Better Buy: Mega Millions or Stocks?
Friday’s sluggish market action gave traders plenty to think about over the weekend.
The Dow Jones Industrial Average was the only major index to close in the green on Friday, capping off another disappointing week for stocks. Dip buyers were AWOL once again and failed to gain any traction off Tuesday’s strong bounce. As we kick off the new trading week, the averages continue to look vulnerable. A test of the October lows is in play this week if buyers don’t step up to the plate.
But we’re seeing a few glimmers of hope shining through the gloom and doom this morning…
First, beaten-down Chinese stocks enjoy their second-straight days of gains.
The Shanghai Composite is building on Friday’s comeback rally with a gain of more than 4% today.
Remember, the Shanghai has remained locked in a nasty downtrend since the winter correction echoed across global markets. Just last week, the sagging Shanghai posted its lowest close since 2014. It was down as much as 25% year-to-date.
A meaningful bounce from these levels would not only help relieve some of the pressure on emerging markets — it could also ease fears of resilient U.S. stocks getting sucked into oblivion as world markets fall apart.
Meanwhile, Mega Millions mania is spreading.
The lotto jackpot has jumped to an all-time high of $1.6 billion following Friday’s drawing that failed to find a winner.
“The jackpot has been growing since July, when the $543 million jackpot was won by a California office pool,” MarketWatch reports. “The new total would rank as the largest Mega Millions jackpot ever, well ahead of the $656 million pot won on March 30, 2012 and shared by three winning tickets.”
Of course, the lottery remains an excellent method of extracting tax revenue from folks who are bad at math. The odds of winning Tuesday’s drawing are about 1 in 303 million.
But I still contend that forking over a few bucks for a Mega Millions ticket is a better investment than buying shares of social media also-ran Snap Inc. (NYSE:SNAP).
Sticking with social media, Facebook Inc. (NASDAQ:FB) is slicing through the earnings season noise this morning.
Rumors are swirling following a report claiming Facebook is looking to buy a major cybersecurity firm. Zuckerberg & Co. have approached several companies with the hopes of closing a deal by the end of the year, The Information reports.
On Friday, we discussed how it’s time for Zuck to put up or shut up as Facebook stock slides. The mishandling of serious data breaches has eroded the public’s trust and led to activist investors demanding Zuckerberg vacate his chair (remember, Zuck is Facebook chairman and CEO). Making a serious play at a cybersecurity company is a smart move that could help the company salvage its image — and avoid another disastrous breach.
Speaking of disasters, the Facebook news might help prop up our own ailing cybersecurity plays.
Cybersecurity stocks have taken a beating during the October market swoon. The PureFunds ISE Cyber Security ETF (NYSE:HACK) has dropped as much as 12% this month. It’s lagging the tech sector and remains below its summer lows heading into the new trading week.
It had been a wild comeback ride for many of these cybersecurity stocks this year. We’ll need to see longer-term support hold and hard-hit names like Palo Alto Networks (NYSE: PANW) regain their footing if we’re going to remain bullish on the sector.
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