Pay Close Attention This Week

Earnings Season Continues

Market Adventures

May 2, 2021

The Beginner’s Edge A Monthly Digest

Profit On The Buy!

“An Investment In Knowledge Pays The Best Interest .” Benjamin Graham

by Alex Cunningham on May 1st, host of Market Adventures Podcast

Welcome to the Market Adventures monthly newsletter! I’m glad you’re here and even more excited that you’ve taken an interest in the stock market. If you’re getting this and you bought the stock market 101 course, this is where you put that information to work. You’ve learned the basics, now you see some real life examples.

“This newsletter and all related Market Adventures content is not investing advice. Everything you are about to read is merely the opinion of the writer. Please seek the counsel of a financial advisor prior to making any investment decisions. Though the stock market does present many opportunities to make money, there are an infinite number of ways to lose all or more than your original investment. That being said. Don’t invest or trade in any security mentioned in this publication or its related content.” Now that that’s out of the way…

Always Start With

The Broader Market | S&P 500

Price Action Is Superior To Indicators

The Market has been on a tear since the last letter went out on April 1st. The general trend was upward and a flurry of positive economic news and vaccination progress only added fuel to the fire. You can see the arrows on the chart and the coinciding RSI, the market has been ignoring several indicators on its way up. The box I created at the most right of the chart is showing a weak trading range for the general market. We are trading at the highs of the range as earnings season continues.

Sell In May, And Go Away

This is something to consider around this time of year. Being this has been a saying in the market long before COVID inflated asset prices, I don’t expect this time to be any different. There’s a lot of bubble talk in the air. And even though the Central Bank has eased some inflation concerns, with prices as high as they are and no “clear sign” of profit taking as of yet, be vigilant and look for the signs of high volume selling.

Don’t forget

Set Your Rules. Then Stick To Them.

Proper Money Management: Saving Made Easy With Digit

Every paycheck I put 20-30% of my check away using Digit before doing anything else. You should always pay yourself first. When I’ve hit my savings goal, I move the funds over to my account and into the investments I’ve identified. Digit helps me save, invest, pay off debt, and prevent overdrafts. With Digit guiding money to your goals each day, you’ll reach them faster and feel at peace along the way. Get $5 free to get your savings started.

Loaning Money To Earn 8.6% Interest: BlockFi

While I’m waiting for investment opportunities, why would I leave my hard earned money in a bank savings account paying LESS than HALF OF HALF of 1%? Inflation alone, at 2-3% a year means you’re losing money every day it sits there. Here’s what I’ve been doing: 10% of every paycheck goes into my Blockfi interest account. By loaning out my funds, I earn enough interest to beat inflation and grow my money with compound interest. Use My Link To Get Free Crypto When You Fund Your Account

Let’s Look At

Stocks To Watch | Swing Trading

Conservative Monthly Profit Goal: 5% Move In Stock Price

Strategy:

Scale in 1/3rd lots, buying on the way up.
Bull market. Let it run unless there is a technical or major fundamental reason to reduce position.
2% loss rule, don’t lose more than 2% of the entire portfolio balance on any one trade

Wait For the Set Up

Remember, the general market supersedes individual stocks. Even when individual stocks set up to move higher, a general market downturn will weigh on all securities.

Plug Power ($PLUG)

1st signal: Price closes above $30 | Next target $37

Need RSI to break above par (50), Move above 200 MA (red line) and 20 MA (green line)

Arrows show 3+ contacts with price, representing strong emotional points for investors. Range formed with former resistance.

Draftkings ($DKNG)

1st signal: Price settles around $55 | 5% target: $58 | Real target $62.5 - $65

Need RSI to break above par (50) and price to move above 20 MA (green line)

Super early. Not an attempt to pick the bottom, just identifying a very strong support zone for the price. The 55 level has been touched more than 3x and there was a gap up from that price level just a few months ago. If it breaks, price will come tumbling down to the 200 day MA. But if it holds, it gives buyers time to come in.

