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Fairy DustTo keep it simple, fair value or intrinsic value for a stock can be measured by calculating earnings with a reasonable long term growth rate. Some tech stocks are currently enjoying extraordinary growth rates averaging around 40%. Some are even higher. Tesla has an earnings growth rate for the current year of 99.6% and the PE ratio is 684.15 at the current price. Fair value for the stock price on earth is currently $42.02 (or 136 DOGE) Let's take a look at these popular names using the formula below: Fair Value formula: EPS = earnings per share 8.5 = time in years G = long term growth rate FV = EPS X (8.5 + 2G) Then you adjust for corporate bond yields, the alternative, "safe" investment Currently we could say they at around 4% yield Final Value = FV * (4.4 / 0.04) Below is a list of popular stocks with the current Fair Value assuming they can keep a long term earnings growth rate of 15% annually , which is still an impressive number compared to most companies. Long term it is virtually guaranteed that earnings will decline from current levels so it will be interesting to see this play out in the stock price. In addition, included below is a chart of where fair value is and text of the current growth rate this year and the P/E ratio. Data pulled from Yahoo Finance and TD Ameritrade API Apple Growth rate: 57.6% PE ratio: 31.40 Adobe Growth rate: 21.4% PE ratio: 51.26 Amazon Growth rate: 33.5% PE ratio: 66.81 Facebook Growth rate: 30% PE ratio: 30.38 Google Growth rate: 49% PE ratio: 31.68 Microsoft Growth rate: 34.9% PE ratio: 37.78 Shopify Growth rate: 11.8% PE ratio: 114.8 Square Growth rate: 78.6% PE ratio: 395.75 Zoom Growth rate: 40.1% PE ratio: 134.18 The Trade Desk Growth rate: -10.10% PE ratio: 157.6 Nvidia Growth rate: 58.3% PE ratio: 97.12 PayPal Growth rate: 21.9% PE ratio: 66.13 Using this method the only growth stocks that have realistic upside are Apple, Facebook, Google and Microsoft.
NASDAQ:TSLA
by trade-God
3
This is ALL you need to be Profitable in TradingGood morning traders! Today we will make an educational post about something that generates many doubts in many people: That is, what are the tools that I should use to trade correctly? Do I need indicators? do I need extremely complex strategies? The answer is DEPENDS. Why does it depend? It depends because there are many ways to see and trade the market, and just as there are thousands of traders, so there are also thousands of strategies since there are many ways to combine the different tools that we have. That said, it is worth clarifying that this post is made 100% from our experience, and the objective is not to discredit or downplay other trading methods. This is simply what we use, and for a long period of time, it has served us well. We will divide this post into two parts, first, a theoretical explanation of each tool, and second, show how we apply the previously explained concepts. 🔸Price action: This is the first concept that we must cover since it incorporates everything in a certain way. The price action, basically, is the behavior of the price. Depending on the market situation (trend, either bearish or bullish or in range), we may see different price actions. The technical analysis starts from the basis that the price action discounts everything necessary to decide on an asset; therefore, everything that is happening, the price is transmitting in its behavior. For example, if the price is in strong support, and we see that a candle with a lot of volume appears, and it forms a candlestick pattern (suppose bullish engulfing), clearly the price action tells us that there is strong buying interest. This applies to all scenarios; we can also consider a breakout of a structure or correction that closes with a strong candle above the previous high, and so on with infinite cases. Example of price action in support (real situation in USD / CAD in Weekly Chart): 🔸Trendlines/channels: This will be a determining tool when defining a trend. Depending on which market or timeframe we trade, we will see more or fewer trends, but they are a very comfortable visual way of marking them. In the case of an upward trend, the concept is based on joining the increasing lows with a line and the same with the increasing highs. Same situation for a downtrend, but with the highs and lows in reverse. The price tends to respect these lines very well, bouncing off them every time it touches them. Example of trend lines in channel form in EUR / USD Daily Chart (Real example): 🔸Support / Resistance Zones: The Support and Resistance zones are horizontal and static supply and demand zones. As we saw previously in the trend lines that the price reacts (these are considered dynamic supports and resistances since the value changes as time progresses), the same thing happens here, since they are specific places where there are many buy or sell orders. The key is to wait for a reaction in the price in that area to confirm the movement. When the price moves for a long time between support and resistance, we can say that it is within a range. This usually happens after periods of a powerful trend, where the price begins accumulation/distribution consolidation processes that last a long time. Here, we have an example on Amazon (AMZN): 🔸Corrective Patterns: This is a particular concept since it is focused on momentum/trend traders. This trading style is characterized by taking positions that are always in favor of the trend, and corrective patterns are an exciting time to join the movement. These patterns happen after impulses; if we have a strong upward movement, then once the price starts to retrace, it will form a correction pattern in the opposite direction of the trend. They are very useful to be able to join the next trend. Real example on Facebook (FB): 🔸Risk Management: The basic idea of ​​risk management is to be able to earn as much as possible but always keeping losses as low as possible, and of course, avoid destroying an account. It is very common to see traders who try to "duplicate" accounts or obtain exorbitant results in very short periods of time. Is this possible? Of course, YES, but we must ask ourselves whether this is functional in the long term, and the answer is NO. OBLIGATORY, if we take high risks, we will lose a lot of money after a certain period of time. This is very simple, trading is a game of statistics, and streaks exist either for better or worse. There are certain basic rules, such as the % risk of the total capital in each trade. For example, if we have an account of $10,000, a conservative and correct risk to assume, it would not be more than $300 per trade, which implies 3% of the total capital. We recommend risking that value as much as possible, and even the optimum is a little less. We handle ourselves with risks between 1-2%. Assuming real situations, there are bad streaks of trades that can reach 10-15 consecutive negative trades. Assuming a risk of 2% per operation, we would have a maximum loss of capital of 30%. In this way, we can stay in the game for the long term. Never forget that capital is the raw material of labor, and rule number 1 is NOT TO LOSE IT. 