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Natural Gas: Opportunity of the Year?

It’s difficult to imagine that this energy commodity could offer a promising opportunity for profit when you observe its performance across different timeframes, including yearly, half-yearly, and even year-to-date. Below is a chart displaying its performance over the course of one year.
Source: finviz.com
Natural gas futures have performed the worst among all commodities on the mentioned timeframes, losing 73% of their price in one year. They are almost double the percentage loss of the next worst-performing commodity, oats futures.

The chart below sheds light on the poor performance of natural gas futures.
Source: U.S. Energy Information Administration
Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2018 through 2022. The dashed vertical lines indicate current and year-ago weekly periods.
The blue line on the chart represents the current level of working gas in storage for natural gas futures, which stands at 2,063 billion cubic feet (Bcf). This is close to a 5-year high and well above both the 5-year average (gray line, 1,722 Bcf) and last year’s reading of 1,556 Bcf.
This outcome is the result of misbalance in the market.
Source: U.S. Energy Information Administration
The volume of U.S. Natural Gas Marketed Production in February was 3,084,913 million cubic feet compared to 2,959,454 million cubic feet of U.S. Natural Gas Total Consumption. This excess in the market is bearish for natural gas.
Let us jump to a technical chart where I spotted a pattern that promises an opportunity.
Source: TradingView
The idea behind this opportunity is straightforward. The quarterly chart above shows a significant range established at the start of this century, with the top of 2000 at $10 and the bottom of 2002 at $1.9.
Over the past 22 years, the price has reached or even exceeded the ceiling four times, with the last being last year at precisely $10. The bottom for the same period has been touched four times as well, with the last one being this quarter exactly at $1.9.
This could signal a significant profit potential, as the target at the peak of the range at $10 is 4.5 times the current price of $2.2.
The market price remains low due to bearish fundamentals, but there is a bullish alert to consider. The winter heating season data shows consumption for electric power generation, as depicted in the chart below.
Source: U.S. Energy Information Administration
According to U.S. Energy Information Administration, “Natural gas consumed for electric power generation in the United States during the 2022–2023 winter heating season (November 1–March 31) averaged 30.6 billion cubic feet per day (Bcf/d), the highest winter heating season average on record, based on data from S&P Global Commodity Insights. Natural gas consumed for electric power generation has increased most winter heating seasons since 2016–2017 with the continued reductions in coal-fired electricity generation and the overall growth in electricity demand.”
Although natural gas is a fossil fuel, it is considered a cleaner energy source compared to coal, which makes it a preferred choice for many countries. This is a bullish factor for natural gas.
Additionally, abnormal cold weather during recent winter seasons has led to increased demand for heating, which could prompt buyers to stockpile natural gas at relatively cheap prices ahead of the new heating season.
Another factor contributing to the volatility of natural gas prices is recent geopolitical events, which have forced Europe to search for alternative supply sources of energy to replace Russian gas, with some turning to American liquefied natural gas (LNG) as an option. This process is still ongoing and could lead to further volatility in the price of natural gas this year.

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Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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Market Anticipation Builds as 3 Key Companies Prepare to Announce Earnings

Corporate America was bracing itself to report the biggest drop in earnings since the pandemic began three years ago, with profits for S&P 500 companies expected to fall by as much as 8% due to inflation, increased borrowing costs, and other headwinds.
However, businesses appear to be blowing past these low expectations, with 77% of reports beating analysts’ estimates, with reported earnings being 7.2% above expectations.
A relatively weak dollar due to the trend of de-dollarization gaining momentum and the looming crisis over raising the debt ceiling due to political differences regarding government expenditure on both sides of the aisle might also have been unwitting tailwinds that have helped the likes of Apple Inc. (AAPL) keep the mood buoyant on the Street
After reporting stronger-than-expected results, the tech giant’s shares surged by 4.8% on May 5.
However, the first quarter still would mark a second straight quarterly fall for U.S. corporate earnings after COVID-19 hit corporate results in 2020.Given this backdrop, let’s look at the prospects of three stocks ahead of their earnings release this week.

The Walt Disney Company (DIS)
DIS has recently been in the news for being on a legal collision course with Florida Governor Ron DeSanctis. Differences between the company and the governor began with DIS’ opposition to the Parental Rights in Education Act, which prohibits lessons on sexual orientation and gender identity in public schools through the third grade.
In an alleged retaliation, the Florida Senate approved the Disney Special Tax-District Bill, which would seek to move the control of the Reedy Creek district from the company back to the state. DIS has expanded the lawsuit contesting this move to include new regulations passed by the state’s legislature that allow officials to nullify development agreements brokered by the company.
Outside the political and legal arena, DIS is going through a significant transition under the leadership of its returned CEO, Robert A. Iger, to give the company’s content executives more power and emphasize sports media more.
Ahead of its earnings release for the second quarter of fiscal year 2023, analysts expect the global entertainment giant’s revenue to increase by 13.2% year-over-year to $21.80 billion. However, its quarterly EPS is expected to come in at $0.94, down 13% year-over-year.
STE provides infection prevention and other procedural products and services through four segments: Healthcare; Applied Sterilization Technologies; Life Sciences; and Dental.
On May 3, STE announced a $500 million share repurchase authorization and a quarterly interim dividend of $0.47 per share, payable on June 28, 2023, to shareholders of record at the close of business on June 14, 2023. While demonstrating the management’s confidence in the company’s prospects, share repurchases would also positively impact EPS in the upcoming quarters.
Ahead of its fourth-quarter earnings release on May 11, analysts expect STE’s revenue and EPS for the period to increase by 5% and 5.4% year-over-year to $1.27 billion and $2.15, respectively.

