News Details – Smallcapnetwork
That's a Bullish Clue, Even if There's No Follow-through. Plus, 2050 Motors is Back.
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February 2, 2024

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PDT

Welcome back from the weekend, everyone, and what a wild start to the new trading week it was! We started out in the black and toyed with a quick rebound effort. But, by mid-day we were alarmingly deep in the red. By the time the trading session ended though, we were basically back to where we started. I suspect it's all a bigger sign of some serious indecision on the part of traders right now, though it should be noted the shape of today's bar -- a doji -- suggests a bullish reversal is at least trying to develop. We'll see. We'll have our normal market discussion below, but we've got a couple of other items to cross off of our list first. Yesterday's Projects - Tomorrow's Stand-Alone Industries I don't know if you saw this today or not, but Arch Coal (ACI) is filling for bankruptcy, joining Patriot Coal, Alpha Natural Resources, and a whole slew of other coal miners that have done the same in recent years. I know the landscape of the coal industry is ugly right now, and you all have heard us say more than once the time to buy stocks is when nobody else wants them. If there was ever an exception to that rule of thumb, however, we've got a feeling coal is it. I think we can pretty much kiss the coal industry as we know it goodbye (on the off chance you haven't already). Yes, 30% of the nation's electricity is powered by coal. That's a lot. That's a proportion down from more than 40% just a few years ago. And, with fracking producing more fossil fuels than we even have room to store now, I can see natural gas widening its current lead on coal as the way in which the U.S. generates power. My point isn't to explain to you why coal has a bleak future, however - I'm guessing most of you knew that anyway. I'm just using the demise of coal to underscore the point that we're not only in a new kind of economy, we're in a new kind of industrial environment. Again, most of you innately realize this. The question is, are you investing like it? I only ask this question because some new industries have been created by technology, and they now deserve to be standalone investments in and of themselves that boast their own product cycle, and operate independently of other industries. It's the independent nature of these industries, in fact, that makes them so compelling. One of the biggest secular trends I see turning into a perpetual industry is the so-called Internet of Things. IoT is also one of the Elite Opportunity's long-term hot buttons, and though John Monroe doesn't have anything in the long-term EO portfolio right now that could be considered an Internet of Things play, he has in the past and he will in the future. Another offshoot of a sector that's become an industry of its own is specialty chemicals like medically-safe coatings and performance polymers. It's not an especially sexy arena, but far more important than you might think. Yet another stand-alone industry that's developed within just the past few years is electric vehicles, and by coincidence, an EV maker has made its way back onto our list of Featured Stocks. Remember 2050 Motors (ETFM)? Last year the company is setting up shop in the U.S. - Las Vegas, Nevada first - to sell a clever electric vehicle called the e-Go. In the meantime the company has unveiled the bigger, full-sized sedan called the Ibis, and it's starting to turn heads in and around Las Vegas where it's being demonstrated. Just a little backstory on 2050 Motors... like many of its peers, the EVs made by China's Jiangsu Aoxin New Energy Automobile Co. and sold in the U.S. by 2050 Motors are powered by a large battery pack which spins an electromagnetic motor. Unlike most of its peers in the electric vehicle space, however, the bodies of these two cars are made of carbon fiber, which is five times stronger than steel and one-third the weight. That lower weight means the motors of the Ibis and the e-Go don't have to work as hard to push the vehicle around, which means the battery pack doesn't have to be as big, which means the car doesn't have to cost as much as... say a Tesla, most of which sport a six-figure price tag. Fast forward to today. We already knew the e-Go was being driven around the Las Vegas area. We just learned this past weekend, however, an Ibis has been delivered to 2050 Motors as well. It's a beautiful car too. I've included a picture of it below, but for a 360-degree up-close view, take a look at this video of it. Spectacular. I could say a lot more about 2050 Motors and the Ibis here, but instead I'll refer you to Bryan Murphy's write-up on the Ibis which goes deeper into the what and why. I'll simply add this to Murphy's thought... I have a feeling the Ibis and the e-Go from 2050 Motors are going to be two of the key vehicles to bridge the gap between the un-affordability of Tesla's electric vehicles and the form/function missing from most of the lower-cost EVs currently on the market. That puts ETFM in a very enviable position. We'll be following ETFM for a while and see where the introduction of the Ibis goes. This could get real interesting, real fast. Again, here's the video, and Murphy's deeper analysis. The Bulls Dropped a Hint Before we get any further into the market's action today, let me make one thing clear - there's no telling where the market could go next, as last week's pummeling has left a lot of people stunned and a little edgy. Inasmuch as there's a lesson to be taught by today's market action, though, just for the sake of argument we're going to be temporarily bullish. Ever heard of a doji? It's a word used to describe the shape of a chart's bar that looks like today's from the S&P 500 and most other indices. That is, not only are the open and close almost the same level, they're both near the middle of the day's high-to-low range. Sometimes you'll hear them called spinning tops. Take a look. The implication is, this is a transition from a net-selling environment to a net-buying one. More specifically, a doji bar implies the equilibrium between sellers and buyers has been met en route to a reversal. In this case, the route is taking us out of a downtrend and into an uptrend. Maybe this one will pan out that way. Or, maybe it won't. We're just saying, whether this one works out as a pivot point or not, this is what dojis look like. It's a pattern worth tucking away for future reference. The NASDAQ Composite doesn't look too different, though it's not a doji today. It's better described as a hammer, derived by the hammer-like shape with the long tail serving as the handle and the open/close range looking like the mallet part. This is also a bullish clue, however, once again suggesting we just ran out of sellers and only the buyers are left behind. That has all the makings of a bullish reversal. Again, we're not saying the bulls are back in charge, and even if they are there's some major technical resistance not too far above. We're just saying these are the most bullish clues we've seen in several days, and they're clues that tend to mark at least near-term bullish efforts. If you're interested in tapping into this volatility rather than just talking about it, we recommend you subscribe to the Elite Opportunity newsletter, which is delivered in the middle of the trading day so you can take action on its advice. This end-of-day look you're reading right now doesn't always do you a lot of good when the market is going to gap up or gap down like it's apt to do on Tuesday morning. Here's how to get more timely market analysis and trading advice.