Newscasts - Wall St Ends Higher, Markets Digest Trump Tariff Threats, Fed Minutes

To gain an edge, this is what you need to know today.

Buying Opportunity Ahead

Please click here for an enlarged chart of iShares MSCI Mexico ETF .

Note the following:

• President-elect Trump is threatening to impose steep tariffs on Mexico and Canada using an executive order on his first day in office.
• Mexico's president is responding by claiming that migrant caravans are no longer arriving at the U.S. border. She is also offering cooperation to stem the flow of drugs to the U.S.
• If negotiations with Mexico do not go well, stocks in Mexico will be decimated. That will likely be an opportunity for long-term investors to back up the truck and buy stocks in Mexico. The reason is that there are simply not enough people in the U.S. to support economic growth and on-shoring of all of the manufacturing from China.
• The chart shows Mexico ETF EWW is oversold. However, EWW can become more oversold.
• Mexico ETF EWW can easily fall to the top support zone shown on the chart.
• In The Arora Report analysis, the back up the truck buying opportunity will tentatively occur if Mexico ETF EWW falls to the lower support zone shown on the chart. However, this is all data dependent. Investors should carefully follow the data points.
• Investors need to look ahead and be prepared if the opportunity in Mexico arises. Mexico has been continuously covered in The Arora Report’s ZYX Emerging for 17 years. As full disclosure, if there is a back up the truck buying opportunity, a signal will be made in The Arora Report’s Real Time Feed of ZYX Emerging. In a buy signal, the support zone is only one of many factors. The algorithms used by The Arora Report are highly complex and combine the best elements of macro analysis, fundamental analysis, technical analysis, and quantitative analysis with an overlay of change. Identifying change early and being prepared to capture opportunity leads to big gains.
• Trump is also threatening Canada with steep tariffs. If Canadian stocks are decimated, there will be an opportunity to buy Canada ETF iShares MSCI Canada ETF . Again, investors need to be prepared ahead of time to capture the opportunity if it arises. As full disclosure, a signal to buy Canadian stocks will be in The Arora Report’s ZYX Allocation.
• Yesterday evening, when the news broke of Trump's tariff plan, stock futures were first quickly sold. Then, the momo crowd stepped in and has been aggressively buying the dip.
• There are important developments in bitcoin. Please scroll down to the bitcoin section below.

Magnificent Seven Money Flows

In the early trade, money flows are positive in Apple Inc , Amazon.com, Inc. , Meta Platforms Inc , NVIDIA Corp , and Tesla Inc .

In the early trade, money flows are neutral in Alphabet Inc Class C and Microsoft Corp .

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust and Invesco QQQ Trust Series 1 .

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ. Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil. The most popular ETF for gold is SPDR Gold Trust . The most popular ETF for silver is iShares Silver Trust . The most popular ETF for oil is United States Oil ETF .

Bitcoin

At a time when almost everyone is bullish on Bitcoin and cryptos, money flows are at a record to short bitcoin. As an example, money flows in ProShares UltraShort Bitcoin ETF (ARCA: SBIT) were at a record $18.8M yesterday. Of course, money flows in short bets on bitcoin pale in comparison to money flows in long bets.

Bitcoin whales took profits in the zone of $93,000 – $98,000, taking advantage of super excited retail investors. At a time when retail investors were converting their dollars into bitcoins, bitcoin whales were converting their bitcoins into dollars.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror. The proprietary protection band from The Arora Report is very popular. The protection band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Netflix drew global headlines this month with its first-ever live sports broadcast, featuring a much-hyped bout between YouTuber Jake Paul and heavyweight champ Mike Tyson. The event set records for the streamer, with 65 million concurrent viewers at its peak.

Despite the event's massive reach, many viewers reported glitches during the broadcast, including lengthy buffering and access delays. Traditionally not a broadcaster of live content, Netflix's Tyson vs. Paul match was intended to showcase its readiness to host similarly high-profile sports events later this year, including Christmas Day NFL games.

Is now a good time to invest in the next growth phase of NFLX stock, or should investors stay cautious? Here's a closer look.

NFLX Stock Outperforms the Market

Valued at $383.7 billion by market cap, shares of Netflix have climbed 79% year-to-date, outperforming key streaming rivals like Disney , up 28%, and more diversified tech competitors like Amazon , up 36.7%, and Apple , up about 22%, which also have streaming entertainment divisions. For comparison, the broader Nasdaq-100 Index ($IUXX) has gained about 24.3% over the same time frame.

Longer term, NFLX stock has gained 1,648% over the past decade, easily outperforming the broader market.

Netflix Beats Q3 Earnings Estimates

On Oct. 17, Netflix reported its Q3 earnings for the fiscal year 2024, which surpassed Wall Street's expectations on both the top and bottom lines. The company reported $9.82 billion in revenue, up 15% year over year, and earnings per share (EPS) of $5.40, an increase of more than 44%. Analysts were looking for revenue of $9.77 billion on $5.09 per share in earnings.

Subscriber growth remained strong, with Netflix adding 5.07 million new subscribers, up 14% to 282 million.

Netflix strengthened its balance sheet, generating $2.19 billion in free cash flow, and ended the quarter with a cash balance of $7.45 billion.

During the quarter, NFLX repurchased $1.7 billion in shares, with $3.1 billion remaining under its current authorization.

On the conference call with analysts, CFO Spencer Neumann confirmed that Netflix investors shouldn't expect a dividend anytime soon, explaining there are “no plans to increase leverage to buy back stock or to issue a dividend,” despite expectations for strong cash flow generation going forward. “We put a real premium on balance sheet flexibility,” added the CFO.

For fiscal Q4, Netflix guided for revenue growth of 14.7% to $10.12 billion, with earnings expected at $4.23 per share.

What Do Analysts Expect for NFLX Stock?

With 41 analysts in coverage, NFLX stock has an average rating of "Moderate Buy" on Wall Street. The mega-cap stock has garnered 23 "Strong Buys," 2 "Moderate Buys," 14 "Holds," and 2 "Strong Sell" ratings.

Following what it described as the “mostly" successful Tyson-Paul event, Pivotal Research weighed in bullishly on NFLX stock. Telling clients that the glitchy match was a “learning experience” for Netflix, the brokerage firm raised its price target on Netflix all the way to a new Street-high of $1,100.

In a note, analyst Jeffrey Wlodarczak cited Netflix’s “massive scale” and “large free cash flow” as key differentiators in the streaming wars, writing: “The key for [Netflix] going forward is to press their advantages and keep the subscriber/[average-revenue-per-user] flywheel going because the larger they get the more leverage they have over their peers/content creators, the better their product gets… and the bigger the moat grows around their core business model.”

Netflix stock has already outpaced its average price target from analysts of $789.17, while Wlodarczak's new target suggests the stock can climb another 26%.

The Bottom Line on NFLX Stock

Netflix's potential to expand into live streaming could be a key growth driver for the company, as highlighted by recent events. However, technical hurdles, such as handling a large live streaming audience, must be overcome for Netflix to meet investors' expectations.

The strong price action in 2024 means NFLX isn't cheap, either, at 43.6x forward adjusted earnings. While this is roughly in line with the streaming giant's historical average multiple, it reflects the market's expectations for Netflix to keep delivering higher-than-average growth.

While the company's strategic shift to live streaming content could help it to keep ahead of the curve - similar to the password-sharing crackdown, which was previously met with skepticism - investors who want to buy into the next phase of the Netflix growth story may want to consider doing so cautiously at the current valuation.

On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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