For the fiscal year 2023, revenue and EPS are expected to increase 5.7% and 1.6% year-over-year to $4.85 and $8.05, respectively.
Revvity, Inc. (PKI)
PKI’s offerings cater to diagnostics, life sciences, and applied markets through two segments: Discovery & Analytical Solutions and Diagnostics.May 9 marked the official launch of PKI as a science-based solutions company aimed at revolutionizing next-generation scientific breakthroughs that solve the world’s greatest health challenges. The company would begin trading as RVTY from May 16 onwards.
Ahead of its earnings release on May 11, analysts expect PKI’s revenue and EPS to decline by 46.1% and 57.7% year-over-year to $678.61 million and $1.02, respectively.

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Silver Update: Roller Coaster Ride

The previous post “Golden Pattern For Silver, Not Gold” from December highlighted a bullish pattern called the ‘Golden Cross’ that appeared on the daily chart of silver futures. This occurred when the 50-day moving average crossed over the 200-day moving average.
While the majority of readers considered this signal to be reliable, they did not expect the price of the metal to rise above $30.
The following daily chart will show how the pattern has played out since then.
Source: TradingView
When the ‘Golden Cross’ signal was posted, the price of silver futures was at $23.9 (marked by the orange vertical line), and it went up almost $1 to reach $24.8 before stalling for over a month.

The price was unable to break above this new high and subsequently collapsed, dropping below the blue 50-day MA and testing the red line of the 200-day MA, briefly breaking through to reach the ‘golden cut’ Fibonacci retracement level of 61.8% at around $20.
Fortunately, the price rebounded strongly from this support level and crossed back over both moving averages to establish a new high of $26.4 last Friday.
If you had read the complete post, you would have been more prepared for the market movements described above. I spotted a Bearish Divergence on the RSI sub-chart and alerted about the possibility of a retest of both moving averages. As it turned out, this warning was spot on.
Ultimately, the price of silver saw a $2.5 or 10% increase from the time of the ‘Golden Cross’ signal to its most recent top, validating the reliability of the signal.
Nevertheless, the subsequent rise of only $0.9 (+3.8%) followed by a significant drop of $4 (-16.7%) to $19.9 could have been quite unnerving for even the most experienced traders. Therefore, I believe that this traditional signal should be viewed as a medium-term directional indicator rather than a prompt for immediate entry into the market.
The way the price moves in relation to the moving averages is particularly interesting. Specifically, when the price crosses above the blue 50-day MA, it can be considered a good tactical trigger for a bullish entry (or bearish stop), and vice versa. On the other hand, the slower red 200-day MA tends to act as a strong support or resistance level.

RSI divergence is a highly effective tool that I often use to warn readers in my posts, and it has a strong track record of accuracy. It proved successful once again in the recent price movement, as it allowed careful traders to protect 10% of their investment and avoid unnecessary stress.

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Once again, a Bearish Divergence has appeared unexpectedly, indicating that the lower readings on the RSI sub-chart do not confirm the higher peak on the price chart. As a result, traders should brace themselves for a potential roller coaster ride.
It is difficult to predict how far the RSI divergence may push the price down, but the first support level is at the blue 50-day MA, which is currently around $23.5 (-9.7%). Additionally, in previous price action, the red 200-day MA was retested and is now located at $21.7 (-16.2%).

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Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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Navigating A Major Lawsuit: Will Pharma Stock ABBV Hold Strong Under Scrutiny?

