NETFLIX 1D Golden Cross historically shows fast recovery.Netflix (NFLX) completed last week the Golden Cross pattern on the 1D time-frame, which is when the 1D MA50 (blue trend-line) crosses above the 1D MA200 (orange trend-line). By doing so it closed yesterday above the 1W MA50 (red trend-line) for the first time since January 06 2022, practically when its Bear Market was confirmed.
Since it started trading, NFLX has had a 1D Golden Cross pattern while below the 1W MA50 another three times (October 07 2016, December 17 2012 and June 02 2005). On all cases, the price recovered at least the 0.786 Fibonacci, very fast. During 2016/17 it recovered the previous High in just 94 days since the 1D Golden Cross formation. In 2012/13 it recovered the previous high in 264 days, while in 2004/05 it recovered the 0.786 Fib in 200 days.
The worst case scenario of 2004/05 would have Netflix hit $511 by June 08 2023. Do you agree? Which of the 3 scenarios do you think is more likely to happen?
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Streaming
NETFLIX gives a confirmed MEGA BUY signalWe've been bullish on Netflix (NFLX) since early Summer after the price held the 1M MA200 (yellow trend-line), which as we noted on our April 21 analysis, is the historical Support:
Even though the drop didn't complete the expected -80% drop, it did come close enough (-76.50%) and as you see the rebound since the mid May bottom has been massive already (+87%). The price is now close to hitting the 1W MA50 (blue trend-line) for the first time since the first week of January.
The current analysis is on the 1W time-frame and illustrates NFLX's long-term price action since it's first trading day. Though the scale is logarithmic, we can fit the price action within a Channel Up. The recent May bottom was exactly on the Channel's bottom (Higher Lows trend-line) just like the previous Higher Low in late July 2012.
The catalyst that is making us claim that Netflix formed a bottom and is giving a confirmed long-term buy signal is the fact that the price continues to rise even after the formation of the Death Cross (bearish signal technically), which is when the 1W MA50 crosses below the 1W MA200 (orange trend-line). In all (2) previous occurrences (July 2012, April 2005), the stock price had already formed its bottom and was at the start of a very aggressive rally towards its previous All Time High. The current Death Cross was formed in August (2022) and the +87% already shows how this is similar to past bottoms.
There is a Lower Highs trend-line involved (dotted line) which during the past two rallies, was the initial target. In the 00s the price took a while before making a new All Time High while in the early 2010s it took just a few months after touching the (dotted) Lower Highs trend-line. As a long-term target, an investor could use the Multiple 3 (red trend-line), from the Fib MAs indicator.
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NETFLIX +15% near the 1D MA200 for the first time since January!Netflix (NFLX) had its highest daily opening in over one year, rising so far +15.21% form a 240.86 close yesterday to a 277.50 intra day peak. This is of course a fundamental move due to the big earnings surprise yesterday (3.1 EPS against a 2.18 forecast). Technically, this brings the price just below the 1D MA200 (orange trend-line), which has been untouched since January 05 2022!
A break above it has to be backed-up by new fundamentals though as there is a strong Resistance Cluster formed by both the 0.382 Fibonacci retracement level and the top (Higher Highs trend-line) of the Channel Up that started in mid-May. If that rejection occurs, then buying again on the 1D MA50 (blue trend-line) would be the most optimal low risk strategy, targeting just below the 0.5 Fibonacci level at 330.00. Further long-term buys can be taken, in our view, only above the 0.618 Fib which is the top of the High Volatility Zone of January - April 2022.
P.S. Check our previous analysis on Netflix in an attempt to price a good long-term buy. Has been working out very well so far:
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Big potential drop within next 6 monthsNASDAQ:NFLX has already dropped from ATH of 6xx $ to 17x$. Paramount looks next. On charts we see a technical head and shoulder (HS) in play. The breakdown has started. Wait for confirmation by retouch on the neckline of the HS pattern before shorting (green flag). Any confirmed close above the neckline voids the HS pattern and this analysis. Target is Covid low of around 12$
DIS: Overbought?Walt Disney
Short Term - We look to Sell at 123.51 (stop at 133.26)
They reported higher than expected streaming subscriber growth and the stock aggressively went up. This has resulted in signals for sentiment being at overbought extremes and we look for a move to the downside. Bespoke resistance is located at 124.00. Selling spikes offers good risk/reward. A lower correction is expected.
