$NU - Uptrend Commencing+14.73% MoM at the moment of editing. But more important than this percentual gain is what this candle represents.
This market had been ranging between the $3.5 & $5.5 thresholds for the past 12 months after a brutal sell off.
This month, after a shy breakout above the 10 EMA (M), this market is trading close to $6, with that proud green candle breaking above the above mentioned resistance threshold, making new high highs and announcing what could be the start of an uptrend.
Noteworthy is the fact that we are barely in the equator or the month, the time frame used for this analysis ... It goes without saying that we need a closed candle in order to draw firmer conclusions.
No less important, despite the curiosity triggered by this breakout, a careful examination of this market tells us that it has heavy overhead supply and also that the upcoming logical target (zone where the odds of the bears stepping in this market increase),entails that a bullish swing trade would have a poor risk to reward ratio ... if of course we place our stop loss in a logical place as well (below the $5.50 threshold - as previous resistance and new support, always with sufficient buffer).
Having this said, now comes the moment when I alert you for the complexity of the world and the financial markets. No Nobel prize, prime trader, financial institution or whatsoever, knows what's going to happen tomorrow. This is a game of probabilities and risk management. If your trade has 60% odds of succeeding (which are actually very good odds), it still means that you ought to expect 4 losses out of every 10 trades in the long run. 4 out of 10 are still pretty significant numbers. Can you really afford to place a bulky share of your capital at this risk? You need to stay alive to allow the good side of the odds to help you out here. So manage risk at all costs and make it your priority.
Cheers,
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NUD trade ideas
NU Long BreakoutLong Idea.
Over the last year, NYSE:NU has been consolidating between 4 - 5, and has recently reclaimed the 200D. Along the way, a trend of increasing volume with price increases and volume decreases with price decreases implies that dips are getting bought, which seems bullish.
Based on market profiles, poor highs seemed to get cleaned up and revisited, implying that there is interest in going higher.
Buy targets: 4.5 / 4.4 / 4.3
Profit targets: 4.9 / 5.1 / 5.3 / 5.6
Trade is invalidated with price < 4.
$NU is Warren Buffett's Largest Investment by Shares -Here's WhyWhy has Buffett purchased a lot of shares of Nu Holdings, specifically?
For starters, the company has grown its customer base to 70.9 million clients in just over a year since going public. Nu Holdings provides credit cards to people who are not eligible to get one through other banks & tries to minimize risk by reducing the eligible benefits that the customer is initially eligible for. As they pay their bills on time, they unlock more benefits & more credit limits.
Another reason is its management. It's no secret that Buffett likes to invest in companies with good management. As he once said, “When we own portions of outstanding businesses with outstanding management, our favorite holding period is forever.”
Nu Holdings has recently hired David Marcus (former president of PayPal & former Meta Board member) on March 6 to be part of its Board of Directors. It’s expected that David will play a crucial role in Nu’s journey going forward.
The rest of the management team brings a lot of experience to the table as well:
CEO, David Velez, was a partner at Sequoia capital between January 2011 & March 2013. He also worked for Goldman Sachs, Morgan Stanley, and General Atlantic.
CGO, Cristina Junqueira, worked for a Boston Consulting group before founding Nu Holdings in 2013.
CFO, Guilherme Lago, worked in Credit Suisse Group AG & Mckinsey as well.
CPO, Jagpreet Duggal, worked as a director of product management at Facebook.
So you can see Nu’s management team has significant experience in this sector and under their leadership, Nu Holdings grew its revs from $1.7 billion in 2021 to $4.8 billion in 2022 - a 182.3% increase YoY.
Nu Holdings’ Edge - Brazil’s Unbanked Population
Before Nu Holdings started, over 55 million Brazillians were unbanked. This is because it's notoriously difficult for people who are not wealthy to obtain credit cards in Brazil. In general, it's very difficult to get a credit card in Latin America without being one of the wealthy elite.
By offering credit cards to people who would not be able to obtain one any other way, Nu has captured a large, untapped market. This is the main reason Nu is as successful as it is today.
Compared to SOFI, Nu Holdings has a much larger client base, this is of course due to its operations in Brazil, Mexico, & Columbia which in total have a larger population than the US. Thanks in part to these widespread operations, Forbes listed Nu Holdings as one of the world’s best banks in 2022.
Nu Holdings has a larger client base, more revenues, and is growing at a much faster rate than SoFi. The main reason for this is the fact that Nu Holdings doesn’t have as many competitors as SoFi, especially since they focus on an untapped market in Latin America. With SoFi, they have competitors right, left, and center due to established banks and fintech competitors. Nu Holdings became profitable Q3 2022 - only a year after its inception. After making a net profit of $7.8 million in Q3, it went on to make $58 million the next quarter and is on track to report an EPS of $0.02 & $1.393B in revenues in Q1 2023
Whereas, SOFI is still struggling to become profitable and is forecast to make an EPS of $-0.077 & $442.262M in revenue in Q1 2023.