Humira has not just been a wonder drug for treating moderate to severe rheumatoid arthritis and other debilitating auto-immune conditions for millions of people; it has been a cash cow for its manufacturer, AbbVie Inc. (ABBV). Excluding the COVID vaccine that was developed in response to the pandemic, Humira has been the world’s best-selling drug.
In return, the company has defended its fortress from potential competition from cheaper substitutes for over two decades with the help of the American patent system, which has enabled ABBV to file more than 100 patents to extend Humira’s patent protection beyond the 12 years that’s standard for other biotech drugs.
Biotech drugs like Humira are more complicated to design, develop, manufacture, and administer than pills or tablets. Consequently, their interests are protected by relatively more patents and intellectual property (IP) rights around them.
However, even by those standards, ABBV’s strategy was more aggressive, according to some experts, considering that some of Humira’s patents covered things such as the drug’s formulation and manufacturing methods.
But ABBV’s approach of taking no prisoners may be coming back to bite it this time around. In this article, we will look into the specifics and potential consequences of its alleged transgressions.
Under The (Double-Barreled) Gun
On April 25, ABBV was sued by a nationwide class of consumers who have accused the drug maker of fraudulently and illegally inflating the cost of Humira by as much as 470% over the past two decades.
The class action lawsuit filed in the U.S. District Court for the Northern District of Illinois alleges that the drug maker had repeatedly raised the publicly-listed price paid by consumers while offering pharmacy benefit managers (PBMs) lower and undisclosed net prices for its blockbuster drug.
ABBV has allegedly exploited this covert arrangement to charge its consumers exorbitantly while helping PBMs to profit excessively by pocketing a portion of the larger spread between the publicly listed price and the private net price they paid for the drug.
In exchange, PBMs conferred Humira with formulary status, which makes insurance companies more likely to pay full price for a drug. The lawsuit alleges that this gaming of the system allowed ABBV to make outsized profits.
An investigation into Humira by the U.S. House Committee on Oversight and Reform, which the lawsuit has also cited, found that ABBV charges approximately $77,000 for a year’s supply of Humira. Moreover, it has increased prices 27 times since the drug’s introduction, with total price increases amounting to a 470% hike since 2003.
The pharma giant’s CEO Richard Gonzalez had been grilled by a Senate panel back in February 2019 over concerns regarding executive bonuses linked to the sales of Humira. Validating those concerns, Humira generated $16 billion in U.S. net revenue in 2020 alone, with ABBV’s executives making over $340 million in the previous five years, according to the lawsuit.
Although the company has reduced the prices of Humira internationally, troubles are still brewing offshore. On February 22, Financial Times broke the news that ABBV is being sued by the Pharmaceutical Accountability Foundation (PAF), a public interest group in the Netherlands, for overcharging Dutch citizens for Humira during its monopoly from 2004 to 2018.
PAF has claimed that, after subtracting all research and development costs, production and distribution costs, and a “fair” 25% profit margin from the drug’s turnover, it found that ABBV overcharged Dutch citizens by as much as €1.2 billion.
Unlike other pharmaceutical litigations, PAF’s lawsuit considers the overall effects of high prices on healthcare and society.

In its quarterly earnings release on April 27, ABBV said that its worldwide net revenues decreased by 9.7% year-over-year to $12.23 billion. During the same period, the company’s adjusted EPS decreased by 22.2% to $2.46 due to an unfavorable impact of $0.08 per share related to Acquired IPR&D and Milestones Expenses.
With negative sentiments due to the litigation adding to its woes, the stock declined 9.5% between April 25 and May 4, compared to the S&P 500’s 0.47% gain during the same period.
Losing a Battle to Win the War?
Political and commercial developments have rendered ABBV’s current litigations more inopportune.
Big pharma, represented by PhRMA, had been losing political influence before the pandemic. Since the Trump administration was in charge, drug makers have come under increased scrutiny from both sides of the aisle for exploiting restrictions on the government that prevent it from negotiating directly with drug companies to lower prices.
However, since President Joe Biden set the tone for rationalization in the prices of insulin and other prescription drugs in his State of The Union address in February, pharma companies have come under increased political pressure to fall in line.
Doubling down on his commitment to “change the way drugs are priced,” on March 15, he announced fines on drugmakers for raising prices on some drugs faster than inflation for people on Medicare. Companies would pay the fines as rebates to cover the difference in pricing.
Moreover, the Inflation Reduction Act, signed into law last year while seeking to cap the price of insulin at $35, has also provided the administration with the legislative firepower to penalize exorbitant increases in the prices of some drugs.
With Big Pharma running short of friends at the Hill, ABBV is unlikely to find support on that front.
Moreover, Humira’s patent protection ended on January 31, meaning competitors could now launch biosimilars, the biotech equivalent of generic drugs, to grab a piece of Humira’s billions of dollars in annual sales.
Since fierce litigation and patent protection was working to keep biosimilars of Humira, with a whole bunch approved as far back as 2016, off the market, the floodgates have opened now.
California-based Amgen Inc. (AMGN) did not need a second invitation. On January 31, its long-awaited Humira biosimilar, Amjevita, hit the market, signaling the end of the exclusive run of what was for years the country’s biggest-selling drug. Other Humira copycats are due to become available later this year.
ABBV is working to keep Humira on formularies with bigger discounts in a bid to keep patients on the branded therapy. According to CEO Richard Gonzalez, if the company can “concede price” and maintain formulary access, “ultimately, many physicians will choose to leave the patient on the same therapy.”Nevertheless, margins are set to shrink in what will increasingly become a red ocean. Meanwhile, the company is turning to next-generation successors while also betting on four drug approvals by the end of next year.
Moreover, ABBV is doing away with its self-imposed deal cap of $2 billion per year that was instituted to pay down debts when the company shelled out $63 billion to buy out Allergan in 2019 to create the fourth-largest drugmaker globally at the time.
Hence, after years of maximizing gains, in current circumstances, it would be wise for ABBV to play it safe and minimize losses from the ongoing litigations and keep its focus on finding new blue oceans to fish.

