Negative Momentum: Don't Just Blame Snapchat

[] Markets continue to sell off in a negative momentum environment. Tesla stock is falling off a cliff again as institutions dump shares. [View in browser]( . Markets continue to sell off in a negative momentum environment. Tesla stock is falling off a cliff again as institutions dump shares. [View in browser]( . . [] [Havens Investment Letter] [] [Havens Investment Letter] [] [] [] STOP Wasting Time Hunting Down Daily Trades... Let a 20-year trading legend do it for you! Every morning before the market opens, this veteran trader sends out a list of his top stock trades for the day. Giving you a chance to make $490 or more every day the market is open. [CLICK HERE HOW to start receiving your daily list of trades.]( [] --------------------------------------------------------------- [] STOP Wasting Time Hunting Down Daily Trades... Let a 20-year trading legend do it for you! Every morning before the market opens, this veteran trader sends out a list of his top stock trades for the day. Giving you a chance to make $490 or more every day the market is open. [CLICK HERE HOW to start receiving your daily list of trades.]( [] --------------------------------------------------------------- [] [] Don't Just Blame Snapchat for Negative Momentum [Garrett Pic] Dear Investor, Momentum is red. Cash is your friend. Nothing has changed. Today, Barron’s stepped in to offer some insight into the state of Tesla (TSLA) stock, which fell to $628.16, an 11-month low. Blame Snapchat (SNAP). Snap Inc. - the parent company of the social media platform that still makes no sense to me - plunged by roughly 43% Tuesday - and blamed the “macroeconomic environment” for its downturn. Sure, a second-tier social media platform is responsible for an overvalued Tesla’s downturn in the middle of a massive selloff. But, do go on, Barron’s. I’ll tell you why Tesla stock is falling. It’s not complicated. Valuation Matters Over the last two years, we’ve witnessed an incredible surge in stocks with no earthly business reaching nosebleed valuations. Datadog (DDOG), CrowdStrike (CRWD), Zoom Video Communications (ZM), and dozens of other technology and communications firms traded at 20 times revenue or higher. In a market where interest rates are zero and the Federal Reserve has dropped $5 trillion from the sky, valuations do not matter. But they DO matter when interest rates rise, and concerns about economic growth accelerate. Snapchat’s downturn on Tuesday was driven largely by a massive shift in advertising spending and weak growth. The company blamed the macroeconomic environment, and digital advertising stocks spiraled lower. Of the 644 companies that hit 52-week lows today, 11 were advertising firms. I eye this list every day of weak stocks because that trend will likely continue, especially as valuation compression continues. For those new to Haven Investment Letter, valuation compression is a situation where a company’s multiples like price-to-sales, price-to-earnings, and EV-to-EBIT drop because investors aren’t willing to pay more money for the same expected returns. When growth slows and forecasts slump, valuations typically contract. Valuation compression is the real story in this market. Not Snapchat. Tesla might be the most innovative company on the planet. But should investors be willing to pay 10.9 times revenue or a price-to-sales of 91.2 for the right to own it? Not in this macroeconomic environment and NOT in an arena where investors are too caught up in the company’s battle over electric vehicles - which are VERY expensive. Several analysts price Tesla’s stock in the $140 range. They’ve been wrong for so long because the Federal Reserve largely propped up this market with cheap money, distorted valuations, distorted the economy, and created conditions where valuation did not matter. It matters. If Tesla traded at the P/E ratio of Ford Motor Company (F), shares would be in the $32 range. But, of course, investors ARE willing to pay more right now for earnings because they anticipate rampant future growth. In a negative momentum environment, Tesla has a BIG downside. The Federal Reserve hasn’t even started to drain liquidity from the market. The central bank will begin its Quantitative Tightening operations on June 1. Given that the Fed owns 25% of all Treasury Bonds, there could still be a lot of volatility and selling. Therefore, I am not ready to call a bottom on this market before June 1. And based on the fact that the Fed doesn’t end this program until September - while raising interest rates - this summer could be even more difficult for the Dow Jones, S&P 500, and the Russell 2000. And, of course, the Nasdaq 100 still has a lot of price discovery left. So What’s Working? Again, every day I go to Finviz. I set a screener. I look at 52-week highs and 52-week lows. I don’t get caught up on individual stocks. Instead, I focus on the sectors. This selloff screams that a recession is coming. Across various sectors, pain is accelerating as purse-tightening preludes it. Retail is getting crushed. Biotech is fading faster each week as investors pile out of speculative positions. As a result, the asset management industry is shedding clients and profits. Residential construction is plunging. Software applications are contracting at a massive pace. And travel services are facing new challenges. My goodness, Garrett… Is anything working? The new highs continue to focus on things that we NEED in this world. Oil and gas exploration, oil refining, marine shipping, agricultural seeds, and regulated utilities. This isn’t hard to put together. Our economy is weakening, consumers are focused on what they need and not what they want. There is a significant rotation of capital happening RIGHT NOW… Washington might not see it. But we are investing in reality. Food, energy, inexpensive consumer defensives, and keeping the lights on. It might be a long summer. But know that 36 U.S.