Are Insiders Selling the Top?⛰️ | Market News Sentiment Review 11/15-11/19

News sentiment continues to hover on the bullish side as Q3 earnings szn comes to a close, are insiders are selling at a disconcerting rate. We dive into sentiment for $MKR, $HPE, $XLM, $EBAY, & $FOXA

Hey, welcome to another weekly review of market news sentiment. I am your host Ramsey Shaffer (@babbldev on Twitter) — thanks for being here, and shouts out to the 5 new subscribers to the newsletter this week! If you haven’t already, join our growing lil community here 👇

This past week we analyzed another 855 stock market news articles from across the internet to find stocks worth watching and investing in. Below we’ll highlight the topics and tickers that Wall Street is talking most about this week, and give you some ideas for stocks to buy (and sell) based on their news sentiment. Here’s the breakdown:

  1. This Week’s News Sentiment [1 min read]

  2. Most Mentioned Tickers in News Coverage [1 min read]

  3. Best and Worst Ticker Sentiment [2 min read]

  4. Biggest Mood Swings & Changes [2 min read]

  5. Weekly Market Mood Outlook [1 min read]

1. This Week’s News Sentiment 📰

After a relatively optimistic string of news coverage, this week’s overall stock market news sentiment fell slightly to an overall score of +23% (on a scale from -100% = completely bearish to +100% = completely bullish). This indicates that analysts are still expressing more bullishness than bearishness about the markets as a whole, though slightly less than the previous week. The sentiment score is a calculated combination of both the news’ mood (ie. optimism vs. pessimism expressed) and the news’ time-sense (ie. the amount of speculation vs. reaction expressed). In terms of mood, overall Wall Street news leaned to the optimistic side at +7%, and in terms of time-sense, news trended speculative at +20% on a scale from -100% to +100%, driven by the events and topics outlined below:

📈 Stocks: the S&P 500 and the NASDAQ posted modest gains, recovering from their small losses in the previous week. On the flip side, the Dow and Russell both slipped in a week that produced strong gains in the consumer discretionary and information technology sectors but pullbacks in materials, energy, and financials.1 With last week bringing Q3 earnings season to a close, overall profits at S&P 500 companies climbed an average 39% compared to last year’s Q3 (the third-largest quarterly increase since 2010). Following the big earnings results, we noted big insider selling at a number of major companies, which we’ll dive into more below.

₿ Cryptos: after a big week of all-time highs for cryptocurrencies across the board two weeks ago — particularly in the altcoin realm driven by big growth from the likes of Solana ($SOL) and Coin ($CRO) — the global cryptocurrency market reversed course this week, falling 10% to $2.57 trillion dollars in total market cap. Bitcoin ($BTC) continued to drift below $60,000, as cryptocurrency analysts looked ahead to a week of possible reduced trading activity as a result of the U.S. Thanksgiving holiday on Thursday. Ether ($ETH) held steady for much of the weekend above $4,300. Despite the broader correction, the global market cap remains up more than 500% over the past year. Also apparently El Salvador is a “Bitcoin City” — whatever that means.

🦅 Economy: in optimistic news, President Biden’s two major economic packages gained momentum on the week. On Monday, he signed into law a $1.2 trillion measure to upgrade traditional infrastructure. On Friday, the House passed a larger package addressing human infrastructure needs. That proposal now heads to the Senate, which is expected to trim the measure in terms of price and policy scope. In pessimistic news, rising COVID-19 cases across the globe weighed on financial markets. Outside the US, Austria initiated a national lockdown, while Germany said it may consider a similar move to combat the surge in new cases.

2. Most Mentioned Tickers 📊

Each week we analyze the number of headlines written about each stock and cryptocurrency. Here are the most mentioned tickers in this week’s news and the tickers with the biggest volume increase compared to last week:

🧩 Maker ($MKR) saw the biggest jump in stock market news coverage this week:

Maker is the company behind MakerDAO – the decentralized autonomous organization which issues the stablecoin DAI. As the second-largest decentralized finance (DeFi) protocol in the crypto-market Maker has a lot of eyes on it, especially given its parabolic usage growth and price growth of 388% over the past year. But on this particular week, $MKR made headlines for the opposite reasons, falling 4% on the week to $2,893 and losing approximately $2.1 billion in total value locked (TVL) on-chain as active investor addresses dropped by more than 40% in just one week.