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Dollar Stores Change As Inflation Rises

Editor’s Note: Our experts here at INO.com cover a lot of investing topics and great stocks every week. To help you make sense of it all, every Wednesday we’re going to pick one of those stocks and use Magnifi Personal to compare it with its peers or competitors. Here we go…

Dollar stores – the no-frills discount retailers – were known for catering to the most cash-strapped consumers. These chains expanded rapidly to meet the needs of that demographic, with more than 19,000 Dollar General stores and more than 16,000 Dollar Tree and Family Dollar outlets now in North America.
But now, dollar stores’ demographic is changing, as inflation drives more and more middle-income consumers through their doors. One primary factor behind this trend is U.S. grocery prices, which were up 8.5% from March of 2022.
This emerging trend has led the industry’s two biggest chains – Dollar General (DG) and Dollar Tree (DLTR) – to both announce plans to remodel almost twice as many stores as they will open this year. Dollar General and Dollar Tree will increase the number of refitted stores by 11.4% and 25.6% from last year, respectively.
Both are investing heavily in freezers and coolers to meet growing demand for groceries from U.S. consumers who have shifted more spending from discretionary items to essential items like food.
Dollar General will increase capital spending by 22% this year, to $1.9 billion—about 142% above what it spent in the pre-pandemic fiscal year to January 2020. Dollar Tree is increasing its capital expenditure this year by about 60% to $2 billion, nearly double what it spent in the fiscal year to February 2020.
However, profit margins are lower for groceries than other items, so dollar stores have little incentive to push too far into the terrain of the likes of Walmart (WMT). UBS notes that dollar stores’ operating margins were more than double those of grocery chains last year. So, the number of food items available at dollar stores will be limited.
With that in mind, let’s compare the largest of the dollar stores, Dollar General, against Walmart over this past volatile and inflationary year. The quick and easy way to do this to ask Magnifi Personal to run the comparison for us. It’s as simple as asking this investing AI to: “Compare DG to WMT.”
As you can see, it was a toss-up. While Walmart’s stock was less negative than Dollar General’s, its operating margin was much weaker than that for Dollar General.

This is an example of a response using Magnifi Personal. This image is not a recommendation or individual advice. Please see bottom disclaimer for additional information, including INO.com’s relationship with Magnifi.
This is just a starting point, of course. Magnifi Personal can easily compare several stocks or ETFs on more criteria, such as dividend payments, turnover, volume, and so on.
You can do it, too. Get access to Magnifi Personal completely free-of-charge – just click here.
This ability to have an investing AI pore over reams of data for you in seconds and spit out an easy-to-understand comparison of two or more stocks is an invaluable tool in deciding where to invest next.
We highly recommend you try it out. Click here to see how.
Magnifi Personal makes research like this as simple as typing a question. You can easily do this yourself, or ask Magnifi Personal to add other measures to the comparison, including dividend, valuation metrics such as P/E or P/B ratios, gross margin, and more.
Just click here to see how to set up your Magnifi Personal account.

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Subpoenas to Biden Agencies Over Social Media ‘Censorship’: Impact on Big Tech and Stock Market

Holocaust survivor Susan Sontag, when asked, summed up her lesson from her struggle with a simple yet profound observation that 10% of any population is cruel, no matter what, and that 10% is merciful, no matter what, and that the remaining 80% could be moved in either direction.
The above observation has not just stood the test of time; it holds true for political ideologies and economic doctrines as well, as revolutionaries and public enemies over the ages have found out to their respective triumphs and desolations.
However, in the age of information and the Internet, social media has become the new battleground for conflicting subcultures to shape narratives and influence the 80% to write a preferred version of history.
This ongoing and intensifying conflict reached another flashpoint when House Judiciary Committee, chaired by Republican Jim Jordan, subpoenaed three government agencies on Friday, April 28, as part of investigations into alleged censorship.
This has followed subpoenas sent in February to chief executives of Alphabet Inc. (GOOGL), Amazon.com, Inc. (AMZN),Apple Inc. (AAPL), Meta Platforms, Inc. (META), and Microsoft Corporation (MSFT) demanding information on how they moderate content on their online platforms.
In this article, we will get into the details of the subpoena, followed by an exploration of what regional and temporal differences in the definition of appropriateness and appropriateness in the limits of free speech mean for the business prospects of big tech companies.We conclude by contemplating how regulation and expression could coexist in an age in which almost everyone has an opinion about everything, and anyone could be offended by just about anything.
Government Versus Government
As part of the Republican-led investigation into allegations of censorship, House Judiciary Chairman Jim Jordan has sent subpoenas to the Centers for Disease Control and Prevention, the Cybersecurity and Infrastructure Security Agency, and the Global Engagement Center.