-based companies hit their 52-week high today. About 290 are within 3% of their new highs. Opportunity exists. Just follow the money and the trends. I’ll talk tomorrow about another major trend that can benefit you. Mergers in a bear market. Enjoy your day, [Garrett Sig] Garrett {NAME} Chief Analyst, American Markets [] --------------------------------------------------------------- [] [] Don't Just Blame Snapchat for Negative Momentum [Garrett Pic] Dear Investor, Momentum is red. Cash is your friend. Nothing has changed. Today, Barron’s stepped in to offer some insight into the state of Tesla (TSLA) stock, which fell to $628.16, an 11-month low. Blame Snapchat (SNAP). Snap Inc. - the parent company of the social media platform that still makes no sense to me - plunged by roughly 43% Tuesday - and blamed the “macroeconomic environment” for its downturn. Sure, a second-tier social media platform is responsible for an overvalued Tesla’s downturn in the middle of a massive selloff. But, do go on, Barron’s. I’ll tell you why Tesla stock is falling. It’s not complicated. Valuation Matters Over the last two years, we’ve witnessed an incredible surge in stocks with no earthly business reaching nosebleed valuations. Datadog (DDOG), CrowdStrike (CRWD), Zoom Video Communications (ZM), and dozens of other technology and communications firms traded at 20 times revenue or higher. In a market where interest rates are zero and the Federal Reserve has dropped $5 trillion from the sky, valuations do not matter. But they DO matter when interest rates rise, and concerns about economic growth accelerate. Snapchat’s downturn on Tuesday was driven largely by a massive shift in advertising spending and weak growth. The company blamed the macroeconomic environment, and digital advertising stocks spiraled lower. Of the 644 companies that hit 52-week lows today, 11 were advertising firms. I eye this list every day of weak stocks because that trend will likely continue, especially as valuation compression continues. For those new to Haven Investment Letter, valuation compression is a situation where a company’s multiples like price-to-sales, price-to-earnings, and EV-to-EBIT drop because investors aren’t willing to pay more money for the same expected returns. When growth slows and forecasts slump, valuations typically contract. Valuation compression is the real story in this market. Not Snapchat. Tesla might be the most innovative company on the planet. But should investors be willing to pay 10.9 times revenue or a price-to-sales of 91.2 for the right to own it? Not in this macroeconomic environment and NOT in an arena where investors are too caught up in the company’s battle over electric vehicles - which are VERY expensive. Several analysts price Tesla’s stock in the $140 range. They’ve been wrong for so long because the Federal Reserve largely propped up this market with cheap money, distorted valuations, distorted the economy, and created conditions where valuation did not matter. It matters. If Tesla traded at the P/E ratio of Ford Motor Company (F), shares would be in the $32 range. But, of course, investors ARE willing to pay more right now for earnings because they anticipate rampant future growth. In a negative momentum environment, Tesla has a BIG downside. The Federal Reserve hasn’t even started to drain liquidity from the market. The central bank will begin its Quantitative Tightening operations on June 1. Given that the Fed owns 25% of all Treasury Bonds, there could still be a lot of volatility and selling. Therefore, I am not ready to call a bottom on this market before June 1. And based on the fact that the Fed doesn’t end this program until September - while raising interest rates - this summer could be even more difficult for the Dow Jones, S&P 500, and the Russell 2000. And, of course, the Nasdaq 100 still has a lot of price discovery left. So What’s Working? Again, every day I go to Finviz. I set a screener. I look at 52-week highs and 52-week lows. I don’t get caught up on individual stocks. Instead, I focus on the sectors. This selloff screams that a recession is coming. Across various sectors, pain is accelerating as purse-tightening preludes it. Retail is getting crushed. Biotech is fading faster each week as investors pile out of speculative positions. As a result, the asset management industry is shedding clients and profits. Residential construction is plunging. Software applications are contracting at a massive pace. And travel services are facing new challenges. My goodness, Garrett… Is anything working? The new highs continue to focus on things that we NEED in this world. Oil and gas exploration, oil refining, marine shipping, agricultural seeds, and regulated utilities. This isn’t hard to put together. Our economy is weakening, consumers are focused on what they need and not what they want. There is a significant rotation of capital happening RIGHT NOW… Washington might not see it. But we are investing in reality. Food, energy, inexpensive consumer defensives, and keeping the lights on. It might be a long summer. But know that 36 U.S.