, I Don’t Know What Is - zjf1

The question then becomes why would management seek to inflate the valuation of their firm’s equity? The answer is very simple. As the Financial Times recently put it, “Corporate executives give several reasons for stock buybacks but none of them has close to the explanatory power of this simple truth: Stock-based instruments make up the majority of their pay and in the short term buybacks drive up stock prices.”

This is not just an inference made from the clear incentive executives have to fatten their own pockets. Harvard Business Review recently noted there is a statistical relationship between equity-based pay and buyback activity: “We find that the more vesting equity the CEO has in a given quarter, the higher the likelihood is of both buybacks and M&A. Like investment cuts, buybacks and M&A could be good rather than bad — but we find that vesting equity leads to the bad type.”

In addition, the Roosevelt Institute found another curious statistic: “In the first 8 days after a buyback announcement, insiders sell an average of $500,000 worth of stock per day—a five-fold increase as compared to the normal daily average of $100,000.” So the history of buybacks over the past several decades show that they are implemented when executives would most benefit from juicing the stock price and they take full advantage by selling heavily back to their own company.

If this isn’t stock manipulation, I don’t know what is.

Now I’m sure there are shareholders who would be unhappy with my criticism in this regard as they feel they have benefited alongside management during this time. That may be true in the short run. Manipulating the stock price certainly feels good to existing shareholders while it’s happening. However, repurchases made at prices that are uneconomic are damaging to the long-term health of the company.

Here again, history (and the chart above) shows that stock buybacks are pro-cyclical. Companies repurchase far more shares at peak valuations and then they halt buybacks altogether, or worse, issue shares when valuations are at their lows. As HBR puts it, there is just too much incentive for the “bad type” of stock buybacks – those that benefit execs in the short run and harm investors in the long run. What’s more, this cycle has seen the greatest amount of debt-financed buyback activity in history. Executive teams have leveraged up their companies to record levels while paying record valuations. As my friend John Hussman put it, corporate executives have, “quietly placed investors on margin.”

If This Isn’t Stock Manipulation, I Don’t Know What Is - zjf2

The bill will not come due for all of this leveraged equity manipulation until the next recession and concomitant credit crisis. And considering the size the of the leveraged buyback party executives have thrown over the past decade I think it’s safe to say the hangover is going to be just as riotous, though not in a celebratory way. At that point shareholders will be made painfully aware of the true cost of inebriating their upper managements with massive equity compensation and then giving them the keys to the financial car.

The good news is there is a very simple fix here. Stock buybacks in the open market should be banned because they are clearly the single greatest form of market manipulation that exists today. However, this would not preclude companies from putting together tender offers for their own shares. The difference between open market repurchases and a tender offer is night and day. Restricting companies to making tender offers would eliminate the ability to manipulate prices at the discretion of executives. Yet it would still provide a way for companies to deploy capital as they see fit and in a way that is much more forthright and fair to everyone involved.

Clearly, the rationale behind the original ban on stock buybacks was valid. The history of buybacks since their reinstatement over 35 years ago clearly demonstrates this. Hopefully, legislators will see the value in maintaining corporate determination of their own capital allocation while banning practices like open market activities that, in many cases, are clearly against the interest of every stakeholder outside of the executive suite.

SPX/MKT S/R Levels 2.11.19

SPX R1=2714-15- first level of R-  *A move above this level would indicate a move to R2@ 2752-55-

SPX R2=2752-55- algorithmic resistance and the lower end of the “macro” range we highlighted over the weekend. Traders /PM’s would be looking to Sell/Fade/SS this level-

SPX S1-S2=2694-97- this level needs to hold on ANY pullback OR would be T/A “Red-Flag” and indicate a break of price symmetry- most likely lead to lower price.

Today’s Most Active Options

SymbolContracts%Calls%PutsDaily Vol%
GE82032012.1687.84361.14
AAPL29934257.9042.1089.79
AMZN20188052.8047.20180.43
TWTR19635773.0626.94293.29
VALE19590865.0234.98354.92
EA19136472.2827.721285.96
AMD15304062.0837.9275.54
NFLX13995454.7945.21105.69
TSLA13819652.0947.91115.33
FB13641159.5740.4368.43
BAC13529463.0536.9556.81
SNAP13473265.8734.13222.58
MU13420449.3050.70121.58
CLF11038382.7817.22590.00
LLY11005150.4149.59758.87
NVDA10931261.0238.9875.27
FCAU10461587.9412.06814.86
BABA8451640.7259.2874.81
WFC8316770.8829.12251.89
GOLD6802191.248.76490.73

SPX/MKT Update 2.8.19

So what happened to the 2.8-11.19 SELL signal?

Well , it could be that the Algo is off by 3 days, BUT that’s outside of what would normally be considered acceptable TIME disparity given the length of the signal…so , that doesn’t make sense.