Documents have been sought by May 22 from the agencies to ascertain whether the federal government “pressured and colluded” with social media companies “to censor certain viewpoints on social and other media in ways that undermine First Amendment principles.”Of late, the Biden administration has come under fire for its efforts to stave off alleged “disinformation,” especially following a series of Washington Examiner reports of the Global Engagement Center funding a group called the Global Disinformation Index that has allegedly been blacklisting conservative media outlets.
Further reports based on internal Twitter documents and communications have also claimed that the government under President Joe Biden repeatedly corresponded with employees at the company, such as ex-general counsel Vijaya Gadde, to suggest suppression of certain information.
The subpoena marks an escalation in the ongoing panel’s inquiry after House Judiciary Chairman Jim Jordan described the agencies’ responses to previous voluntary requests as “inadequate.” He also said that none of the agencies had produced any documents responding to previous requests to date.
The agencies, on their part, have deemed the move unnecessary, stating that they have responded to earlier requests for information within the said deadline, and they have assured to continue cooperating appropriately with Congressional oversight requests.
Implications for Big Tech
For more than two decades, Section 230 of the Communications Decency Act has been a sanctuary and bedrock, fostering innovation in the tech industry by protecting the internet platforms from the legal liability for their users’ posts while also allowing them to decide what stays up or comes down.
However, even before the latest Congressional inquiry into allegations of censorship and collusion, this piece of legislation has been under siege from three fronts. This year the U.S. justice system, including the Supreme Court, would take on cases that would help it determine the limits of free speech.These cases could also determine the extent to which platforms have the authority or the responsibility to promote or remove content through their algorithms. This comes amid increased pressure from legislators to diminish the protections offered by Section 230, with many Democrats wanting platforms to remove more hateful content and Republicans wanting to leave up more posts that align with their views.
A scenario in which internet platforms owned and operated by big tech companies could be held responsible for the content that’s put up or taken down while being vulnerable to political influences regarding the kind of content that could be considered “appropriate” or otherwise at a given point in space or time, could turn the Internet, especially social media, into a legal minefield or a drab, disorganized mess.
General Counsel Halimah DeLaine Prado Alphabet Inc. (GOOGL) summarized GOOGL’s position by saying, “Without Section 230, some websites would be forced to over block, filtering content that could create any potential legal risk, and might shut down some services altogether.” She further added, “That would leave consumers with less choice to engage on the internet and less opportunity to work, play, learn, shop, create, and participate in the exchange of ideas online.”Civil society groups also expressed concerns that amid increased pressure to ensure compliance in a risky legal field in a more nuanced way, the for-profit tech companies would find it more cost-effective to simply censor everything.
In addition to muffling a lot of underrepresented voices, an Internet that’s a virtual equivalent of Disneyland populated with AI-generated happy and politically correct content would become an echo chamber that would drive down user engagement and advertising revenues, thereby impacting profitability.Hence, an effort to ensure survival in an environment of increased regulation could ironically result in Internet platforms shooting themselves in the foot.

(Maybe) A Middle Path?
On November 18, 2022, while reinstating controversial Twitter users Kathy Griffin, Jordan Peterson, and the Babylon Bee, Elon Musk, a self-described “free speech absolutist,” tweeted: “New Twitter policy is freedom of speech, but not freedom of reach.”
He added that Twitter would demonetize and not promote tweets containing hate speech or otherwise “negative” content. This approach is similar to the strategy employed by YouTube, a video-sharing platform owned by GOOGL, where the site’s algorithm suppresses some provocative content but is not entirely taken down.
Hence, just like it works on the rest of the Internet, users cannot see particular content or types of content unless they explicitly search for it.
The term “negative” could still remain open to interpretation and manipulation by for-profit organizations or the political ideology representing the majority worldview, and restricted visibility or access to ideas and viewpoints could induce radicalization and extremism. However, that could still be an improvement over Internet platforms swamped with compliance issues.
As parting food for thought, the Internet and society could become more open if‘The Right To Be Offended’ is accompanied by ‘The Responsibility of Dealing With Offence Peacefully.’

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“Dr. Copper’s” Prescription Proves Effective

In February, I presented my analysis of copper and gold/copper price trends in a post titled, Dr. Copper Prescribes Gold. Now, it’s time to update both charts.
In the previous analysis, most readers preferred a conservative outlook for copper futures prices, predicting a drop to only the equal distance in the CD part, which is $2.45. Since then, the price has declined, but not as rapidly as anticipated.
Let me show you the updated copper futures chart below.
Source: TradingView
As expected, the price action on the Rising Wedge pattern’s support played out in textbook fashion, with the price breaking below it and then spiking up to retest it before continuing its downward trend.

The price has now reached a double support zone formed by the purple moving average and the black horizontal trendline, between the $3.78 and $3.83 levels.
The RSI indicator has already turned bearish by sinking below the key support of 50, which could further support the breakdown of the aforementioned double support.
The target levels remain unchanged as none of the previous peaks have been surpassed. The nearest target is at $2.45 (CD = AB), followed by $2.02 (large 2nd move = large 1st move down), and the farthest target is the valley of 2008 at $1.25.
The recent release of US GDP data, which was well below expectations, and the contracting Chinese manufacturing statistics are supporting a bearish outlook for the copper price.

