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Futures dip in return from break
The market is aiming lower in early trading, but a blockbuster credit card merger is creating a premarket buzz.
Chris Dinello
February 20, 2024
Good Morning!
It's Chris from Elite Trade Club, here to give you this morning's premarket trading news.
Welcome back from the President’s Day holiday. I hope you enjoyed the break.
Now, let's get ready to trade!
Markets 📈
The market turned south before entering the three-day break. The Nasdaq was the day’s biggest loser, while small-caps outperformed with a flat session.
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S&P 500 futures contracts are pointing lower in early trading. S&P 500 contracts are currently down by 0.3%.
What to Watch Today:
It’s a big day for Big Box retailers. Today, we’ll kick off the trading week with reports from Walmart and Home Depot ahead of today’s opening bell. After the close, a quarterly report from International Flavors & Fragrances could also be worth keeping an eye on.
They said a 96% win rate with our 'Daily Paycheck' options system was controversial.
We said, 'Challenge accepted.'
Now, the naysayers are as silent as a hedge fund manager after a market crash.
This system is so easy and so accurate, you'd think we had a crystal ball. (Spoiler alert: We don’t. It's just a really, really good strategy.)
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Premarket Highlights 🔎
🔍 Capital One's Blockbuster Deal: Is It a Game Changer?
🚀 The $35 Billion Question
Capital One's [COF] whopping $35 billion acquisition of Discover Financial Services [DFS] could redefine the credit-card landscape. But, investors and market watchers alike are left pondering a critical question: Can this newly-formed consumer credit card titan outshine the broader market's performance?
📈 Comparing Track Records
Over the past three years, Capital One and Discover have shown commendable growth, outpacing their peers within the financial sector with returns of almost 15% and over 17% respectively.
This is in stark contrast to the 1.8% dip seen in the Dow Jones U.S. Banks index. Yet, when pitted against the broader S&P 500’s surge of more than 28%, their achievements seem to dim.
🎯 Strategic Synergies
The merger isn't just a consolidation move; it's a strategic play aimed at capitalizing on the burgeoning credit card market.
With an eye on the future, Capital One is betting big on the shift towards digital payments and the allure of rich rewards programs to propel the merged entity's profitability and share value skyward.
💳 Debt Dynamics
An uptick in credit card usage, coupled with rising consumer debt levels amidst escalating prices and dwindling savings, underscores the potential for this merger to thrive. However, mergers of somewhat equal companies are no guarantee of success.
🏦 A New Financial Giant
With the merger, the combined entity is set to rank as the sixth-largest bank in the U.S., boasting assets close to $625 billion.
This positions them as a formidable force in the banking world, yet still a considerable distance from JPMorgan Chase’s [JPM] towering $3.4 trillion asset base.
🤔 The Verdict?
As the financial world watches closely, the success of this mega-merger hinges on its ability to navigate the complex dynamics of consumer finance and regulatory landscapes.
Will this be a masterstroke for Capital One and Discover, or will the challenges of scaling new heights prove too steep? Only time will tell.
Featured Earnings 💰️
Walmart [WMTD] ... AM
Home Depot [HD] ... AM
Medtronic [MDT] ... AM
Palo Alto Networks [PANW] ... PM
Public Storage [PSA] ... PM
Realty Income [O] ... PM
CoStar [CSGP] ... PM
Diamondback Energy [FANG] ... PM
Keysight Technologies [KEYS] ... PM
[IFF] ... PM
Economy 🏗
U.S. leading economic indicators [Jan] ... 10:00a
Running Hot 🔥
Gainers
Trxade Group [MEDS] >> +372.9%
Shineco [SISI] >> +75.5%
D Wave Quantum [QBTS] >> +33.5%
Decliners
Cooper [COO] >> (74.4%)
Semilux [SELX] >> (60.2%)
Universe Pharma [UPC] >> (26.8%)
Discover Financial [DFS] - Last Close: $110.49
In a massive deal, Discover has agreed to be acquired by Capital One [COF] in an all-stock deal worth $35.3 billion.
Discover shareholders will receive 1.0192 shares of COF stock for each share they own upon closing, representing a 27% premium to DFS’s Friday close.
The companies hope to close in late 2024 or 2025, pending approval from regulators & shareholders.
DFS is leading the S&P 500 with a 14.3% gain on more than 600K shares traded.
My Take: If you own DFS shares, you should decide if you want to be invested in Capital One. If the answer is no, take the profits and call it a day.
SciSparc [SPRC] - Last Close: $3.48
Clearmind Medicine [CMND] has submitted three international patent applications for psychedelic compounds under its collaboration with SciSparc.
According to a premarket press release, the applications refer to novel proprietary combinations of LSD, DMT, and Palmitoylethanolamide.
These applications were previously filed by Clearmind as provisional patent applications with the United States Patent and Trademark Office.
"We are pleased to continue our ongoing collaboration with Clearmind by expanding the intellectual property portfolio," said SciSparc CEO Oz Adler.
SPRC is up 93.4% on more than 5 million shares traded, and CMND is up 39.6% with more than 7.5 million shares changing hands.
My Take:SPRC and CMND could get another boost from this story when these patents are approved, so it could be worth keeping an eye on these two tiny micro-caps.
AgriFORCE Growing [AGRI] - Last Close: $0.2140
After Friday’s close, this tiny AgTech stock announced it had been awarded a new patent from the U.S. Patent & Trademark Office.
The patent is titled, “Structures for Growing Plants (To Generate Micro-Environment Conditions)” and it related to the company’s FORCEGH+ Facilities.
AGRI is the top stock in today’s premarket, with a 214.8% gain on over 40 million shares traded.
My Take: AGRI has been volatile lately, so watch for a sudden pullback in if you’re going to trade this one.
Tevogen Bio [TVGN] - Last Close: $9.51
This micro-cap biotech stock is running hot after making its NASDAQ-NMS debut last week.
Tevogen Bio hit the market on Feb. 15th after closing a SPAC merger with Semper Paratus Acquisition.
The company says going public will help it speed up development of its COVID-19 therapy, TVGN 489.
TVGN is up 72.5% in early premarket trading.
My Take: There’s not a lot of volume behind TVGN’s rally, so we could see substantial volatility in this stock today.
That's it for today! Thanks for reading, and good luck out there!
Best Regards,
— Chris D.
Elite Trade Club
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