How are Nu Holdings & SoFi similar?
But Nu Holdings & SoFi share one very important thing in common. They both want to be a one stop shop for financial services.
Since SoFi specializes in student loan refinancing, it creates a bond with younger customers who - hopefully - will turn into lifelong customers that use SoFi for all their banking needs. Similarly, Nu Holdings offers credit cards to customers younger than 18 in Brazil - capturing a demographic of young people who will hopefully become lifelong customers.
This means that both companies could continue to grow and expand as their customer base grows older and younger generations adopt their services as well.
Conclusion:
So in conclusion, I think SOFI is in a fairly safe spot as long as the Supreme Court gives a favorable ruling. Since Nu Holdings operates in Latin America it won’t compete with SoFi for market share. Ally & SoFi also have different specializations but Ally is a more established FinTech company which could take customers from SoFi. Still, SOFI’s goal is to become a one stop shop for all financial services and it has diversified its services extensively over the years which could give it an edge in this industry.
Personally, I believe SOFI will be able to grow its customer base better than ALLY because it appeals directly to young adults heading into college. If these customers have a good experience, then SOFI can become their go-to financial service provider for the rest of their life.
On this note, the FinTech industry is on track for major growth especially since Covid-19 acted as a catalyst for the industry - leading to wider adoption at a time when contactless payments were becoming essential.
Besides this, the FinTech industry will likely continue to grow just out of sheer practicality. For one thing, Fintech cuts down servicing costs like maintaining physical branches while still providing a very high value service. As more and more transactions move online, the digital revolution continues to work in the industry’s favor and the widespread adoption of smartphones means that our phones will increasingly act as wallets. So it's not surprising that the use of Fintech companies increased 88% from 2020 to 2021.
Technical Analysis:
Compared to ALLY and SOFI, NU has not dropped as dramatically, which is likely due to its exposure to Latin American markets rather than the US.
The stock is currently trending downwards within the sideways channel. The stock is testing the 200 MA on the daily chart, if it breaks through it I will be going short with the lower trendline as my take profit and the 50 MA as my SL.
The “Lipstick Index” and beauty stocks to invest in During the last months, inflation has reached sky-rocketing values, leading to a significant increase in the cost of living; contrary to the textbook economic rationale, a possible recession is not making the sale of cosmetics products decline. Rather, in June 2022, lipstick sales went up in the US.
The Lipstick effect, or Lipstick Index, entails a negative correlation between beauty sales and the general economic trend and can be found even during the 1930s Great Depression.
The term was used by Leonard Lauder, the former CEO of Estée Lauder, that stated that the brand’s lipstick sales jumped after the 9/11 terrorist attack and the corresponding American downturn.
Similarly, in 2012, researchers in Texas found out that a downturn in the economy had a positive effect on profits in the beauty industry.
According to NPD Group Inc, in 2011 in the US, skincare, makeup and fragrance sales rose by 11% with respect to the previous years. Sales also rose by 9% in Britain and by 3% in France.
Therefore, people that have less disposable income decide to spend it on non-essential goods anyway. The main theory behind this behaviour is either that women would buy more cosmetic products to feel more attractive, or that in general buying a small luxury will not leave you completely broke.
The Journal of Behavioural and Experimental Economics in 2020 made research on CEX - Consumer Expenditure Survey (which does not distinguish between diverse beauty products) - and it turned out that during the Great Recession, women between 18 and 40 years old would reduce their spending on other categories of consumption to favour spending in cosmetic brands.
Back in June this year, the NPD Group found out that sales of lipstick and other types of makeup grew by 48% in the first quarter over the previous year, and that the biggest share was retailed by prestige brands.
Economists establish that during recessions, consumers spend increasingly either on the traditional inferior good, or the morale booster (non-necessities).
The Lipstick Index could therefore be the indicator of a possible economic recession.
Moreover, after the rebound from the COVID-19 pandemic, the new threat for Europe and the US became inflation. By July inflation had reached 8.6% in the US, and 9.1% in the UK, triggering a drastic effect on various industries.
Beauty purchases seemed on the rise, and brands were forced to up their RRPs to cover higher supply chain costs. For instance, pricing for fragrances at Ulta, Sephora and Nordstrom has increased by 12% since 2020.
According to Yahoo Finance, the cosmetics industry is a fast-growing one and generated over $500 billion in sales in 2020.
According to NPC, during the first half of 2020, the sales of makeup products declined by 24%, whereas the skincare sector was on a rise during the pandemic.
E-commerce sales grew, too, and in the first quarter of 2021, Ulta Beauty reported an increase of 16% in online orders.
The best beauty products to invest in allegedly are :
Natura&Co. Holding S.A. (NTCO) , which in quarter 1 of 2021 had generated 9.5 billion BRL in revenues; at the end of that year, 4 hedge funds were tracked holding positions in the stock.
