The 2016 Rio de Janeiro Games is starting now and the opening ceremony is just a few hours away today. So I will be brief. I'm sure many friends are wondering what will be the good trades for one of the most important sport events in the world. I have 2 for you to consider:
The Olympic Games is no doubt one of the world's biggest, richest media events you can find. As such, media companies are the natural choices for such a most watched game. Comcast Corp. (CMCSA) is one of them to consider. It made $41 billion from the 2012 Sochi Winter Games with 80% of its profits from ad sales. Aside
from acquiring a 51% majority ownership of NBCUniversal in
2011, Comcast has been aggressively enhancing its technology and marketing to increase its high-speed Internet
subscriptions, from which to further boost its sales and revenue. The most important catalyst to position it well for the Olympic Games is its latest technology, the X1 Entertainment Operating System, which
provides subscribers with a unique interactive TV experience together
with a voice-controlled remote. It appears this strategy can keep people tuned in
for everything they could possibly want. Per the recent report by TheStreet, Comcast has already installed approximately 40,000 of these X1 boxes a day. This could be further pushed up during the Olympic Games (OG) in the next 2 months. Technically, it has already broken out its all time high, a very bullish move. I bet the OG may turn out to be a great booster for Camcast's businesses!
The second idea is the ETF for Brazil (EWZ), the hosting country for the Olympic Games. But this is not a long trade but instead a short trade. Call me crazy but I think EWZ is likely peaking with the start of the Olympics. EWZ has been rip-roaring in the past 6 months or so and has almost doubled since its Feb low. But if history is of any guide, EWZ may go down substantially from here either immediately after the start of the Olympics or soon after the end of the games. You see, we had seen something very similar last time when Brazil hosted the FIFA World Cup for soccer. It went up to all time high with a 25% jump a few months heading into the start of the World Cup and then lost nearly 40% of its gain within a few months after the World Cup. I bet we will likely see something similar this time. Its technical is sending a bearish signal as well: a negative divergence is forming when it is breaking out its recent high in April. Its MACD is turning down now. We are probably witnessing a "buy the rumor and sell the news" type of setup for EWZ.
Let's see if my two bets will turn out to be profitable along with the exciting start of this year's Olympic Games!
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