The reason for the drop? Analysts point to the passing of Biden’s Infrastructure Investment and Jobs Act, which lays out potential provisions to expand tax reporting rules for many cryptocurrency projects, which could result in a more legitimized regulation for stablecoins like Maker’s DAI. While there remains much to be seen about the implications of the act, speculation about the future crypto regulatory environment has surely spiced things up, with some projects (ie. $MKR) seeing a more pessimistic outlook than others. MakerDAO founder Rune Christensen regards 2022 to be a rough year for stablecoins. In a recent Reddit Ask-Me-Anything interview, the founder advised users to “be ready for the worst” in terms of stablecoin regulation. This can put the future of DAI and, in return, Maker in jeopardy. See the full AMA here:

“Rune Christensen MakerDAO AMA” | r/MakerDAO

3. Sentiment Winners and Losers 👍👎

Each week we summarize the most extreme sentiment scores in the news for each ticker to help you decide where to focus your attention. This time we’re doing things a bit different: instead of breaking sentiment out into mood (optimism/pessimism) and time-sense (speculation/reaction), we’ve combined these metrics into a singular bullish/bearish sentiment score for each ticker:

Most Bullish Tickers in News Coverage 😀

💻 1. Hewlett Packard ($HPE) stock enters “undervalued” territory on its way to Q3 earnings:

Shares of $HPE fell roughly 2% on the week to $14.39 after Goldman Sachs downgraded their rating for the company earlier this month, citing a weak U.S. IT-spending forecast for the remainder of the year. Rather than reacting with pessimism, the rating revision and subsequent dip in share price have caused Wall Street analysts’ opinions of HP to warm, with many articles this week claiming that the company’s stock is now trading at a considerable discount and encouraging value investors to take note.

HP’s stock is currently trading around 11% below its 52-week high of $16.74 set back in May, with an attractive price-to-earnings ratio of 7.30, and price-to-book ratio around 1.10 — couple this with an average earnings-per-share estimate of $0.19 heading into their Q3 earnings call next week, and given the fact that HP has made it a habit to beat such estimates by an average of 88% over the past year, it seems reasonable to foresee HP eclipsing its $17 price targets by the end of the year. This week’s most optimistic $HPE article:

$HPE Up 51.40% This Year: What Is Going To Happen Next” | Stocks Register

🌌 2. Stellar Lumen ($XLM) gains on growing excitement surrounding its underlying blockchain tech-specs:

The reaction to the Infrastructure Investment and Jobs Acts’ crypto regulatory provisions came in many forms this week. While some cryptos like Maker ($MKR) drew adverse outlooks amidst the speculation surrounding the provisions, others benefited handsomely, with analysts arguing that the regulation could make some of the more obscure alternative crypto projects more legitimate. One such altcoin making headlines this week is Stellar Lumen — a stable coin with top-25 market cap — which rose as much as 22% last week to find its current price of $0.34/coin.

Analysts have spoken optimistically about $XLM recently following the company’s partnership earlier this month with MoneyGram International ($MGI) to pilot their cross-border payment program. Unlike many similar projects, analysts appear more interested in Stellar’s underlying blockchain technology than its actual coin valuation, and for good reason. Stellar’s value prop is simple (and dare I say elegant): it allows individuals to make cross-border exchanges of money in seconds as opposed to days and it does it for less cost than existing options like Western Union. It’s like Venmo on a global scale, and with big-name partners like IBM (and now MoneyGram), the potential is there for the company to become a preeminent force in the international money transfer space. For more on what Stellar does and why analysts are bullish on it over the long term:

3 Under-the-Radar Cryptocurrncies With Far More Potential Than Shiba Inu” | The Motley Fool

Most Bearish Tickers in News Coverage 😒

📦 1. eBay Inc. ($EBAY) stock stalls on limited growth projections and insider sales:

$EBAY stock finished the week relatively flat at $74.36 to cap a 7% decline over the past 30 days from its all-time high of $80 set in late October. Following its Q3 report released three weeks ago, analysts suggest that $EBAY seems to have limited upside potential at its current price point — the company saw a slight fall in gross merchandise volume by 10% YoY to $19.5 billion. Annual active buyers on eBay declined by 5% over the quarter, and while analysts expect eBay’s revenues to rise by 7% to $11 billion for 2021, net income is projected to fall slightly to $2.4 billion for the year, decreasing its EPS figure to $3.47 in 2021.

