00:00 Speaker A
We’ve made it to the top eight of Yahoo Finance’s Mad Markets. This is our tribute to March Madness in the stock market. We saw dominant performances and major upsets. Let’s focus on the two key games on the right side of today’s bracket, our morning bracket. Joining me now is Bob Lang, a technical analyst at Explosive Options. The market madness brought to you is ever present. Uh, let’s break this down a little bit, Bob. Let’s start with the two we met in the first group. We have JP Morgan going up against Amazon. What are your options? Who won this game and why?
00:37 Speaker B
I’m going to call Amazon, Brooke. Nice to meet you. Well, I really like Amazon here. This is a stock that has fallen significantly over the past few months. It’s one of the Mag’s top seven names, and it’s been performing pretty poorly since earnings came out in late January, Brooke. But um, I think the stock is building a good foundation here. Uh, between 200 and 220, a little over $200. I think, uh, if we get above the 220 level, uh, Brooke, um, all bets are going to go up, uh, I think all the old all-time highs, the old all-time highs, sorry, around 255, 260, um, are going to come out. But, you know, I like the growth engine of Amazon AWS. This is a powerful boost for the company. It’s the best-performing name among all the U.S. names working in cloud computing. Well, you know, listen, I mean, uh, after a significant correction, this company is going to thrive in this environment whether we go into a slowdown or not.
01:41 Speaker A
Yes, we also just heard that Amazon is working with companies like Delta Air Lines to develop high-speed internet. There are a lot of potential opportunities for Amazon to really rise. But I have to ask Bob, why don’t we go with JPMorgan Chase?
01:51 Speaker B
Well, JPMorgan, um, what worries me is the big banks here, not just JPMorgan but City Group, Wells Fargo, Bank of America, Goldman Sachs and Morgan Stanley. All of these names are going to have some difficulty running their businesses, especially if interest rates start to come back up. I know interest uh margins also become a good driver of profitability for these companies. But as the yield curve gets flatter, Brooke, that’s what we’ve been facing over the last three weeks or so.
02:22 Speaker A
Correct.
02:22 Speaker B
Well, I think the company is going to face some challenges. Of course, loan growth has been slowing. That’s what they’ve said over the past quarter or two. Well, and then, you know, mortgage lending hasn’t been as strong as people expected. Home construction is beginning to slow. Again, if interest rates started to come down, that could be a catalyst for them, but that’s not the case.
02:45 Speaker A
Bob, okay, let’s get on to the next game. This one is interesting. Here’s how the Gateway Arch compares to cryptocurrency exchanges. We’re talking McDonald’s vs. Coinbase. Where are your options here? The two companies couldn’t be more different, especially in this environment.
02:59 Speaker B
Very different, Brooke. It’s true. But uh I love the golden arches here. I love McDonald’s here, and actually this is just a chart from my perspective. The stock has fallen to its 200-day moving average multiple times over the past seven or eight months. It just penetrated a little bit today. I came down and tested it yesterday, April 1st. Well, every time it pulls back to test the 200-day moving average, it’s a strong spring for the stock to recover.
03:25 Speaker B
So I I bet, you know, the eighth or ninth time, listen, I don’t need, I don’t need more than two or three times to recognize that there’s a good pattern on the chart, but I think, um, a bounce off the 200 day moving average, Brooke, the stock is trading around 305, 306 right now. I think we have a good move between 330 and 340. We are also seeing some nice options flowing in the June 320 and 340 upside calls, where buying action has been very active. So, uh, how about a 5% to 10% increase, which is very strong for a company like McDonald’s. So I prefer McDonald’s here to Coinbase.
04:00 Speaker A
Bob, we did hear from Big Arches today that they are going to be introducing a menu for under $3, as well as a $4 breakfast combo, and adding that to the value menu. Also, what are you excited about about how AI will play a role in the fast food industry?
04:16 Speaker B
You know, um, I think companies like McDonald’s and Chipotle in the restaurant industry are exploring ways to cut costs and I think artificial intelligence is a direct result of those companies making some investments to help them cut costs, cut wages, cut wages and so on. Well, I know it’s bad for the job market, but, you know, for investors, if they can find some way to incorporate AI into their day-to-day business, then the income is going to improve. I think uh there’s certainly uh service and uh III don’t think the AI is actually going to make and flip the burgers for them, Brooke.
04:59 Speaker B
But I do think they have ways to use these tools to help them reduce costs and keep them to a minimum.
05:10 Speaker A
Yes, we got the Challenger report this morning that AI is indeed impacting layoffs. Come on, play devil’s advocate here again. Coinbase, has fallen 20% so far this year. You seem to be hammering it further. I mean, what do you think about Coinbase? What are your thoughts on the current environment in which cryptocurrencies are expanding further?
05:28 Speaker B
You know, I’m a little surprised that, uh, you know, after Bitcoin broke through the 78,000 level, it didn’t allow uh to recover enough to recapture that level. So, you know, Bitcoin may be entering a very, very long base period. We know that Coinbase is highly correlated with Bitcoin and some other cryptocurrencies. So, I think what we’re seeing here with Coinbase is more of a long-term fundamental period. It could be two months, three months, six months before the stock actually remains range-bound. You know, we’re talking about a pretty wide range from about 140 to the downside, maybe 200 to the upside, you know, 140 to 200 is a pretty big range. It’s about 30% range. But you know, I think uh, the upside here is limited to around $200, unless Bitcoin can break through the $78 to $80,000 levels, then we may see some upside from Coinbase. But for now, I think a longer base period is best for Coinbase before it moves higher. Coinbase’s best year may be 2027, which is the year I think cryptocurrencies, especially Bitcoin, will breakout.
06:48 Speaker A
Well, Bobling, no pressure here, but Amazon and McDonald’s are going to be in the next round because of you. Thank you so much for taking the time to play Market Madness with us.
06:56 Speaker B
Thanks Brooke, great to meet you.