It could be that the model I’m looking at is wrong about the 8th-11th being a pivotal TOP/HIGH-  * which is probably the case here…

I’m just not seeing anything here that makes sense technically ,other than an overbought MKT that is stretched in Stochastics %K ,RSI,MACD ext.-

So, although the MKT was punched in the stomach yesterday by the trade deal set back, I’m not so sure we can surmise that the current trend is OVER based upon that new bit of News/Information.

As outlined this morning, the Algo #’s as measured by DTE- and calculated by DMP would suggest fairly good support here for the SPX/MKT- 

Additionally, I would add that the SPY/QQQ’s are showing a bullish divergence AND the speed at which the MKT is moving is NOT accelerating at a HIGH Rate of change. This is generally not seen as a rush to the exits reversal pattern price movement dynamic , but more of a continuation pullback price movement dynamic.

Based upon the underlying relative strength of the last 2 days, were basically holding in there pretty well (Were only dipped lower by 4 SP handles than yesterday’s LOW and were trading above that level-, at least for now…)

When I look at the sum of the technical parts, my conclusion is that the MKT is likely pulling back within its UP trend structure, and is likely NOT setting up a “reversal” pattern of any significance at this TIME.

Traders/PM’s are advised to temper their downside expectations and assume the MKT’s trend structure is intact for now. We would NOT be loading the boat on the SHORT side here. I wouldn’t be surprised if we saw a late afternoon rip your face off rally… (Of course I’m stuck long and praying for this right now… J)

praying for this right now… J)

QQQ 60 min bullish divergence-

2 Longs & 2 Shorts to Watch

American Superconductor Corporation (AMSC) jumped 66 cents to $14.54 Thursday on 604,100 shares, or double its average volume.  The wind turbine component maker beat Wall Street expectations in its earnings release on Tuesday.  The stock has been in a steeply rising channel since its late-October low under $6, and the channel top points to $19.

Evolus, Inc. (EOLS) popped $4.85 to $28.91 on 4.8 million shares Thursday.  Shares in the provider of medical aesthetic products have rallied since the company received FDA approval a week ago for its treatment of frown lines.  The stock is right at resistance from its late August high, and a move through this level could get it to $34 next.

On the short side, Carvana Co. (CVNA), which dropped 39 cents to $33.02 on Thursday, has broken down from an ascending wedge within a declining channel off its September top.  There’s support at around $29 for the stock in the company, which operates an e-commerce platform for buying used cars. If that level doesn’t hold, then the stock could fall to next support at around $24-$25.

Medifast, Inc. (MED), which gave back 19 cents to $127.07 on Thursday, has been declining since September in a series of ascending wedges that have failed.  Stock in the healthy-living specialty retailer is currently in another ascending wedge near the top of its declining channel, which if it fails could pullback to test the $108 area.  The stop would be near last week’s high just under $132.

CitiBank analyst reports … William Hill is an Attractive “TAKEOVER CANDIDATE” at Current Valuations => Sees +70.00% Upside in the Shares

William Hill initiated with “BUY” rating at Citi Bank
Citi analyst Monique Pollard… Resumes coverage of William Hill with a “BUY” rating and £310 /pence price target
( £310 /pence price target… Equates to $4.00 / USD )

The analyst believes the company’s valuation.. U.K. and U.S. market positions could make it an attractive – “Takeover Target”Shares of William Hill are currently trading in London at:  (LON: WMH) @  £179.95So adjusting for currency conversion ($USD)….
William Hill shares are currently trading on the Losndon Stock Exchange at:  $2.33 / USD
Meaning that Citi analyst Monique Pollard sees +70.00% percent Upside in William Hill Shares
Believeing that $4.00 per/share would be a fair price for a William Hill … Takeover to be Viable
REFERENCE LINK:http://bit.ly/2WWfAj0

________________________________________________________
These are “My Thoughts” on William Hill … 

I think the shares are worth “MULTIPLES” better than CITI’s estimated Fair Value 
Of:  £310 /pence price target -or-  $4.00 / USD 


Here are My Thoughts:

https://www.strandshoppingcentre.com/UserFiles/Image/Stores/williamHill-Logo.png


I believe investors are getting a “Free Call Option” on William Hill’s growth opportunities in the US Sports Gambling Marketplace 

We expect fully expect William Hill to get a “Large” chunk of US market share in the =>  US Sports Betting Market

An opportunity that Barclays Bank’s analyst believes could be worth close to => $4 BILLION -in- 4 Years Time

This is not properly understood currently by the US Investment Community … And certainly not yet priced into the stock


This year “2019” is all about US State Adoptions…. US States Legaizing Sports Betting -for- The very 1st Time 

We view the +5.50% stock dividend yield at current prices… As share price supportive these current prices