Walmart ($WMT)

1st signal: Price settles around $55 | 5% target: $58 | Real target $62.5 - $65

Need RSI to break above par (50) and price to move above 20 MA (green line)

Formed a range at a previous gap. This is a level of high emotion and buyers seem lined up. If price can move above the 20 day MA and MACD shows increased momentum to the upside, that would be a good set of signals. With earnings in the rear-view, WMT would need some significant news to drive price above this crucial resistance. If there is news, this may present a good opportunity to utilize options. See below for options information.

Easiest Way to Build A Small Account

Learn to put on credit spreads. Great for weekly income or to build an account up. Growth is slower but more consistent with a solid strategy. Listen to the episode here.

Featured Episode: How To Get 8.6% Return In A Savings Account

I’ve been trying to find ways to put my money to work passively as I look for a real estate opportunity. Lending money is a simple way to put money to work, an idea that became of particular interest after reading the book, “Richest Man In Babylon” again.

Truthfully, I had a hard time finding a way to do that intelligently. So for now, I’m using a new company I found paying 8.6% interest….that’s WAYY better than the banks paying 0.05%. BLOCKFI was created with the goal of providing credit services to markets with limited access to simple products like a savings account. Following along the crypto industry mission of leveling the playing field. I recorded a podcast episode talking about this investment. Available on all platforms.

Listen on Spotify | Listen on Apple Podcasts | Listen on Web

This Month’s Long-term Stock Pick

Walgreens ($WBA), 3.52% Dividend Quarterly Yield

KEY TRENDS (retrieved from TdAmeritrade)

Increasing demand and utilization of prescription drugs in the U.S.

The U.S. has an aging population, and as older people contribute to a larger proportion of expenditure on drugs (people above 60 spend an average 2-3 times more than those below 40), this will lead to an increase in the prescription drugs market in the U.S. The 2010 U.S. health reform legislation is also expected to increase prescription drug sales, as over 30 million uninsured Americans will gain coverage and the U.S. government will accordingly increase outlay on prescription drugs. This will be driven by an expansion of Medicaid and Medicare Part D plans.

Accelerating sales of generic drugs

Generic drugs offer approximately 50% higher gross margins compared to branded drugs. The total generic dispensing rate, which factors the percentage of generic drugs in a consumer’s prescription, grew to 78.5% in 2012, from 74.1% and 71.5% in 2011 and 2010, respectively. Generic drugs continued to replace branded drugs in 2015 and 2016, albeit at a slower pace.

In the last few quarters, Walgreens claims that the market has shifted from historical patterns of deflation in generic drug costs into inflation, a trend that is negatively impacting margins. The company has witnessed higher costs for a subset of generic drugs and in some cases the increase has been significant. Walgreens believes that generic drugs inflation will continue to negatively impact gross margins in the near term.

Walgreens is working to minimize the impact of inflation by tracking the movement of AWP (Average Wholesale Price), working with market participants to help them understand the importance of appropriate AWP adjustments to represent changes in actual drug costs, evolving its payer contracts to reflect the realities of an inflationary versus a deflationary market, and working through its joint venture with AmerisourceBergen (ABC) to secure better costs.

It’s Finally Here The Options 101 Course

This form of investing IS NOT for everyone. Where there is high potential rewards, the risks also increase. If you’re interested in learning about options trading and see how I used these 3 strategies to see success as a beginner go to stockcourses.co. Use discount code “456” to get 50% off through the end of this week (4/7), after that it will go back up to full price. IF YOU’RE A PAID SUBSCRIBER to the newsletter, I will give you a personal code to get 75% off as a thank you for supporting this newsletter, just email me at anansi.cunningham@gmail.com by the end of the week.

My Current Long-Term Holdings:

$T, $WKHS, $AGNC, $XRX, $IRM, $WFC, $MO, $ABBV, $XLE, $PFE, $O, $HBI, $INTC, $KO, $IBM

My Current Swing Trade Positions: $UWMC, $PTON

My Current Options Trading Positions: HD $265 Put 05/21, INTC $55 Put 05/21, T $30 Call 01/20/23

My Son’s Long-Term Holdings: $DKNG, $EPD

My Daughter’s Long-Term Holdings: $ETHE