🚂 All aboard. Adelaide COVID drama? Barely lasted a week. Melbourne’s seemingly perpetual lockdown? 29 days without a case. Australia is back in business baby, and the ASX is booming (+9% Nov).

In today’s edition:

• 🏪 An ASX competitor

• 🕵️‍♂️ Palantir moons

• 😮 Reddit sentiment analysis

Quote of the day

"Given a 10% chance of a 100 times payoff, you should take that bet every time." — Jeff Bezos

🇦🇺 DOMESTIC

💉 Testing for COVID-19 real quick and fast

Australian biotech company AnteoTech (ASX: ADO) is preparing for clinical trials of a coronavirus test using just saliva samples.

The deets: AnteoTech’s COVID-19 test has been shown to detect traces of the virus in saliva. The product has met all requirements to move forward to the next developmental stage, which is on track to occur in December. If successful, the company will aim to fulfill the ongoing need for rapid COVID-19 testing through 2021.

Thoughts: The marketplace for COVID-19 management and vaccines is rapidly evolving with the virus sticking around for the foreseeable future. The traditional way of getting a test through a Q-Tip is very invasive, so a saliva breakthrough would be a significant improvement. Whether demand for these tests will remain after a vaccine is released and coronavirus is effectively eradicated remains to be seen.

🌿 Over-the-counter medicinal marijuana

Could you soon be able to buy CBD products over the counter at pharmacies?

The deets: The Therapeutic Goods Administration (TGA) is expected to make an announcement sometime in December about allowing medicinal marijuana products to be sold without a prescription. The decision will concern whether CBD products can be brought down from a schedule 4 to a schedule 3 medicine.

Thoughts: In a market where legislation is the key factor holding companies back from growth, this could be huge news. Keep an eye on stocks like Creso Pharma (ASX: CPH) if you want to ride this wave, or take a look at Stockhead’s ASX cannabis stock guide.

💡  Bits and pieces

• Innovation always wins: Elon Musk is now the world’s second-richest person, overtaking Bill Gates with a $128 billion net worth.

• Gambling as a service: Jumbo Interactive (ASX: JIN) has received regulatory approval to supply their lottery and gambling software to other businesses in the UK.

• Party on Wall Street: A significant financial milestone has been achieved as the Dow Jones Industrial Average topped $30,000 for the first time ever.

• Big corp buy-now-pay-later: Fatfish Group (ASX: FFG) is launching a BNPL product allowing businesses to buy equipment and repay within 12-24 months.

• What the Fugg? The Austrian town of Fucking renamed itself to Fugging, after its residents (known as Fuckingers) had enough of being mocked.

🌎 INTERNATIONAL

🕵️‍♂️ Palantir, the secretive data firm is up 200% since IPO

Palantir (NYSE: PLTR) continues to rise since its October public offering, adding 17 billion in market valuation in the past week.

The deets: The company, co-founded by Paypal’s Peter Thiel, is a big data analytics firm contracting for the US government Department of Defence. Some people are chalking the meteoric rise in Palantir’s share price to the election of Joe Biden, who may influence US defense policy in favor of Palantir. Others believe it is due to pure speculation with the company “no longer a stock but a full casino".

Thoughts: Data analysis tools for surveillance are becoming increasingly popular amongst government and commercial customers. However, at 50x expected 2020 revenue compared to other publically traded government contractors that trade at below 3x revenue, the market seems to be taking into consideration these growth prospects.

---

🔎 IN-FOCUS

📈 Understanding market sentiment

Market sentiment is the overall opinion of all investors towards a particular stock or market. In other words, it is the crowd psychology - or current vibe.

Markets are either bullish (when prices are rising aka the current stock market), or bearish (when prices are falling aka the market when coronavirus first took hold in March).

Indicators for market sentiment

• The VIX: An indicator of investor sentiment and market volatility. If the VIX is high, the market expects very large changes in the S&P/ASX200 over the next 30 days. If the VIX is low, the market expects very little change.