Our profit targets will be 100.57 and 95.00
Resistance: 124.00 / 140.00 / 160.00
Support: 100.00 / 90.00 / 80.00
Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’) . Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
Disney is a realm of escapism - Recession Proof & Cash Flow RichThe Walt Disney Company recorded negative operating cash flow for the first quarter of the year. Even in the second quarter, cash from operating activities was still outpaced by investments in diverse activities. This was mostly caused by a lack of action during the coronavirus demand destruction in fiscal year 2020. But now that the parks are reopened, there are less ramp-up requirements. The majority of Disney's movie ticket sales will result in revenue generation because the majority of the backlog of films has already been paid for. The free cash flow should significantly increase during the following quarters. Despite the most severe criticism, "Thor: Love & Thunder" is on track to surpass $500 million worldwide. The success of the movie was another evidence that the conventional approach is still effective.
10 Year TSR Value
Disney's track record of making more money than it needs is quite extensive. As a result, advancements into further growth areas can still be made in the future. Disney may be a sizable business, but it has plenty of room to expand as long as there are measures in place to produce adequate cash flow. They have a strong economic moat. The brand is extremely well-known, and the market is now discounting the Disney+ streaming component of the company's operations as the excitement surrounding it fades due to Netflix's (NFLX) sluggish member growth. We have to consider that Netflix have peaked their user base. However, Disney+ have enough tier to grow their client base.
Due to the parks being open again and new movies being released, cash flow is expected to increase significantly soon. In the long run, this corporation has a significantly more profitable method of producing films than many of its rivals.
However, One of the biggest disadvantage of holding this stock is due to their high operating costs, Disney's value will increase to about twice what it is currently trading for if operating margins return to the mean of around 17%.
As operating costs increased and park and cruise revenues decreased during the pandemic, Disney had to cut dividend payout. Undoubtedly, the dividend's reinstatement will be a bullish event that many are anticipating. Although market players despise dividend cutbacks, Disney's management at the time made a wise decision in doing this. Disney was able to leverage money from eliminating the dividend to make a splash in the streaming industry. However, it is in their best interests to compensate shareholders by resuming dividend payments in situations where the value of their firm is dwindling.
The market seemed to be concentrating too much on downside risks, that continue to drive Disney's share price lower, despite the fact that revenue growth continued to rise. In the future, Disney's earning power might increase significantly, just like it did a decade ago. The stock might surge once more with an operating margin returning to regular levels of 17-21%. As the company's free cash flows and direct-to-consumer operations may grow, Disney has a lot of potential in the long run. Disney produced record EPS and nearly $10 billion in free cash flows in 2019. Now that the theatrical industry is recovering from COVID the company is expected to generate record breaking free cashflow.
Total Revenue vs Total Operating Expenses
They have already begun to report positive financial outcomes for its fiscal year 2022. Revenue increased from $31.86 billion last year to $41.07 billion this year, a 28.9 percent increase over the same period previous year. From $918 million to $1.57 billion, net income has grown by 71.5 percent. Operating cash flow increased from $1.47 billion to $1.56 billion, an increase of just 6%. However, if working capital adjustments were taken into account, it would have increased from $1.84 billion to $4.67 billion. That is a 153.7 percent increase from the previous year.
Excellent Management & Strategic Growth over the years.
People seek escapism during recessions, and Disney's content offers them hope. Every week, 80 million Americans went to the movies, even during the Great Depression and since then movie businesses have won the label of "Recession Proof", The movie business has generally been one of the few industries that has been able to retain its place in the market or even grow admissions, even in some of the worst economic downturns ever. This is a result of people's continued consumption behavior. Even if they were impacted by economic downturns, The release of "Avatar: The Way of Water" this year and Disney's 100th anniversary celebration in 2023 will boost the company's marketing efforts and help them generate more sales revenue.
Vox Royalty to C$4.50Vox Royalty (TSX-V:VOX) Corp has told investors it expects to report royalty revenues of between C$10 million and C$12 million in 2022—more than double what it realized in 2021—as it also revealed it has acquired a producing royalty on a Western Australian iron ore mine.
The royalty, purchased from a private vendor, is a 1.25%-1.50% sliding scale gross revenue royalty (GRR) on the Wonmunna mine operated by major Mineral Resources Ltd (ASX:MIN).
Vox is paying US$4.75 million in cash, US$12.15 million in Vox shares, and issuing 3.6 million share purchase warrants with an exercise price of C$4.50.