Though some analysts claim that $EBAY might be worth picking up for the long haul after its fall from Q3 earnings highs, the consensus on the street appears to be that eBay’s short-term outlook is more negative than positive. It was also reported on Wednesday of this week that eBay SVP Pete Thompson sold a large portion of his personal stake in the company, further strengthening bearish claims. This week’s most pessimistic eBay article:

“What’s Next for eBay’s Stock?” Forbe’s

📺 2. Fox Corp ($FOXA) slides after earnings as insiders sell their shares:

$FOXA shares fell 5.27% on the week to $38.99 per share after news broke that the company’s Executive Chairman of the Board sold 90% (worth $69 million total) of their personal holding at $40.32 late in the week. This is the biggest insider sale of Fox’s stock in the past year, and the exclamation mark on a string of insider selling over the past three months. Analysts reacted to the sale with warranted trepidation, as news sentiment continues to lean increasingly pessimistic for the stock after its most recent earnings report.

Fox reported first-quarter fiscal 2021 results at the beginning of November, posting adjusted earnings of $1.11 per share; though this beat the Zacks Consensus Estimate by 11%, it was a disappointing 5.9% lower than the previous year. Revenues were up 12% year over year to $3.05 billion, surpassing the consensus mark by 4.6%. According to these numbers, analysts posit that the stock’s recent slide brings it to fair value. $FOXA’s new 13.42x price-to-earnings ratio is currently discounted relative to its industry average of 16.42 — and if you believe that Fox should be trading at this level over the long run, then there’s not much of an upside to gain over and above other industry peers. This week’s most pessimistic $FOXA article:

“Fox Executive Chair Keith Murdoch Just Sold 90% of Their Holding” | Simply Wall St.

4. Biggest Mood Swings & Changes 🔀

Each week we compare the sentiment of each ticker to its sentiment from the previous week. Presented below are the tickers that saw the biggest increases in bullish/bearish sentiment this week vs. last week:

🔬 Thermo Fisher Scientific Inc. ($TMO) saw the largest increase in bullish news sentiment this week as analysts react to its recent impressive Q3 earnings report, emphasizing the stocks 22% return on investment over the past year, and a relative strength score of 81 (meaning its outdone 81% of the overall market this year).

🧫 Lab Corp. of America Holdings ($LH) recorded the 2nd-biggest increase in bullish sentiment this week after it broke that the company is in talks to combine some of its assets with Syneos Health Inc.; $LH shares rose 3.6% following the rumors.

🗺️ Expedia Inc. ($EXPE) posted the biggest increase in bearish language expressed this week compared to last and its stock fell 2.5% on the week after news of more insider selling to the tune of $70K from the company’s CAO on Tuesday.

🏃‍♀️ SunPower Corp. ($SPWR) toated the 2nd-biggest increase in bearish sentiment expressed this week compared to last after a new crop of price targets were released around $29.30 per share, indicating that analysts expect the stock to fall roughly 9% over the next year — the stock dropped 4.5% on the week to boot.

5. Market Mood Outlook 🔭

Though this week’s stock market news sentiment came out slightly bullish on tailwinds from the conclusion of Q3 earnings season, overall market sentiment fell this week compared to last. Inflation remains a major blemish on the face of the stock and crypto markets’ recent all-time highs, and supply chain concerns are still top of mind, though some analysts argue that we may have already seen the worst of the reopening global economy’s logistical growing pains (see this article from the WSJ). Historically speaking, market news sentiment this week was roughly 5% above average for the past year.

Behind the new all-time stock market highs and impressive earnings results we’ve seen over the month of November, it’s important to note that we’ve also seen some record-setting amounts of insider selling at big companies abound. Though the majority of analysts seem to agree that we should see the current bull market continue into the near term (barring any major recessions, as Cathie Wood points out here), there is a growing contingent of contrarian analysts speculating that a major stock market correction could be closer than we think. Chamath Palihapitiya offered some food for thought along this vein of reasoning on his “All In” podcast last week:

“If the smartest people in the world [Bezos, Musk, etc.] are now selling their core holdings that they told you they'd never sell, and you're not reconsidering your position on things, you're either much smarter than them, or you're being really reckless.”

Nonetheless, news sentiment continues to hover on the optimistic side for the time being, and we’ll look to the coming weeks for any more indications otherwise. That’s all for this week’s report — if there’s anything we missed, or any tickers you’d like to see more sentiment analysis for, let us know by replying to this email, commenting below, or sending us a message at — we LOVE💜 hearing from you all! Keep an eye out this week for another bonus newsletter, and expect some more exciting changes to the format of this weekly review in the weeks to come. Good look to all of you in the markets this week, and thank you for reading! 😄🙏

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