We Are At A Turning Point In The Market

JOIN OUR LIVE SESSIONS! Our LIVE session starts when the big institutions and elite traders do before the opening bell. We'll look at real-time dark pool data as the market movers position themselves for the trading day in secret off-market exchanges. [JOIN OUR LIVE TRADING SESSION @ 6am PT / 9am ET](~/AASl5QA~/RgRmO01QP0SLaHR0cHM6Ly9iaXQubHkvVEFMaXZlRFM4P3V0bV9zb3VyY2U9S2xhdml5byZ1dG1fbWVkaXVtPWNhbXBhaWduJl9reD1USkZ4LTA2cmJ4eDZVYUpjX0xnX2p2LUk5Y2FsZG1SNVQ1T2NERUhiMnZNR1c2VzVaWVFrWkw4SU9aWk9mQVRvLlc1cEFaV1cDc3BjQgpkUVDIWGR_I1eTUht0cmlzdHJhbWJhbGR3aW45MUBnbWFpbC5jb21YBAAEC1Y~) [Shadow] Hello investor, Get ready. We will get another inflation data with April’s consumer price index due out on Wednesday, along with the producer price index on Thursday. These data could adjust Wall Street’s odds of the central bank pausing its rate-hiking cycle at its next meeting. Currently, traders are pricing in a 9% chance for a hike at the next meeting. - These two data “could help analysts decipher the direction of the more stubborn crevices of the economy where inflation remains sticky,” said Quincy Krosby, chief global strategist at LPL Financial. - “Financial markets are hoping that it continues to remain subdued, but only if inflation cooperates,” Krosby said. Is this the turning point? Financial stocks are lurking close to a dangerous technical level. The S&P 500 financials index is about to fall below its 2007 peak. It took over a decade for the index to recover from its 2007 crash from its peak. (Source: Bloomberg) Falling financial stocks wouldn’t be good for the broad market. It could create pressure on banks to pull back on lending to protect their balance sheets, causing a slowdown in the economy. - “You can’t have a bull market if bank stocks are falling,” said Jim Roppel, founder of Roppel Capital Management. “It’s like if an Olympic athlete had cinder blocks around their legs.” Sure enough, traders are already betting on rate cuts later this year because a tightening in credit conditions could force the central bank to stimulate the economy. Believe it or not, traders think a rate cut could happen as soon as this July. In other words, Wall Street thinks things will be worse for the economy within three months that would promote the central bank to cut rates so soon. Should you buy the dip in financial stocks? Nancy Tengler, chief investment officer of Laffer Tengler Investments, said it’s too soon to start buying banks again. She believes that the “falling knife” has not hit its bottom yet. - “It’s not smart to chase some of these other bank stocks,” Tengler said. “You have to let the falling knife fall.” Scott Colyer, chief executive at Advisors Asset Management, said that the bull market can’t happen until financial stocks are in an uptrend. - “We have to see have financials leading the way for the stock market to be in a sustainable uptrend — but that’s not what’s happening,” Colyer cautioned. “Don’t pick up nickels and dimes in front of a steam roller.” Top Airline Stock To Own Right Now Today’s Stock Pick: United Airlines Holdings Inc ([UAL](~/AASl5QA~/RgRmO01QP0SeaHR0cHM6Ly9kYXNoYm9hcmQudHJhZGVhbGdvLmNvbS9jb21wYW55L1VBTD91dG1fc291cmNlPUtsYXZpeW8mdXRtX21lZGl1bT1jYW1wYWlnbiZfa3g9VEpGeC0wNnJieHg2VWFKY19MZ19qdi1JOWNhbGRtUjVUNU9jREVIYjJ2TUdXNlc1WllRa1pMOElPWlpPZkFUby5XNXBBWldXA3NwY0IKZFFQyFhkfyNXk1IbdHJpc3RyYW1iYWxkd2luOTFAZ21haWwuY29tWAQABAtW)) We absolutely love United as a stock. Its risk is very low – the business is essential as people need to fly. That’s one. Second, the stock is trading at an attractive valuation of just 5.6 P/E if we use 2019’s earnings. With the current market cap of $17 billion, its $3 billion earnings in 2019 make the stock currently trading at an insane valuation. Better yet, United had a phenomenal Return on Equity prior to the pandemic. In the graph below, you’ll see that United’s ROE constantly hovered above 25% between 2016 and 2020: (Source: MacroTrends) This thesis alone would have made United a good pick – especially when the airline is “firing on all cylinders,” said CEO Scott Kirby. - “Our operation is firing on all cylinders. In fact, based on most metrics it’s running better than ever. That isn’t just better for customers. It also reduces costs and leads to strong financial performance that creates the foundation for United and that really positions United to be the world’s best airline,” said United CEO Scott Kirby. And it could last for many months to come. Aviation is still in the COVID recovery phase. China is only 30% of its 2019 level due to its lockdown. Japan just opened last October. So, the demand looks certain to go higher from the current level. Plus, hybrid work has transformed the flying pattern. Every weekend could be a holiday weekend because people could work for two days remotely while taking a vacation. Sure enough, last September was normally an off-peak month but posted the third strongest month in United’s history! United is perhaps the best airline to take advantage of this. The airline has hubs in the