• 52-week highs and lows: If an individual stock is close to its 52-week high, the sentiment is bullish. If the stock is close to its 52-week low, investors tend to have a bearish market sentiment. There is also the High-Low Index.

• Shorts vs. longs: Looking at how many people are shorting a stock (betting on it falling in price) vs. longing (betting on it raising in price) can also aid in understanding market sentiment.

These are all classical methods for gauging market sentiment, but as per usual, we like to spice things up a little.

Spicy ways to assess market sentiment

• Running an algorithm over Reddit posts: u/MyNameIsShapley analyses Reddit comments and posts in r/asx_bets to understand whether people are feeling positive, negative, or neutral towards ASX stocks. These are automatically updated on his website daily.

• Twitter mentions: Number of mentions of a stock on Twitter in a given week. More mentions can be a bullish signal.

• Google trends: Indicates how many people are searching for a stock ticker at a certain time. If it’s at an all-time high, the sentiment can be bullish.

Bottom line: Sentiment analysis can help determine whether a market/ stock is overheated and due for a correction, or if it’s a good time to buy-in.

---

🏦 MARKETS

🏪 IS THERE ROOM FOR ONE MORE?

In light of last week’s ASX meltdown which halted the trading of securities for over 4 hours, many questions have been raised about the ASX’s status as a monopoly in the stock exchange market.

Is the ASX really a monopoly?

The ASX denies their status as a monopoly (of course) saying they compete directly with Chi-X for trades. That said, there are many factors that point to the ASX having many monopolistic traits including over 80% market share, and the fact that Chi-X is not even an option with many brokers.

What is Chi-X?

Chi-X is an exchange that works almost identically to the ASX, you can buy many of the same stocks across both exchanges, but the ASX definitely has more to choose from. It’s essentially like the difference between shopping between ALDI and Coles, however, market makers pretty much ensure prices remain constant between the two, so you are unlikely to get a better deal by switching to Chi-X.

Why is this a concern?

Many market analysts have criticised the lack of competition as enabling the ASX to avoid investing in modern technology, which can lead to outages like the one we recently experienced. While it may not have had a huge impact on sole traders, it can cost institutional investors millions and lead to unusual market conditions where hundreds of thousands of trades are left in limbo.

What is the solution?

Looking abroad, we can see that companies in countries like the US have numerous exchanges to choose from when deciding to list, with different exchanges attracting different types of companies, such as the tech-heavy NASDAQ. Looking at this market it seems that Australia is lagging behind, and that we could really benefit from increased competition to force the ASX to stay on top of its game.

Bottom line: Competition is always good for consumers and in an era where people increasingly rely on equities as a savings vessel, it’s important for exchanges to stay modern and competitive.

---

🔮 REDDIT STOCK ANALYSIS

• Materials and Mining: WA Kaolin Ltd (ASX: WAK) by u/WingsAndRuin001

• Biotech & Medicinal cannabis: Incannex Healthcare (ASX: IHL) by u/Exalted_HC

• Materials and Mining: Diatreme (ASX: DRX) by u/B0bcat5

• Gambling: Sportshero (ASX: SHO) by u/TheRainWillStop

5 Kudos

Give 1 Kudos. — Give 2 Kudos

Comments

Displaying 6 of 6 comments ( View all | Add Comment )

alex	1606989734 Hey jfp (if that's even your real name), I'm casually interested in the investment/trading space so I'm gonna friend you. P.S. my guess is views impact the ranking more than anything (even if you can't see them) Report Comment
jfp	1606921158 Ayyyy. bossss/ Report Comment
jfp	1606921157 Ayyyy. bossss/ Report Comment
jfp	1606921148 La La La Report Comment
jfp	1606921138 Testing Report Comment
jfp	1606921131 Do comments get the post to number one most rated? Report Comment