-based companies hit their 52-week high today. About 290 are within 3% of their new highs. Opportunity exists. Just follow the money and the trends. I’ll talk tomorrow about another major trend that can benefit you. Mergers in a bear market. Enjoy your day, [Garrett Sig] Garrett {NAME} Chief Analyst, American Markets --------------------------------------------------------------- [] Pick the Perfect Apple Trade -- with 70% Success Rate and a 3-to-1 Reward-to-Risk Ratio [hand choosing apple]( [Learn the method here]( --------------------------------------------------------------- [] [] Pick the Perfect Apple Trade -- with 70% Success Rate and a 3-to-1 Reward-to-Risk Ratio [hand choosing apple]( [Learn the method here]( --------------------------------------------------------------- [] [] [] >> Your Ticket << Exclusive Access to the Perfect Apple Trade Presentation If you ever thought that it’s way too late to see significant movement in major stocks like AAPL... 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You need to think again… The Perfect Apple Trade Has Been Discovered Thanks to the help of a maverick group of former Wall Street traders… and a state-of-the-art artificial intelligence platform… California tech wiz and renowned trader Micah Lamar has uncovered obscure “trade cycles” in AAPL shares capable of signaling major movement… All in a matter of days... These Aren’t Common Results Nearly all market analysts are clueless about these moves… But Micah’s proprietary system has been able to predict significant moves in AAPL stock… over and over again. Now, You Can See the System for Yourself! He’ll walk you through his AAPL system step-by-step… and answer the most common questions he sees... 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Please be aware that the claims regarding investing or trading results of non-employees are not tracked by GFP nor can they be verified. As always, past performance is not necessarily indicative of future results. Therefore, results presented in this email should NOT be considered TYPICAL. Actual results can and will vary based on everything from experience, ability, risk mitigation practices, and market volatility... to the amount of money exposed in the investment or trade. Investing and trading are speculative and carry serious risk. You may lose some, all - or possibly more - than your original investment or trade. GODESBURG FINANCIAL PUBLISHING IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER: GFP, including its owners and employees, are NOT registered as securities broker-dealers, brokers, or any sort of registered investment advisors with the U.S. Securities and Exchange Commission, any state securities regulatory authorities, or any self-regulatory organizations. 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DISCLAIMER: COMMUNICATIONS FROM GODESBURG FINANCIAL PUBLISHING (GFP) ARE FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY – NOT INVESTMENT ADVICE: GFP and all the services it offers are for educational and informational purposes only and should NOT be understood to be securities-related offers or solicitations. None of GFP’s communications should be considered or used as personalized investment advice. GFP recommends that you speak with a licensed professional before making any investment decision. RESULTS PRESENTED ARE NOT NECCESSARILY TYPICAL OR VERIFIED: GFP communications may include information regarding the historical trading performance of gurus in their services (all verified by a third party), as well as testimonials of non-employees depicting profitable investments and trades that are believed to be true based on the representations of the persons providing the testimonial of their own free will. Please be aware that the claims regarding investing or trading results of non-employees are not tracked by GFP nor can they be verified. As always, past performance is not necessarily indicative of future results. Therefore, results presented in this email should NOT be considered TYPICAL. Actual results can and will vary based on everything from experience, ability, risk mitigation practices, and market volatility... to the amount of money exposed in the investment or trade. Investing and trading are speculative and carry serious risk. You may lose some, all - or possibly more - than your original investment or trade. GODESBURG FINANCIAL PUBLISHING IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER: GFP, including its owners and employees, are NOT registered as securities broker-dealers, brokers, or any sort of registered investment advisors with the U.S. Securities and Exchange Commission, any state securities regulatory authorities, or any self-regulatory organizations. GODESBURG FINANCIAL PUBLISHING EMPLOYEES MAY HOLD SECURITIES DISCUSSED: If a writer holds any securities in a communication, it will be disclosed along with the information on the potential investment or trade. HIR, its owners or employees, have not been - or ever will be - paid by the issuer of a security mentioned in our services or communications. GFP, its owners and employees are paid entirely or in part from commissions based on sales of their services to subscribers. For more information, please visit [our disclaimer page here.]( Sent to: {EMAIL} [Unsubscribe]( Godesburg Financial Publishing Inc., 251 Little Falls Drive, Wilmington, DE 19808, United States