Inter Parfums Inc (IPAR) , in operation for the past 30 years, with an EPS OF 1.10$ this year, and after licensing the deal with Ferragamo. At the end of the first quarter of 2021, there were 9 hedge funds holding positions in the stock.
Nu Skin Enterprises (NUS) . The popularity of skincare rose during the pandemic, right when people were not able to show off lipsticks and decided to take care of themselves at home. It has a P/E ratio of 17.16, and $2.22 EPS.
E.l.f. Beauty Inc (NYSE:ELF) : it is a recently new multinational makeup and skincare brand. Between 2020 and 2021, the ELF stock gained over 60% and even DA Davidson raised the price target on ELF stock. It currently has a P/E ratio of 81.81 and $0.53 EPS.
Ulta beauty (NASDAQ:ULTA) : it’s got 46 hedge fund holders, with a P/E ratio of 18.51, an EPS of $21.35 and an average volume of 884,553.
Short NULockup period expires 6/7/22. Shares down 50% since IPO. With neutral sentiment, I think we should expect to see some portion the locked up 289,150,555 shares being dumped. Not looking at huge gap down, average trading volume ~50mil, but I believe with recession scares and $NU not being able to report positive net income on their last couple of quarterly reports, investors will shy towards something more resilient
Good technical setup and long term investment oppurtunityXLF was down 1,3% on Friday, but NU kept its upward momentum from the previous days.
RSI and MACD look bullish.
In addition, the price ran into a weekly and a daily Pivot-point without any rejection.
It is safe to say that the stock tries to reverse.
The next resistance is at USD 5.
NU Overview 2022-02-15Being a volatile security Nubank seems to get on track to the bullish channel with begins in 28 of January when hits its minimum price in 6.49 as lowest and closing in 6.75.
However, it's needed that the raises it is necessary that the rise in assets be accompanied by an increase in volume. We need to see that behaviour in order to take a bullish position.
It's important to note that Nubank is new security and it'll have an erratic behavipour. Especially if we take in account that the company have an negative net margin, earning per share and ebitda.
NU Update 2022-02-24Nubank NYSE:NU remains in the channel plotted in the analysis of the day 2022-02-15. Despite the fact that in the middle we have the announcement of some purchases by NYSE:BRK.A , the earnings report and the Russian invasion to Ukrania.
We need to wait to see what happens in this new pivot and see the evolution of the volume, especially in the critic's moments: When the price is near the channels lines. Rhere are some uncertainties in this new stage. You can see this in the yellow line.
NU Overview 2022-02-17Today Nubank ( $NU ) broke the channel top line in 10.02. And closed above it in 10.09. It's a good signal because it means that this channel is broken, and we extend the baseline of the triangle, we can establish a target goal of +4.22 U$S. It means a gain of 42% Approx.
However, it's necessary to have a confirmation in the successive days. Besides that, it's essential to notice that in 22-February will come to the Earning review for the company. So, this event will affect in one or another direction the asset.
Today we have, maybe, a good signal: channel broken with a good volume. But, we need confirmation and take into account the caveat of the important event for the company: the earning review.
Therefore, despite the euphoric power of investors and similar to the overview signed in February 15. Its important to remains neutral in the observation of the tendency.
NU Overview 2022-02-18Continuing yesterday's overview about NYSE:NU Today we need to notice two important events.
1. Today we have the most volatile day in its history. Prices have a range of 2.08$ which means near 18% of intraday volatility
2. At the end of the day the security finish below the channel line (9.99). But Still persist the indecision pattern in the rectangle zone.
The short body of the candle means that exist indecision for the market but there is a bullish bias taking into account the two full body bars in the bullish days vs the little one in the short days.
it is still needed a confirmation to be sure about the target to found in: 14.21 said in the overview of: 2022-02-17
NU IDEA 2AFTER NUBANK REACHING TARGETS WE WAIT FOR THE NEXT PULLBACK
Adjust Stop
10.69
SUPPORTS 22/03/08
10.70
10.39
10.00
9.50
TARGETS 22/04/06
11.30
12.08
12.88
13.80
Just an analysis for study.
This review is not a purchase recommendation.
Always set STOP in order to limit losses.
Respect your strategy!!!
Risk Management: As always, we should use rational position sizing. This means that we should only invest an amount that is appropriate for an individual investor, given their portfolio size and risk tolerance. A rational position size is something each individual investor will need to determine. And remember, never go “all-in” on any investment.
NU IDEANUBANK BROKE DOWNSTREAM ON THE DAILY CHART
Next targets
8.24
8.67
9.03
Adjust Stop
7.5
Just an analysis for study.
This review is not a purchase recommendation.
Always set STOP in order to limit losses.
Respect your strategy!!!
Risk Management: As always, we should use rational position sizing. This means that we should only invest an amount that is appropriate for an individual investor, given their portfolio size and risk tolerance. A rational position size is something each individual investor will need to determine. And remember, never go “all-in” on any investment.