05-10-2021
Trade I am SHORT “400” “DE” at
$400.00A potential SHORT idea...please,
as always do your due diligence...I believe the price action has propelled DE
into Cloud-9 valuations, and the best is likely already priced in....DE has likely
pulled forward a bevy of future earnings these past 2-quarters; and future price
action is about future earnings and revenues, not current and past earnings and
revenues!
DE has rallied incessantly (due to stimulus) checks, and
historically low-interest rates and their extended payment options....” 0% APR fixed rate for 72 months† [side note I bought 2-machines using basically
free money for 6-years]
Ø DE
posted a high of ~$182.00 in 2019 however from the lows of $106.25+/- on 3/19/2020.
It has risen ~270% helping to power the indexes and ETF’s it resides in higher,
as you can see from the earnings chart below DE’s earnings were higher in 2018
& 2019 than they were in 2020 and 2021, and its stock price was nearer 50%
of today’s value!
Agriculture and construction machinery
maker Deere (DE) was hit hard by the pandemic as softer commodity
prices and sluggish building activity weakened demand for their equipment.
After a rough first half of 2020, green shoots emerged during DE's fiscal 2020Q3
(ending July), followed by a notable recovery the next quarter as the company
blew out expectations. Since DE does
not provide quarterly guidance, their results can widely deviate from analysts'
estimates. When times are good, the company tends to surpass expectations and
vice versa. The $1.70/share positive EPS surprise this past quarter was
significant [likely pulling forward demand] ... In the midst of the
pandemic, DE's Construction & Forestry segment bore the brunt of the
downturn. This business segment which manufactures loaders, excavators, and
dump trucks, has significant exposure to road-building projects and to the oil
and gas industry. As crude oil prices deteriorated oil and gas producers scaled
back on drilling activity, curbing orders for DE's equipment.
Consequently, sales in the Construction & Forestry business dove by 25% in 2020/Q2
and by 28% in 2020/Q3...the beat was likely buoyed from by improving economic
activity and constrained output, crude oil prices have basically doubled from
last May (likely not to be repeated again). The vastly improved financial
conditions in the oil and gas industry helped fuel a major rebound in this
segment: during 2021Q1, revenue increased 21% year/year to $2.5 billion.
DE is best known for its farming and agriculture machines, which make up
the bulk of its business. Our U.S. farming industry is poised to thrive this
year after the pandemic drove food demand sharply higher. Rising prices for
agriculture commodities, such as soybeans, corn, and wheat, reflect the bullish
conditions for farming.
DE's upgraded product roadmap, combined with the strength in their end markets,
provided the firm with sufficient confidence to lift their FY-2021 net income
guidance to $4.6 to $5.0 billion from $3.6 to $4.0 billion. With the stock up over
~220% from last March's low point, investors are clearly seeing greener
pastures ahead. The huge rally indicates that some of the good news is already
priced in, but with momentum building under DE's business, investors may
be harvesting more gains this year.
SO I am looking to SHORT DE......
Developed
05-10-2021 Next earnings
May 21st S&P EPS
consensus: $4.38 S&P revenue consensus:
$10.27 billion, likely as good as it gets I will be
SHORT (400-shares) of “DE” at $419.95 or a failure to hold above $405.00 once
obtained.....1st downside target $348.75 thereafter $305.00 I like using a Call-spread, or a vertical PUT
buy-write strategy to implore leverage; out 7-12 weeks... Its is of course optionable Current P/E = 36.00+/- Forward P/E = 26.75 281-million
share float 1.2% Short interest VERY
overextended in my opinion as this stock a year ago was trending in a near $135.00+/-
to $189.00+/- and has gone parabolic this past year.
My near-term indicators are now on a SELL 12 out of 13
indicators. These levels below sport a 75% and 85%
confidence/probability factors.
A reminder my friends: I reiterate this very incantation everyday
multiple times to get myself centered to trade this awful
market……" Every-Day in every way....I'm feeling better and better about my
trading; I am getting better and stronger in my ability to utilize and run good
money management and too pull the trigger on positive trading set-ups that
provide good risk-to-reward; I will always be aware of the big picture...but
intraday I will trade what I see and my technicals indicate....and above all I
will always seek to constantly improve my trading and short-term investing
knowledge every day!"
Please my friends keep an eye on the DEBT With debt
& leverage at all-time highs, rising interest rates will lead to the mother
of all credit crises. And what if the FED and other central bankers manipulate
rates low? With 10,000 baby boomers turning 65 every day, historic low rates
(screwing savers) are leading us into the mother of all pension crises; but
these are not the favorite people of those in power!
PLEASE TRADE CAUTIOUSLY on the LONG & SHORT side, be quick to book profits and in times of uncertainty it’s ALWAYS very prudent to wait till the smoke clears if you are uncertain; remember trade when perceived risk to reward favors your trades; and that NOT to trade is often a prudent decision as well!
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