And We expect EPS growth of greater than +50.00% heading into FY’ 2020

Looking into 2020 …

William Hill management has previously issued extremely bullish forecasts for United States (Sports Betting) growth

William Hill management has previously issued initial EBITDA forecasts of:

(US) +$390 Million -or- British Pounds (£) 300 Million / Annualized EBITDA  -by-  FY / 2023

Barclays analyst does not know when “FCF” for US Sports Betting Companies will inflect positively on Balance Sheet

Barclays analyst does not know the timing of US States legalizing sports betting

And the Truth is .. Nobody knows the timing

BUT … 

We do know that US STATES desperately need “NEW” Tax Revenues -&- Americans “LOVE” Sports Gambling
With “7” States now legally offering Sports Betting… “6” of which have only adopted/legalized over just the past 6-7 months 

We are willing to Assume the “Timing Risks” ..
Which We view as an absolute => “NO” BRAINER

The UPSIDE…

If William Hill is able to deliver EBITDAs of => (US)  $390 Million / (Or even Half of that Amount) -by- 2023

It would suggest “Incredible Upside” into William Hill’s Stock Price

Applying a 10x Times / EBBITDA multiple  -to-  $390 Million ($US) EBITDA

Begets a potential value of =>  USA + $3.90 BILLION -to- Hill / Shareholders

Suggesting a Value … That is now far greater than Willam Hill’s / Entire current market cap

In Summary …

We believe William Hill investors are basically getting a “Free Call Option” on William Hill’s ability 
To obtain a “Very Large” market share of =>  US Sports Betting Market

We do not believe .. The US Sports Gambling Opportunity is even close to fairly priced in the WIMHY Shares
_________________________________________

5 YEAR – STOCK CHART


ENGLAND – Leisure/Gambling 

QUOTE: (LSE: WMH) @ £179.95

https://www.advfn.com/p.php?pid=staticchart&s=L%5EWMH&t=37&p=8&dm=0&vol=0&width=670&height=600&min_pre=0&min_after=0

WILLIAM HILL – (WIMHY)

I believe investors are getting a “Free Call Option” on William Hill’s growth opportunities in the US Sports Gambling Marketplace 

We expect them (WIMHY) to get a “Large” chunk of market share in =>  US Sports Betting Market

An opportunity that Barclays Bank’s analyst believes could be worth close to => $4 BILLION -in- 4 Years Time

This is not properly understood currently by the US Investment Community … And certainly not yet priced into the stock


Looking at consensus 1 year “forward” multiples … 

This year “2019” is all about US State Adoptions…. US States Legaizing Sports Betting for the very 1st Time 

We view the +5.00% stock dividend yield as share price supportive of the shares at these prices

And We expect EPS growth of greater than +50.00% heading into FY’ 2020

Looking into 2020 …

William Hill has issued bullish forecasts for United States (Sports Betting) growth

William Hill management has previously issued initial EBITDA forecasts of:

(US) +$390 Million -or- British Pounds (£) 300 Million / Annualized EBITDA  -by-  FY’ 2023

Barclays analyst does not know when “FCF” for US Sports Betting Companies will inflect positively on Balance Sheet

Barclays analyst does not know the timing of US States legalizing sports betting

And the Truth is .. Nobody knows the timing

BUT … We know the US STATES need the Tax Revenues badly -&- Americans “LOVE” Sports Gambling

We are willing to Assume the “Timing RISKS” … Which We view as a “NO” BRAINER

The UPSIDE…

If William Hill is able to deliver EBITDAs of => (US)  $390 Million / (Or even Half of that Amount) by 2023

It would suggest “Incredible Upside” into William Hill’s Stock Price

Applying a 10x Times / EBBITDA multiple  -to-  $390 Million ($US) EBITDA

Begets a potential value of =>  USA + $3.90 BILLION -to- Hill / Shareholders

Suggesting a Value … That is now far greater than Willam Hill’s / Entire current market cap

In Summary …

We believe William Hill investors are basically getting a “Free Call Option” on William Hill’s ability 
To obtain a “Very Large” market share of =>  US Sports Betting Market

We do not believe .. The US Sports Gambling Opportunity is even close to fairly priced in the WIMHY Shares
_________________________________________

5 YEAR – STOCK CHART


ADR / ENGLAND – Leisure/Gambling 

QUOTE: WIMHY: $9.69 … Up +1.73 %

https://charting.nasdaq.com/ext/charts.dll?2-1-14-0-0-560-03NA000000WIMHY-&SF:7|5-BG=FFFFFF-BT=0-HT=395-

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(WIMHY) @ $9.60 ==> NEVADA GAMING BOARD ==> Approves: ELDORADO, GDEN -&- WILLIAM HILL =>

Nevada Gaming Control Board recommends => William Hill

Approves their Licensing for:  “7” Casino Properties

https://www.sportsgamblingpodcast.com/wp-content/uploads/2018/08/sports-book-review.jpg

By: Richard N. Velotta Las Vegas Review Journal

https://company-profile-images.s3.amazonaws.com/images/814316/1018328/logo/william-hill-logo.png

William Hill is continuing to grow in Nevada.
The international sports book operator took a major step in its growth strategy on Wednesday 

Winning unanimous recommendations of approval for licensing at “7” casino properties in Nevada.