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Moving next to the gold/copper ratio chart.
Source: TradingView
For this update, I am presenting a tactical map that focuses on recent changes in price action, in contrast to the previous large-scale quarterly chart which provided a broader outlook.
This new chart allows us to see the shifts that have occurred since February, which may not be apparent on a longer time frame.
The initial phase of the reversal began in 2021, marked by the first blue leg that started from the 368 oz valley, leading to a ratio peak of 542 oz last summer.
Following this, there was a significant correction contained within the red downtrend channel. This correction continued until the ratio reached the 61.8% retracement level, known as the ‘golden cut,’ around 434 oz in February of this year. It was at this point that I alerted you about the major reversal.
Since the previous post was published, the ratio has increased by 10% and currently stands at 514 oz, indicating the start of the blue leg 2. It has surpassed the purple moving average, broken out of the red downtrend, and exceeded the previous high of 498 oz.
The next obstacle is the peak of the first upward move at 542 oz, which the current uptrend is expected to surpass for confirmation.
The RSI indicator is also signaling bullish momentum, with its current position above a key support level and a rising trend.
Looking ahead, the target for the second bullish move can be found at the same distance as the initial reversal, which is around 616 oz. This level also coincides with several important inflection points from 2019-2020.

Beyond that, the next significant barrier is at the top of 2020, which is located at 776 oz, and would represent a significant move up for the ratio.
In the previous post, most readers believed that “something similar to the Great Recession may be on the horizon”, according to the poll results.
While the trend is currently bullish for the gold/copper ratio, it suggests a potentially gloomy outlook for the global economy, as investors seek the safety of gold.
Let me know what your thoughts are on this outlook in the comments below.
Intelligent trades!
Aibek BurabayevINO.com Contributor
Disclosure: This contributor has no positions in any stocks mentioned in this article. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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3 Beverage Stocks that Could Win on Bud Light’s Bad Publicity

Editor’s Note: In this piece, we look at how Bud Light’s self-inflicted pain could become its rivals’ gain.

Bud Light’s support for diversity and inclusivity backfired when an Instagram video” by trans influencer Dylan Mulvaney featuring herself drinking a Bud Light as part of an ad campaign by the brand to celebrate the end of March Madness and promote a sweepstakes contest for the company drew flak from some its outspoken conservative fans.
With Mulvaney sharing a photo of a commemorative Bud Light can with her face on it celebrating her “365 days of girlhood” series on TikTok documenting her gender transition, affiliate brands such as Bud Light and Maybelline have become a target of the ire of conservatives over transgender rights.
The vocal and explicit outrage ranged from calls to boycott the brand, with rapper-singer Kid Rock going as far as shooting up cases of Bud Light with an automatic rifle while wearing a MAGA hat, to death threats to Anheuser-Busch InBev SA/NV (BUD) marketing executives who supervised the campaign with Dylan Mulvaney.
This has prompted Alissa Heinerscheid, vice president of marketing for Bud Light, and her boss, Daniel Blake, Budweiser’s group vice president for marketing, to take a leave of absence.
In an attempt to pacify its irked consumers and restore their images, Bud Light’s sister brands have pivoted away from their inclusive messaging. On April 14, Budweiser released an ad featuring its signature Clydesdale horse mascot to invoke patriotic sentiments in its patrons.
According to the experts, changing demographics suggest that Bud Light’s inclusive ad campaigns make good sense in the long run and are expected to keep the brand in what, according to BUD’s CEO, is “the business of bringing people together over a beer.”
However, the soup the brand has landed in might warm up the prospects of other beverage stocks. While the “woke-free” beer being brewed by “Conservative Dad” may not make the cut, here are some contenders to look out for.

Ambev S.A. (ABEV)
Ambev S.A. (ABEV), a subsidiary of Interbrew International BVT, is a beverage company headquartered in Sao Paolo, Brazil, that distributes and sells beer, carbonated soft drinks (CSDs), and other non-alcoholic and non-carbonated (NANC) beverages across the Americas. The company operates through three geographical segments: Latin America North; Latin America South; and Canada.
On April 25, ABEV’s Board of Directors approved and homologated the issuance of new common shares as a result of the exercise, by certain beneficiaries, of stock options,within the scope of the Company’s Stock Option Plan. This reflects the investors’ confidence in the company’s prospects.Despite a challenging macroeconomic environment, consistent execution of its platform model, coupled with commercial momentum in its home market in Brazil, helped ABEV ensure a top-line growth of 19.8% year-over-year and a 17.1% year-over-year consolidated growth in normalized EBITDA in the fiscal year 2022.

