Well, it doesn’t feel like it, but the S&P 500 is on a six-month winning streak. The index has been pulled higher by just a handful of companies like Apple and Microsoft in recent months. It’s a little odd to see, but Apple’s chart really resembles that of the S&P 500 over the last few months. Here’s Apple (NASDAQ:AAPL):
And here’s the SPY (SPDR S&P 500 ETF Trust, NYSE:SPY):
While momentum in the S&P 500 is positive, the rest of the market remains under pressure. Right now 56% of stocks are trading under their 50-day moving average. That signals broad weakness. I’m seeing lackluster volumes. I’m still cautious. It’s going to be a busy week.
We’re back watching COVID and economic data. Though the U.S. is unlikely to see lockdowns again, the Delta variant is hitting hard. ICUs are filling up across my home state of Florida. The latest surge has us eying that typical round of COVID stocks that I recently shared with Surge Point Trader readers. Their breakouts are likely to continue.
This all comes at a time that the Federal evictions moratorium expires. About 15 million people live in households that owe their landlords a staggering $20 billion. We could see a very significant amount of problems for Americans and their credit unless Congress takes any action on these debts. This is a great unknown for the market, and it’s going to require a lot of time to unpack.
But let’s get to the trend of the day.
Here’s a $30 Billion Trend
This week is one of the busiest of the years for earnings reports. There’s just one earnings call that I want to hear. DraftKings (NASDAQ:DKNG). The company will report earnings on Friday. And the hype is deserved.
While everyone is hyping electric vehicles, lithium, and other next-generation technologies, I’m focusing on an industry as old as time. Gambling.
DraftKings is one of the companies that is responsible for the wave of legalization of sports gambling across the country. The company established itself as a leading competitive sight for fantasy football, fantasy baseball, and more. Everyone knew it was gambling. But… hush hush, wink wink.
When the Supreme Court overturned a law in 2018 that made it possible for states outside of Nevada to legalize sports gambling, it was game-on for DraftKings. The company had the infrastructure to expand its operations – state-by-state – and expand.
Now, DraftKings has made the next leap. The company recently purchased gambling media outlet Vegas Sports Information Network (VSiN). This gives DraftKings a viable media outlet to help drive more eyeballs to its site and many new customers.
It’s part of an ongoing wave of partnerships and mergers between media companies and sports books. You’ll recall the deal between Penn National Gaming and BarStool Sports. Now, Verizon is making deals. Yahoo! is making deals. ESPN is expanding its gambling content and could eventually open its own sports book.
This media-sportsbook alliance is big business. There is speculation that this could drive upward of $30 billion in gambling revenue from just these agreements. I don’t think that investors are taking this seriously yet.
When this industry matures and becomes a business that has dependable cash flow, watch out. Sports gambling has the potential to become a reliable sector like utilities. It’s that serious.
I’m very interested to listen to DraftKings’ earnings call this week. You should do the same. I’ll be back with more insight on value, momentum, and insider stocks all this week. For now, I must go to the airport. The next time you hear from me, I’ll be in Germany.