In “3” separate Licensing Actions on Wednesday…
The Nevada Gaming Control Board recommended William Hill for licensing approval
For the operation of “Race and Sports Book” operations at “4” properties in Las Vegas -&- Laughlin 
owned by Golden Entertainment Inc, and “2” casinos in Reno and Stateline, NV under the ownership 
of Eldorado Resorts Inc.

The approval in the Eldorado licensing also included amending orders of registration…
These involve Eldorado’s plan to acquire a “20.00%” percent ownership interest in William Hill / USA
This arrangement was previously announced on September 5, 2018. 

William Hill already operates sports books at all of Eldorado’s downtown Reno properties as well asEldorado’s Montbleu Casino in Lake Tahoe, NV.
But the (20.00%) change in ownership status required new licensing.
The Nevada Gaming Commission will consider final approval on all if the above matters on:  January 24th.

https://www.thetimes.co.uk/imageserver/image/methode%2Fsundaytimes%2Fprod%2Fweb%2Fbin%2Fadbccf44-4ade-11e8-864f-5f6f2d0ffcbf.jpg?crop=2250%2C1266%2C0%2C117&resize=685

JOE ASHER – CEO – WILLIAM HILL
William Hill CEO Joe Asher said once final approval is granted, the company would manage race and sports books at:
The Stratosphere, Arizona Charlie’s Decatur -&- Arizona Charlie’s Boulder in Las Vegas….As well as Golden’s properties in Laughlin, NV.

William Hill CEO Asher said…
We are making “considerable” capital investments in all of the equipment and displays… At all the new Sports Books. 

“We typically go in and upgrade the facilities… Put in our equipment… And the display systems that we use,”  Asher said. 

“The Stratosphere sports book in particular… Its going through a substantial renovation right now.”
William Hill was also approved to install “Self-Service Betting Kiosks” in some of the properties.

https://www.tahoedailytribune.com/wp-content/uploads/2016/09/SportsBooks-TMW-112615-2.jpg

Employees who work at the companies’  sports books will become William Hill employees when the transition is completed.

William Hill’s deal with Eldorado is substantial… 

Because Eldorado has quickly grown to become one of the nation’s largest regional casino operators.

“Building a Sports Book can cost between….  $1 million -to- $2 million”…  said William Hill CEO Asher

He put William Hill’s total investment … Into just Eldorado’s sports books as high as =>  $52 Million Dollars

William Hill US operates 137 books in the U.S., including Nevada… 

https://www.reviewjournal.com/wp-content/uploads/2018/08/10914146_web1_SPORTSBOOKHEARING-MAR19-16_031816js_07.jpg

And CEO Asher is looking for more growth opportunities on a daily basis.

The Eldorado deal does not prevent William Hill US from striking more partnerships with casino operators, even in states 
where Eldorado is already present, he said.

“There is no doubt we will continue to do independent deals as we see fit…. It’s still full guns blazing,” he said.

<END> 
_______________________
REFERENCE LINK:https://goo.gl/g3Sahr

“USA SPORTS GAMBLING MARKET”

There is “HUGE” expected growth in Sports Gambling in the United States…
This will make Eldorado’s => “20.00%” – Ownership Stake in William Hill => Extremely Valuable 


There are very few things in this economy… 

That will grow as quickly as => Legalized Sports Gambling
Still in its Infancy …
It is expected to be morphing into a “$5+ BILLION” per/year Industry 

REFERENCE LINK:https://goo.gl/mgoFiH

http://www.rombet.com/uploads/poze-stiri/gambling-compliance.jpg

This report from “Gambling Compliance” projects that the U.S. will far and away eclipse 
all other countries on planet Earth… In terms of the total dollars wagered on Sports.
In the wake of the US Supreme Court’s landmark decision to strike down the federal ban 
on Sports Wagering

Sports Wagering now becomes a “States Rights” issue

US States are now free to pass their own laws…
To allow -or- disavow sports wagering within their own States borders

Gambling Compliance now predicts that the Sports Wagering market will rise meteorically to between:
$3.1 Billion -to- $5.2 Billion in total revenue by 2023…. Up from a mere $700 Million in 2019

https://gamblingcompliance.com/sites/gamblingcompliance.com/files/styles/resource_teaser/public/u.s._sports_betting.jpg?itok=er4ujIRZ
https://gamblingcompliance.com/sites/gamblingcompliance.com/files/bull_case.jpg

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