Constellation Brands, Inc. (STZ)
Constellation Brands, Inc. (STZ)is an international beverage and alcohol company operating in the United States, Mexico, New Zealand, and Italy. Its segments include Beer; Wine and Spirits; and Canopy.
The beer brands sold by the company include Modelo Especial, Corona Premier, and Victoria, Pacifico, while its portfolio of Cook’s California Champagne, Mount Veeder, My Favorite Neighbor, Casa Noble, Mi CAMPO, Kim Crawford, Ruffino, Robert Mondavi Winery, Copper & Kings, and others.
For the fiscal year ending February 28, 2023, STZ outperformed its net sales and operating income growth outlook. The company’s top line grew by 7% year-over-year to a record $9.45 billion, while its operating income increased by 22% year-over-year to $2.84 billion.
Robust financial performance has enabled STZ to exceed its goal of returning $5 billion to its shareholders in the form of repurchases and dividends. With spirits, such as gin and vodka, overtaking beer’s U.S. market share,riding on the momentum of high-end cocktail trends, the company expects to build on its momentum and deliver value to its shareholders in the fiscal year 2024 as well.
Molson Coors Beverage Company (TAP)
Molson Coors Beverage Company (TAP)is a holding company that operates through two segments: Americas and EMEA&APAC.
The Americas segment consists of the production, marketing, and sales of its brands and other owned and licensed brands in the United States, Canada, and various countries in the Caribbean, Latin, and South America. The EMEA&APAC segment consists of the production, marketing, and sales of its primary brands as well as other owned and licensed brands in various European countries and certain countries within the Middle East, Africa, and Asia Pacific.
For the fiscal year that ended December 31, 2022, TAP’s net sales increased by 4.1% year-over-year, primarily due to positive net pricing and favorable sales mix. During the same period, the company has also been able to reduce its net debt by $562.4 million.
On February 28, a week after announcing its top and bottom-line growth, TAP announced the creation of a centralized commercial function in its Americas business unit designed to accelerate its growth in the years ahead.
By uniting multiple teams and geographies around a single strategy, the function is expected to drive clearer total portfolio and geographic prioritization and allow the company to scale new white spaces, brands, and capabilities more quickly.

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Tesla (TSLA) – How Should You Play It?

Shares of Tesla (TSLA) are once again giving traders big daily moves. After the stock hit a 52-week low of $101, it bounced back above $210, and now it appears to be heading lower again.
The catalyst for the move lower was primarily the company’s most recent earnings report, which, despite sales, revenue, and earnings all coming in strong, margins took a hit.
Tesla has dropped prices on its vehicles five times over the last year, so margins taking a hit should not have been as much of a surprise as it was to the market.
However, Tesla still has a strong market position and is still producing industry-leading margins. The issue is that those margins are shrinking, and at some point, Tesla may see its margins fall more in line with the rest of the auto industry.
We have seen these types are situations play out in other sectors as companies grow and mature. The best example I can think of is Whole Foods.

When Whole Foods was a young, fresh company, it commanded upwards of 5% margins on its products. But, as the company grew and the rest of the grocery industry noticed what Whole Foods could do with selling premium products and commanding higher margins, other grocery store chains began to offer similar products.
This competition for the customer naturally puts pressure on Whole Foods’ margins, thus forcing them to lower prices and lose their high margins.
I believe the same story is now playing out with Tesla. At this time, it is clear that the world is moving away from combustion engine vehicles, although slower than some would like. And as consumers move towards more electric vehicles, more companies are offering alternatives to just buying a Tesla.
More competition is always a good thing for the consumer, but not always the best thing for one individual company.
For years, Tesla was, in many ways, the only legitimate player in the EV industry (sorry, Nissan Leaf, but it is true.) Tesla’s most significant differentiating factors that held off the competition in the past were that it was a high-end luxury EV with a superior battery range.
Both factors have eroded as Lexius, BMW, Mercedes, and other luxury car manufacturers have entered the EV segment.
As for the dominance in battery range, while Tesla is still the leader, the other players have closed the gap on how much of a lead Tesla has, again giving consumers many more options besides just buying a Tesla vehicle.
While I don’t believe Tesla will fade into oblivion or even get bought out by another company, like what happened to Whole Foods. I do think we are now going to see Tesla posting numbers that are more in line with auto industry standards.
That means the stock’s current valuation is grossly high. Tesla is trading at 49 times earnings, while the auto industry, on average, is well below a P/E of 10. The only other prominent car manufacturer that is trading even remotely close to Tesla is Ferrari.
Still, they aren’t selling remotely close to the number of Tesla vehicles, so that may not even be a good comparison.
I think investors should be cautious moving forward with investing in Tesla to the long side. I lean towards even getting short Tesla since I believe we are now in a new era where Tesla begins to fall more in line with the rest of the auto industry, with a slight valuation premium, not a four times higher valuation.
A few ways you can short Tesla without shorting the stock are exchange-traded funds.
The Direxion Daily TSLA Bear 1X ETF (TSLS) or the AXS TSLA Bear Daily ETF (TSLQ) are good options. These ETFs will increase in value if Tesla’s stock continues to decline. But, if Tesla stock goes higher, these ETFs will decrease in price.
If you think I am wrong and Tesla is just pausing before it rallies back, you can buy the GraniteShares 1.25X Long TSLA Daily ETF (TSL) or the Direxion Daily TSLA Bull 1.5X Shares (TSLL). Both ETFs will increase in price if Tesla’s stock reverses course and goes higher.

