eyeQ: this bearish signal is a tactical opportunity
Experts at eyeQ use AI and their own smart machine to analyse macro conditions and generate actionable trading signals. Now, there’s a chance to repeat a successful trade.
15th October 2024 10:19
Huw Roberts from eyeQ
"Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance." eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
PayPal
Macro Relevance: 70%
Model Value: $71.06
Fair Value Gap: +11.91% premium to model value
Data correct as at 15 October 2024. Please click glossary for explanation of terms. Long-term strategic model.
The eyeQ smart machine has fired a bearish signal on PayPal Holdings Inc (NASDAQ:PYPL) which sits nearly 12% rich versus aggregate macro conditions on our model.
The stock has had a great run, rallying around 40% over the summer. Macro conditions had supported this move – model value was also rising between June and September. But, in October, macro momentum has shifted lower.
eyeQ model value has fallen 3.4% this month, mainly because PayPal wants a weak dollar and falling inflation. Both have risen of late. The result is a bearish divergence pattern with the last bit of this PYPL rally not backed up by macro fundamentals.
This is a tactical opportunity for the more active investor. It is not a long-term bear call on the company fundamentals; rather that the macro environment has shifted in a less friendly direction.
Remember, on 12 June the smart machine fired a bearish signal. That was a good tactical signal - the stock fell around 10% into month-end, spent a month languishing at the lows before the recent rally started.
It won’t suit everyone but, for the nimble, the macro picture suggests risk-reward is skewed to the downside from here.
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