Raytheon Technologies: 3 Line Strike at PCZ of Bearish CypherThe Defense Sector in general seems to be overhyped as if it expects earnings not to matter anymore but the PE/Ratios keep rising as if it's betting on the US to enter a direct armed conflict rather than reality which is that we are simply just providing old unused equipment to the Ukraine. I think in the near future the market will realize this and we will see prices on these kinds of stocks got lower as the PE Ratios compress just like every other speculative growth stock has done during the cycle.
Missiles
Missiles attack, plane crash, earthquake and ADP dataYesterday was oversaturated and accordingly super volatile. Although it is worth noting that the strength of the counter-movements significantly exceeded our expectations. On days like yesterday, traders either make a fortune or (which happens much more often) lose their deposits. Often the reason for the loss of the deposit is excessive greed on the one hand and disbelief in their own positions on the other.
For us, yesterday’s events mean that even better entry points have appeared on the market. And that means opportunities for even greater earnings. But first things first.
Yesterday began with news of Iran’s missile attacks on US military bases in Iraq. Gold and oil on such news naturally rushed up. The markets were preparing for an immediate US response: Trump's 52 goals - that’s all.
But no action followed. Trump tweeted “keep calm,” and then also made a public statement in which he made it clear that the United States was not going to further escalate the conflict, at least militarily. As a result, investors rushed to lock profits. True, they were obviously carried away, since the fixation clearly turned into the opening of counter-positions.
As a result, gold after the 1610 test fell to the key support area of 1550. Although it looked strange, it was only a great opportunity to buy cheaper. Actually, we wrote about this in our review yesterday. That is, gold could theoretically reach 1550 and it reached. Yes, it looked almost unbelievable, but in terms of the logic of key levels, it was generally logical. So, we repeat, while gold is above 1550 - only purchases, only forward.
In general, most of the news yesterday had Iranian roots. The crash with many casualties on take-off from Tehran immediately after attacks on US military bases unwittingly suggests that a passenger plane could become a victim of either an Iranian air defense or a terrorist attack. Too converge events in time and place.
Add to this a rather strong earthquake in same Iran, and even near the nuclear power plant, and we get such a jackpot. In general, we strongly recommend that you refuse to buy the Iranian real or the Iranian stock market.
But back to the economy. US employment data from ADP presented a gift to buyers of the US dollar and the US stock market: +202K with a forecast of +160K inspire serious optimism on the eve of the publication of official statistics on Friday.
However, the correlation between ADP and official data is very weak, albeit positive, so for now we continue to see in the growth of the dollar is not a threat, but an opportunity. The opportunity for its sales is more expensive. So today we will continue to look for points to open short positions on the dollar. First of all, against the Japanese yen. Everything that is happening in the world plays into the hands of only safe havens. It is hard to imagine that such a positive and relaxing thing should happen in the world so that the level of anxiety and tension would drop sharply. This means that we will continue to buy gold today.
In terms of macroeconomic statistics, today will be a day of respite before Friday and data on the US labor market, so no surprises should be expected in this regard.
$RTN Defense is where my money is!$RTN Defense is where my money is! We have all been watching Fox news and by now know that we put 59 Tomahawk missiles in Syria's lap. Those 59 have to be replaced....right?
The next couple of days are entangled with questions. What if.....and if so then what? With all the unknowns I think the market may be a little bearish in most industries. Except for one.DEFENSE!
I would be willing to wager (Ha) that the defense market will see a move that we haven't seen since November, or heck, maybe, longer!
How much does a Tomahawk Missile Cost?