Remember, though; these are all ETFs that are leveraged in some manner, meaning if Tesla stalls and doesn’t go higher or lower, these ETFs will lose value due to contango.
Furthermore, contango will affect these ETFs if you hold them for long periods. While most contango has an effect daily, if you hold these ETFs for a few days or weeks, you should see much of an impact. Months, however, you likely will feel the contango effects.
Whether I am right or wrong, Tesla is always a fun stock to watch and follow, so add these ETFs to your watchlist even if you decide to follow from the sidelines.
Matt ThalmanINO.com ContributorFollow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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2 Gold Stocks Likely To Outperform

While the Nasdaq 100 (QQQ) has continued its outperformance on the back of a strong start to the Q1 Earnings Season for Big Tech, the real outperformer has been the Gold Miners Index (GDX).
Not only is the index outperforming the major market averages with a 17% return but it’s also outperforming the price of gold, a healthy sign that suggests a potential change in character after years of underperformance.
The recent strength can be attributed to the sharp rise in the gold price towards the psychological $2,000/oz level, resulting in significant margin recovery for gold producers after a tough year plagued with supply chain headwinds and inflationary pressures.
The good news regarding the recent rally in the Gold Miners Index is that momentum is to the upside and sharp pullbacks are likely to find buying support.

The bad news? With the index up over 50% from its Q3 2022 lows, some of the easy money has been made and a few miners are actually looking fully valued.
Fortunately, there are exceptions, and in this update we’ll look at two names that look reasonably valued and are likely to outperform given their relative value compared to peers.
Marathon Gold (MGDPF)
Marathon Gold (MGDPF) is a development-stage gold company based out of Newfoundland, Canada, with the company currently busy constructing its Valentine Gold Project.
The project is home to nearly 3.0 million ounces of gold reserves and the company plans to operate an open-pit mine consisting of three pits (Berry, Valentine, Leprechaun) with average annual production of 195,000 ounces of gold (first 12 years) at industry-leading all-in sustaining costs of $1,007/oz.
Based on the current schedule, Marathon is aiming to start producing gold by year-end 2024, and the project should boast ~48% margins and generate $120 million per annum in free cash flow at a $1,950/oz gold price.
Heading into 2022, Marathon Gold was near fully valued, trading at a market cap north of $600 million and being one of the few junior gold names bucking the sector-wide downtrend.
However, the stock has since slid by over 60% after reporting material cost increases to build its project, with updated costs coming in at $350 million.
This resulted in a funding shortfall and a significant equity raise and in order to address the funding gap, Marathon completed a significant financing which led to unplanned shareholder dilution.
Although this was certainly painful for existing investors and the underperformance has been frustrating, the stock has found itself trading at a market cap of barely $300 million with the project nearly fully financed and nearing 25% completion by summer.
This valuation of barely $100/oz gold reserves is a massive discount to the price paid in takeovers over the past two years despite a higher gold price and it’s made Marathon extremely undervalued on a price to net asset value basis and also a potential takeover target.
In summary, I see the stock as a steal below US$0.63, and I am continuing to build a position on weakness.
Royal Gold (RGLD)
Royal Gold (RGLD) is a precious metals royalty and streaming company with a $8.7 billion market cap and is the #3 name by size among its peer group.
For those unfamiliar with the precious metals sector, royalty/streaming companies offer low-risk exposure to gold and silver given that they allow an investor to get exposure to metals prices with diversification and with insulation from inflationary pressures on operating costs and capital costs.
This is made possible because royalty/streaming companies pay upfront to receive a portion of production over the life of a mine rather than operators which must continuously pay to operate mines and sustain these mines through equipment purchases, tailings expansion, community programs, and mine development/stripping.
Heading into Q2, Royal Gold was one of the better performers among its peers.
However, the company’s recently released 2023 guidance of 320,000 to 345,000 gold equivalent ounces [GEOs] was lighter than investors hoped, with Royal Gold finding itself over 9% from its recent highs despite a mild pullback in metals prices.

While the weaker guidance than expected is a little disappointing, it’s worth noting that Royal Gold has one of the best growth profiles in the sector among its peer group with several assets set to come online over the next few years and its silver stream at the Khoemacau Copper Mine is set to deliver significantly more ounces this year.
Plus, Royal Gold’s size compared to its two largest peers means that even mid-sized deals move the needle for the company so it isn’t having trouble growing and maintaining diversification like the two largest royalty/streaming companies.
Based on a current share price of $133.00, Royal Gold is not cheap enough yet, with it trading at ~21x FY2023 cash flow estimates and I believe the best time to buy the stock is when it’s trading below 18.0x cash flow earnings.
That said, it is one of the most attractively valued name among the top-3 royalty/streaming companies making it a name worth keeping a close eye on if we do see a deeper pullback in metals prices.
Hence, for investors looking for low-risk exposure to precious metals prices that don’t want to step into the riskier development space, I see RGLD as a solid buy-the-dip candidate at $116.00 or lower.
Disclosure: I am long MGDPF
Taylor DartINO.com Contributor
Disclaimer: This article is the opinion of the contributor themselves. Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information in this writing. Given the volatility in the precious metals sector, position sizing is critical, so when buying small-cap precious metals stocks, position sizes should be limited to 5% or less of one’s portfolio.