largest markets and business centers with the most international demand. Their hubs are located in New York, San Francisco, Washington D.C., and Los Angeles for Coastal Gateways. As for the heartlands of America, their hubs are in Denver, Houston and Chicago. (Source: United Airlines) In the graph below, you can see that these cities are among the most in-demand in the country: (Source: United Airlines) Transformation: United created a new transformation program in 2021 to take advantage of the pandemic disruption. They upgraded in-cabin experience, ordered new planes, and improved the customer service. Believe it or not, its NPS soared by 36 points from FY 2019 to 2021! (Source: United Airlines) Through its efficiency program, United expects to reduce its CASM-ex (the metric to measure the cost per seat) from 10.21 to 9.4 – or a 7.9% reduction! (Source: United Airlines) Moreover, United expects to add capacity growth by 4-6% CAGR from 2019 to 2026 through higher gauge, new routes, and increased frequency. Listen, United ordered a massive number of new aircraft in 2021 that totaled 270 – 200 Boeing 737 MAX and 70 Airbus A321neos. So, what’s going on? United has a gauge problem. It has an average aircraft gauge of 104 seats per departure. That was a lot lower than legacy peers of 114 seats per departure – or the low-cost and ultra-low-cost carriers of 175 seats per departure. Here’s the problem – many United jets are single-class that are designed to fly regionally. (Good for small markets.) But United had to use these smaller jets for lucrative routes that require higher frequencies. United simply didn’t have enough jets to avoid using smaller jets which were huge missed opportunities for the company. Take Chicago’s ORD as an example. United flew 42% of its departures using single-cabin regional jets, while American used just 28%. Time to fix that problem. Thanks to its massive order, United plans to get the number down to just 4% of departures of regional jets in ORD. Nationally, the plan is to bring nearly 33% of departures using regional jets down to just 10%. All in all, United wants to grow the average seats per departure of 104 in 2019 to an incredible number of 134 seats per departure by 2026. (Source: United Airlines) As a result, United expects its adjusted EBITDA to jump by nearly 50 percent from the 2019 level by 2026! (Source: United Airlines) Bottom line: United is a dark horse play on the booming demand for flying. That alone would have been a good thesis. But United’s new transformation to reduce its regional jets could turbocharge the returns of its stock. Plus, its MileagePlus program (a membership program) saw a record number of memberships, and the third quarter saw the highest quarter of spend in the history of the program in the third quarter. The momentum is strong, and it is the time to buy the stock. FREE LIVE TRADING SESSIONS & TRAINING USING THE MOST COMPREHENSIVE DARK POOL MONITOR AVAILABLE TO THE RETAIL INVESTOR Join our LIVE Trading Sessions throughout the day where we will focus on how you can learn to master the markets through the use of advanced algorithms and AI to trade like the institutions. BEFORE THE BELL Starts 6am PT / 9am ET Our newest LIVE session starts when the big institutions and elite traders do, well before the market opens. We'll look at realtime dark pool data as the market movers position themselves for the tra ding day in the secret off market exchanges. LIVE TRADING SESSION Starts 8am PT / 11am ET Take advantage of Trade Algo's proprietary advanced algorithms for anticipating big market swings in our daily LIVE trading session. Trade Algo's Senior Analyst Luke Russell will walk you through the key tools and strategies that the institutional investors and top traders use to profit from high volatility in the market. THE FINAL HOUR Starts Noon PT / 3pm ET According to Wall Street Journal approximately 20% of the trading volume happens at the last 30 minutes of the day. Institutions make the majority of these trades in private dark pool exchanges -- away from the public’s eyes. The timing happens for two reasons: 1) Index funds make their trades to mimic the closing price of a stock. 2) Billionaires trade near the end of the day because they anticipate major news that will be released during after-hours. Because they trade in dark pools, the public doesn’t know about these trades until one day later. We’ve consistently spotted the correlation between a spike in dark pool volume at the end of the day and the next day’s price movement. In the Golden Hour we will identify and analyze these movements so you can trade with confidence. CATCH THE SPARK Starts 4pm PT / 7pm ET Catch The Spark is led by trading expert Luke Russell, starting at 4pm PT / 7pm ET. Open to all this session is a recap of the day and a prep for the next trading day with an emphasis on identifying and examining "spark" orders, those large institutional trades taking place behind closed doors in off-market exchanges, that drive stock movement. 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