"The Wonmunna royalty acquisition further expands the revenue and growth profile of Vox and is accretive on all key metrics," said Kyle Floyd, CEO of Vox in a statement.
"The opportunity to add significant, immediate, incremental revenue through a non-brokered accretive transaction with a private seller generates significant value for Vox shareholders for years to come.
©Proactive Investors
The line that I find most interesting is 'warrants with an exercise price of C$4.50', as the current price action is hovering above C$3.00. For the vendor of the Royalty to find this deal acceptable they must have looked at Vox Royalty Corp and seen what others clearly can not see. And that is a 50% increase in value at the minimum.
Warrants and Call Options Similarities
The basic attributes of a warrant and call are the same:
• Strike price or exercise price – The guaranteed price at which the warrant or option buyer has the right to buy the underlying asset from the seller (technically, the writer of the call). “Exercise price” is the preferred term with reference to warrants.
• Maturity or expiration date – The finite time period during which the warrant or option can be exercised.
• Option price or premium – The price at which the warrant or option trades in the market.
©Investopedia
For a strike price of C$4.50 to work, the share price needs to be above C$4.50 or otherwise the warrants have little to no value.
NETFLIX When bubbles pop. The bottom isn't in yet.Netfilx (NFLX) is having a historic weekly selling pressure after the negative quarterly report, which showed a loss of 200k subscribers, putting a stop to a growth for the first time in 10 years.
This chart on the 1W time-frame shows how the NFLX bubble popped in mid January 2022. The Jan 18 1W candle broke both below the parabolic growth curve (black) and the 1W MA200 (orange trend-line) in the same week. That was the confirmation of the start of a Bear Cycle. So far the stock is on an almost -70% correction from the November 2021 All Time High (ATH) but this is by no means the bottom.
Since the 1W MA200 broke, which was a trend-line supporting the bubble since January 2013, we have to go to the monthly (1M) time-frame to look for the next Support. That is the 1M MA200 (red trend-line) which is currently at $137.82. If that is reached before June, that would represent a -80% correction from the top, which is typical for Bear Market bottoms. The 1W RSI is at the lowest level historically since Netflix started first trading.
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Vox Royalty - Good updateAnother positive update from Vox Royalty Corp. ,
We just need to see the price action reflect the momentum on the ground.
Precious metals are holding up, so producers are able to make more money. Though inflation will hit them with larger CAPEX.
Royalty companies don't bare any of the extra costs but can a slice of the revenues.
Vox Royalty Smoothes Out VolatilityHaving multiple royalties within a portfolio means Vox Royalty has enough diversification to clearly smooth out the volatility.
High inflationary environments are great for commodities and equities, but for miners, there is an increase in costs and CapEx. Not so with the royalty company.
Their expenditure doesn't change but they have access to the widening profit margins when each of the producers realise their gains.
TORONTO, ON / ACCESSWIRE / March 8, 2022 / Vox Royalty Corp. (TSX.V:VOX)(VOTCQX:VOX) ("Vox" or the "Company"), a high growth precious metals focused royalty company, is pleased to provide recent development and exploration updates from royalty operating partners Gold Standard Ventures Corp. (TSX:GSV) ("Gold Standard Ventures"), Genesis Minerals Limited (ASX:GMD) ("Genesis"), Develop Global Limited (ASX:DVP) ("Develop"), Norwest Minerals Limited (ASX:NWM) ("Norwest"), and Alamos Gold Inc. (TSX:AGI) ("Alamos").
Spencer Cole, Chief Investment Officer stated: "The past month of royalty operator newsflow includes the exciting release of the South Railroad feasibility study, ongoing exploration success at Sulphur Springs, Puzzle North and Bulgera, capped off by consistent development guidance for Lynn Lake. Each of these projects are being aggressively progressed by well-capitalized operators towards near-term resource updates and development decisions. 2022 continues to be shaping up as a record year for the Vox royalty portfolio based on these developments."
Key Development Updates
Robust feasibility study released for the South Railroad gold project in Nevada by Gold Standard Ventures;
Exceptional drilling results set to underpin growth at Puzzle North gold project by Genesis;
Strong drilling results at the Sulphur Springs copper-zinc project by Develop are likely to result in a significant resource upgrade;
Positive drilling results at the Bulgera gold project by Norwest; and
Significant capital budget planned in 2022 by Alamos for the Lynn Lake (MacLellan) gold project.