🔸Psychology: When it comes to trading, thousands of emotions appear that go through our heads, both positive and negative. We will feel fear, euphoria, anxiety, greed, depression, excitement, happiness, and infinite emotions depending on the situation in which we find ourselves. The objective of working on psychology is, obviously, to reduce these sensations, but more importantly, it is to ensure that they do not affect us in our daily work. In the end, we are human, and we will always feel emotions, but the goal is that they do not negatively influence our trading. In the first place, to reduce negative emotions, we must necessarily know perfectly the statistics of the strategy that we are carrying out. This implies knowing what your return is, what period, maximum loss, how long it will take me to recover it, etc. On the other hand, it is necessary to perform a backtest to know how it behaved over time and if what I see at the moment is correct. In this way, we will have peace of mind when operating. We must never forget that this is a business, and expectations must be long-term. Do not measure the result in days or weeks. Look at it in months, quarters, or years. In this way, the results will be more representative. 🔸With the concepts explained, we will see how we can unite them all to take a trade. Although they are all useful, individually, they do not serve us to take a trade. We must unite them in an organized way to use them to our advantage. We will show you some positions we have taken over the last few months (some already closed, others active). Bullish Trade on INTU: In this trade, we see a clear uptrend. The price, after making a maximum, was consolidating for a few months. We detected a clear corrective pattern and took a bullish position once it was broken to the upside. The entry was above the previous high, the stop loss behind the low, and the target in the Fibonacci extension (this concept is not explained, but we can make an informative post later if you want). The risk assumed was 1% of the capital, with a potential gain of +2.5%. The position is open but near the take profit. Bullish Trade on FB: Similar scenario to the previous one. Price builds bullish momentum and then corrects. We operate the correction breakout, assuming a risk of 1% with a potential gain of +2.4%. Bullish Trade on FB (short-term): This is a trade that we take in addition to the previous one; it is an internal trade. Here, we also incorporate the concept of support/resistance. There was a broken resistance to the upside, and then the price generates a throwback (retest). This setback forms a corrective pattern, which gives us a good opportunity to enter the market—assumed the risk of 1% with a potential gain of +2%. Bullish Trade on GOOGL: In this trade, the price breaks the upper end of the bullish channel and begins to correct at the edge. We see a clear consolidation, and we trade the bullish breakout. This trade is already closed with a profit of +1.75% with an assumed risk of 1%. Of course, not everything is so nice, and there are also stop losses. Bullish Trade on TLRY: In this trade, the price breaks the descending trendline and the resistance zone (then support). It generates a corrective structure, and we take a bullish position at the break. The price was a bit in our favor, but then everything turned against us, and we jumped our stop loss. 🔸 This is a small sample of certain technical analysis concepts and how they can be applied to the market. There is no complex science here, no confusing indicators. Simply clear trends, trade-in that direction, and interesting profits with limited risks. That's all it takes to make money on this.
BITSTAMP:BTCUSDEducation
by ThinkingAntsOk
3
KSM: Bullish Descending Wedge + 4H Hidden Bullish Divergence KSM has formed a bullish descending wedge structure that should begin to consolidate sideways and then breakout to the upside considering we are above the 0.5 Fib Retracement line which is where you look for bullish chart patterns for a continuation of previous trend which is up. The other noteworthy chart pattern a trader should look for is Hidden Bullish Divergence - which we have found on the 4H chart. Also - something positive to see is that a previous descending wedge with Hidden Bullish Divergence occurred in February which had a consolidation period before breaking up near 70% of the pattern completion which we are at now in the current descending wedge pattern.
KLong
by ich1baN
8
ABNB: Retest of 21EMA, Then a Rally to the 50DMA?ABNB lost some steam yesterday after testing a 153 handle. We saw some light inflows today at the open, which have now been erased, but we look poised to test the 50DMA sitting around 156.36. We also have room to run toward the upper band of the triangle around 160 if the 50DMA is captured, where we should see strong resistance and possibly a continuation of the recent (persistent) downtrend. A break above the upper band resistance would see us breakout and a new uptrend would form. The major headwind here is sentiment around growth. If the Fed comes off even remotely hawkish, growth is going to tank...
NASDAQ:ABNB
by Hedge_Of_The_World
FB: Potential Upside to 360?FB is channeling up nicely and showing potential upside to 360 where the upper band of the channel is sitting as of today, which would imply a new ATH, of course. We have downside to around 300 where we should see notable support. If we lose 300, we still have channel support currently sitting around 285. This is a pretty persistent trend, so I don't expect much deviation outside of a shift in sentiment, which of course could be brought on by a number of factors, not the least of which is logic...
NASDAQ:META
by Hedge_Of_The_World