South Railroad (Pre-Feasibility) - Robust Feasibility Study Released(1)
Vox holds a 0.633% net smelter return royalty with advance minimum royalty payments over key portions of the South Railroad gold project, which is located in the prolific Carlin Trend of Nevada;
Vox has been receiving advance minimum royalty payments from Gold Standard Ventures since October 2021;
On February 23, 2022, Gold Standard Ventures announced the following feasibility study results:
After-tax IRR of 62% and NPV5 of US$487M at Spot Gold Price (US$1,899.20 per ounce) and after-tax IRR of 44% and NPV5 of US$315M at US$1,650 per ounce gold ("Base Case Gold Price");
Payback of 1.6 years at Spot Gold Price and 1.9 years at Base Case Gold Price;
29% increase in Mineral Reserves to 1.6 million gold ounces;
10.5-year operating life with total gold production of over 1 million ounces, with an average gold production of 152,000 ounces over the first four years;
Launch of construction financing process, targeting 75% from non-equity sources, to be completed this year in advance of final construction permits; and
Orion Mine Finance to provide Gold Standard Ventures with a term sheet of up to $200 million to support the construction of the South Railroad Project.
Vox Management Summary: These compelling feasibility study results closely match Vox management's estimates formed during due diligence for the South Railroad rancher royalty. This high-return project is being fast-tracked towards a first production target in 2024, based on Gold Standard Ventures management guidance.
Kookynie (Pre-Feasibility) - Exceptional Drilling Results at Puzzle North Discovery
Vox holds a A$1/t production royalty on part of the Kookynie gold project(2);
On February 3, 2022, Genesis announced:
Outstanding new results from reverse circulation ("RC") drilling across multiple areas, confirming potential to expand the mineral resource at the Ulysses Gold Project near Leonora in Western Australia;
Broad, high-grade zones of gold mineralisation intersected from shallow depths in RC drilling at the Puzzle North Discovery, including:
21USRC1186: 27m @ 8.18g/t Au from 30m;
21USRC1190: 34m @ 13.36 Au from 42m, including 1m @ 382.6g/t Au from 68m; and
21USRC1192: 29m @ 2.91g/t Au from 52m;
Drilling at Puzzle North has now defined mineralisation over 600m of strike and up to 100m width, with the mineralisation remaining open both at depth and along strike;
Mineralisation at the southern end of the Puzzle pit extended over 200m south with results including:
21USRC1114: 11m @ 2.20g/t Au from 82m;
21USRC1119: 4m @ 9.07g/t Au from 92m;
21USRC1123: 5m @ 5.98g/t Au from 79m; and
21USRC1127: 47m @ 1.07g/t Au from 95m;
A large drilling program is currently being planned for the Puzzle North to Puzzle corridor.
Vox Management Summary: This exciting gold exploration royalty that Vox acquired for less than A$150k in 2020 is being rapidly drilled to include the royalty-linked Puzzle North discovery in an expanded feasibility study at the Ulysses gold project. The potential development timeline for this project from exploration to development continues to exceed Vox management expectations.
Sulphur Springs (Pre-Construction) - Strong Drilling Results Point to Significant Resource Upgrade
Vox holds a A$2/tonne production royalty (capped at A$3.7M) on the Sulphur Springs copper-zinc deposit and an uncapped A$0.80/tonne production royalty on the Kangaroo Caves deposit, which is part of the combined Sulphur Springs project;
On February 10, 2022, Develop announced:
It has now received ~60% of the assays from the A$10M resource infill and exploration drilling program at Sulphur Springs;
The drilling has been highly successful, with numerous high-grade mineralisation intersections of more than 50m, significantly thicker than anticipated and with two of the intercepts being the thickest intersections achieved in the project's history;
The results point to a substantial conversion of Inferred Resources to the higher confidence Indicated Resource classification;
The upgrade in Indicated Resource classification will pave the way for Develop to update reserves, mine development plans, project costings and to finalise funding options;
Exploration drilling has also returned outstanding results, paving the way for an increase to the total resource;
A resource update is scheduled for mid-2022; and
Preparations for construction of the exploration decline are proceeding rapidly with the approval request submitted. This will be pivotal because it will enable drilling to be conducted faster, and cheaper and brings forward capital/access to the underground deposit.
Vox Management Summary: Under the new leadership of Northern Star Resources founder Bill Beament, the Sulphur Springs project is on track to be expanded in resource size and fast-tracked into underground decline development within the next 12 months. This drilling success indicates that the potential economics of this high-grade copper project are improving month to month.
Bulgera (Exploration) - New High-Grade Drilling Results
Vox holds a 1% net smelter return royalty over the Bulgera gold project;
On February 3, 2022, Norwest announced:
The first three of seven diamond drill holes extend new high-grade gold lode to beyond 400m down dip of the shallow Bulgera open pit;
Drill results included:
BDD21003: 11.3m @ 3.25g/t gold from 260m (downhole), including 4m @ 4.5g/t Au from 260m and 3.3m @ 5.3g/t Au from 268m;
BDD21001: 16.5m @ 1.20g/t gold from 128m and 3m @ 4.10g/t gold from 166m;
BDD21002: 6m @ 2.07g/t gold from 195m;
It is sourcing a drill rig to undertake the Phase 2 diamond drill program (targeting March/April 2022) which will test mineralisation to ~700m down-dip of the Bulgera open-pit; and
Norwest's CEO, Mr. Charles Schaus commented: "Assay results from the first 3 diamond holes confirms that strong gold mineralisation extends beyond 400 metres down dip of the shallow Bulgera open pit. Once the gold assays from the remaining 4 diamond holes are received (over the coming weeks), the Company will commence re-modelling the Bulgera gold resources which should add considerably to the current, 94,000-ounce, gold resource reported in April 2020".
Vox Management Summary: Norwest management are now guiding towards a remodelled and expanded resource estimate for the past-producing Bulgera gold project which would increase the value of Vox's royalty. Oxide ore from Bulgera was last processed at the nearby Plutonic gold mine in 2004 and given the haul road remains in place, credible near-term development options are available for Bulgera.
Lynn Lake (MacLellan, Feasibility) - 2022 Capital Budget
Vox holds a 2% gross revenue royalty (post initial capital recovery) on part of the MacLellan deposit at the Lynn Lake gold project;
On February 23, 2022, Alamos announced:
the total capital budget for Lynn Lake in 2022 is US$14M, including US$11M for development activities and US$3M for exploration;
Development activities will be focused on environmental work in support for permitting detailed engineering and other site access upgrades; and
The approval of the Environmental Impact Statement for the project is expected in the second half of 2022, following which Alamos expects to make a construction decision.
Vox Management Summary: Alamos management has been very consistent in guiding towards a 2022 construction decision at Lynn Lake and is currently guiding investors towards 2025 first production in its corporate presentation. Alamos' 2022 capital budget further supports its consistent project development guidance.
Qualified Person
Timothy J. Strong, MIMMM, of Kangari Consulting LLC and a "Qualified Person" under National Instrument 43-101 - Standards of Disclosure for Mineral Projects, has reviewed and approved the scientific and technical disclosure contained in this press release.
About Vox
Vox is a high growth precious metals royalty and streaming company with a portfolio of over 50 royalties and streams spanning eight jurisdictions. The Company was established in 2014 and has since built unique intellectual property, a technically focused transactional team and a global sourcing network which has allowed Vox to become the fastest growing company in the royalty sector. Since the beginning of 2019, Vox has announced over 20 separate transactions to acquire over 45 royalties.
#THETA/USDT, facing dynamic resistanceFundamental:
Theta is one of the assets which working on streaming, due to increase requests for streaming service specially after COVID, invade our world,
this kind of decentral streaming platform might face a high demand in future.
Technical and Trend analysis:
The price face high overbought saturation on 2.5$ and price beautifully react to PRZ and start a bullish divergence, however Theta have a strong dynamic resistance on its way.
if the price could break through the down trend line(yellow one) and again make a pull back to the trend line ,price potentially can pass the static resistance on 4.6$ and upper one around 5.8$.
Caution:
it's not a suggestion for buy or sell, only my idea about the price action and potential movements for THETA.
it would be appreciated if you share your idea with me on comment
thanks for your patience
$LPT/USDT 6h (#BinanceFutures) Bull pennant breakout and retestLivepeer Token regained 200MA support and looks ready for bullish continuation after that pull-back.
livepeer.org
Current Price= 46.751
Buy Entry= 46.750 - 44.510
Take Profit= 53.870 | 62.582 | 75.612
Stop Loss= 40.908
Risk/Reward= 1:1.75 | 1:3.59 | 1:6.35
Expected Profit= +36.12% | +74.30% | +131.42%
Possible Loss= -20.70%
Fib. Retracement= 0.618 | 0.786 | 1
Margin Leverage= 2x
Estimated Gain-time= 1 month
Disney December $164 WISHThis stock fell pretty hard, so a bounce back could happen. How high will it go.. I have no idea.
Taking a look at some trends and numbers, I think buying Friday might be the move.
Long term, I like this stock at $230 by next year. Short term, I like this stock around $160. I've marked some key numbers, if we do happen to see a turn around.
UltimoGG (ULTGG): Streaming Content, Gaming Tourneys-Screams BUYThis is NOT financial advice. Full disclosure: I spent $125 USDT on purchasing 20 billion ULTGG tokens on BitMart. This is a review of UltimoGG (ULTGG). You can find everything I'm sharing here on their website, ultgg dot io. Yes, you have to put a real dot where I wrote the word.
UltimoGG (ULTGG) is the revolutionary gaming token from the Ultimo GG platform. Get rewarded for everything you do on the platform, from winning tournaments to creating content and contributing to the community, then spend your ULTGG on the platform and with our partners. Purchase NFTs or even create your own featuring your greatest gaming moments or convert ULTGG into real-world money to turn your dream of a career in gaming into a reality. ULTGG will democratize esports and give gamers & content creators around the world the power to build a better future through gaming and set to rival YouTube & Twitch.
Ok, so that was the short version of what they will tell you. Here is my personal observation. The website was clean and professional. They really do have a growing pool of partners. The team has some depth to it and that is always a good thing. The business has been around for 4 years but the token was only recently launched earlier this summer on Pancakeswap. They have good graphics (the website, youtube vids, platform, etc), a good following (at least in the UK where much of the content has been generated), and glimpses of cool gaming merchandise (think T-shirts and in-game NFTs). Even though the token quantity is huge, they are committed to burning. Their interest in the NFT realm appears to revolve around their focus on being a streaming gaming platform, or as they call it, esports. They have a very strong social media presence and because they are working towards further listings on other exchanges, I believe this has the potential to turn into a money-maker for anyone investing now!
If you like this review, please check out my other reviews in the up-and-coming gaming, NFT, defi crypto space. Whether you agree or not, let me know what you think. I have interest in several other small tokens (Peculium , SportsCashOne , & Rewardium ) that are not yet available on TradeView, but can be found elsewhere (bitmart). Just be sure to do your own research. Good luck!
$DIS: America's Sweetheart is WobblyLabor shortages, increased streaming competition, sub par content as of late. Will value investors step in and save it at 170 or is this a major crossroads in the future of this giant. The bullish case here mostly lies in whether or not inflation will persist. If we see the dollar continue to improve, value names may be on the table which will involve this getting snapped up. However, if inflation is persistent it may be a huge struggle to retain labor and could put a dent in streaming profits
Can Golds correction be nearly over?This week we learn whether the US Federal Reserve has made any further plans towards tapering their asset purchases. Currently, they remove $120bln of collateral out of the system and replace it with Reserve Assets. Also known as QE.
QE has been designed to crush the interest rates so that people like you and me can afford to take on more debt as the interest payments are low. This is designed to stimulate us all into getting the economy up and running. Some may say that the stock markets hitting all-time highs is proof that QE works, but the markets are not the economy. Currently, we are in the middle of transitory inflation which is making living more expensive for the average person. The stock market is being buoyed by margin trading and the banks have been slow to lend, which is what SME companies need to grow.
Tomorrow's announcement from Fed Chair Powell has been telegraphed as the point where he announces tapering. This should mean the market reacts with higher bond yields, and going by the recent relationship between the US10y and gold, the price of gold should come down.
The major risk of course is that the Fed can not taper or if they do, they do it so slowly the market adjustment is negligible. In this scenario, the disappointment of expectations should be enough to get the gold price rising and the yields going towards zero or maybe negative. At which point gold should be above $2k per oz.
The technicals show that the price of gold from the $2k peak has been in a descending channel and the probability is that this breaks to the upside eventually. That doesn't mean we don't trade lower within the channel. But ultimately I see this price action breaking higher. The near term trend could also be signalling a sharper rise as we are breaking out of that smaller channel in Green.