Black Friday's Selloff Continues

Dec 05, 2021 | Should Equities have a place in the Crypto market?

Weekly Newsletter- Week of 12.05.2021

Markets Get Hammered Again

Stocks once again bled red, as the markets took losses for the second straight week. The Nasdaq and the DOW are both eyeing massive losses of nearly 5% over the last month. While the S&P 500 is doing only slightly better, as it’s tracking for losses of almost 3%. The VIX volatility index, which measures overall market sentiment and implied volatility, has also spiked once again this week. The volatility index jumped almost 8% this week, but has risen an eye-popping 104% over the last month! The higher the VIX, the less likely stocks are to rise, and this pattern is once again holding true as uncertainty continues to depress stocks.

Tech Goes Down

As Covid and its latest variance continue to see-saw overall market sentiment, the FED looms large as we're all watching for any massive changes in fiscal policy. Tech continues to bear the brunt of the market selling and has been one of the hardest hit sectors during the latest selloff. Big names like Tesla, dropped nearly 7% last Friday alone. Pandemic-winning Zoom recently hit a 52-week low as shares continue to get hammered- it’s down over 35% in the last month and over 55% from its all-time highs. No tech name got clobbered harder this week than DocuSign, another former pandemic winner. DocuSign shares absolutely cratered after issuing slower than expected growth guidance for its next quarter. Shares dropped 45% this week alone!

Travel Stocks Plummet

It's no surprise, travel stocks were also some of the hardest hit this week. Just a couple of weeks ago, market sentiment was riding high while consumers were feeling great heading into a busy and profitable travel season. But then Omnicron hit, and the latest Covid variance put a quick halt to the market rally. As travel restrictions grow around the world, any stocks related to travel have taken a nosedive. Cruises, airlines, and hotels all took heavy losses this week, with cruise lines getting absolutely crushed in particular. Popular growth stocks like Airbnb were also unable to avoid the selling. Airbnb dropped over 4% this week as well.

Elsewhere in the Markets

Investors were also left to digest an underwhelming jobs report, as fewer jobs were created than originally anticipated. 210,000 new jobs were created, well
below analyst estimates of 573,000 new jobs.

We routinely report on the bearish sentiment of Chinese socks at the moment, and their negative outlook was only amplified this week. Chinese ride-sharing stock Didi announced it would be delisting from the NYSE, which led to another massive selloff in foreign stocks. Chinese stocks continue to pile up losses. For example, Alibaba shares are down over 30% in the last month. As we look ahead to next week we have to ask, has the selling been overdone? Proceed with caution when investing or trading this week!

Weekly Swing Trades

PNRG (Prime Energy)

October 2, 2022

Entry Price:

80.62

Stop Price:

76.85

Target Price:

88.04

Time Frame:

1 Week Hold

Expecting a short-term bump after a recent OPEC+ announcement regarding the a supply constraint to oil. The constraint would result in ~1M less barrels of oil per day, which should cause a price jump. Low RSI and bouncing off our 250 day moving average, both hallmarks of a good swing trade.

DV (Doubleverify)

October 2, 2022

Entry Price:

27.75

Stop Price:

26.75

Target Price:

29.00

Time Frame:

3 Week Hold

Using our moving averages heavily on this swing trade, look for continued strength as we try to notch out a 6-8% gain. Specifically, we are taking advantage of of a recent cross over in the 50 day moving average. Last week closed down, so wait for confirmation of a reversal.

Square Goes All-In on Crypto

This week, Jack Dorsey decided to relinquish one of his two CEO hats. Going forward, Mr. Dorsey will only be helming Square. He’s routinely noted his desire and passion for Bitcoin and cryptocurrency, and with this move, he is expected to focus solely on the advancement of crypto.

From Square to Block

In a move straight out of the Facebook / Meta playbook, Square will be completely rebranding their name going forward. Though they have changed names, Dorsey has stated their mission will not be altered. They’ve been positioning themselves to become an even larger player in the fintech and crypto ecosystem, and this move should only further cement their status. Square Crypto, a unit within Square has also rebranded as ‘Spiral’.

Will SpaceX Ever Blastoff?

This week, billionaire investor and philanthropist Elon Musk sent a frantic email to his SpaceX staff warning them of a growing bankruptcy and funding concern! Much like the previously mentioned Jack Dorsey, Elon Musk is the leader for two separate tech companies. We all know what he's done for Tesla, but he's also been leading one of the primetime players in the space exploration race. SpaceX is currently not publicly traded.

Musk’s Email

Over Thanksgiving weekend, SpaceX employees received a very unexpected email from Elon. He wanted to warn his company that SpaceX was at risk of going bankrupt if they can't rapidly increase production of its key engine 'the Raptor'. "Unfortunately, the Raptor production crisis is much worse than it seemed just a few weeks ago" he exclaimed. Though he noted bankruptcy was ‘unlikely’, he can still see a scenario where bankruptcy could become a reality. "If a severe global recession were to dry up available capital, while SpaceX was losing billions bankruptcy could be possible" he added.

Musk Sell Shares

This email comes at a tough time for Musk, as his flagship company Tesla continues to tread lower in the current Bear market. With fears of SpaceX's capital rise, Musk has been cashing in on Tesla shares. After putting a Twitter poll asking if he should sell more Tesla shares, he recently sold another 4.5M shares. This totaled over $5B for Musk. He’s now sold over 7M shares in the last several months. We’ll be watching for any additional SpaceX-related news. Though not publicly traded, the space tourism industry has been steadily growing entrance and competitors over the last 12 months.

Upcoming Economic Reports

Market Performance- Week of 09.25.2022

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Weekly Watchlists

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Weekly Review

Market Performance- Week of 09.25.2022

Recent Winners

SBUX (Starbucks)

SBUX (Starbucks)

Entry Price:

85.00

September 11, 2022

Price at High:

89.90

Return for Members:

5.76%

Timeline:

2 Month Hold

Strong momentum over the last few weeks. Watch for a mean reversion, but if moving averages stay consistent look for an early play to open the week.

PNRG (Prime Energy Resources)

PNRG (Prime Energy Resources)

Entry Price:

83.20

September 4, 2022

Price at High:

100.00

Return for Members:

20.19%

Timeline:

3 Week Hold

PNRG had a drawdown to historical levels of support (around the 100 day moving average). Looking to make an entry in the coming days as we also have macro tailwinds with the energy crisis in Europe.

PYPL (Paypal)

PYPL (Paypal)

Entry Price:

87.00

August 28, 2022

Price at High:

103.00

Return for Members:

18.39%

Timeline:

4 Week Hold

Playing off the dip in June, we're starting to see momentum as the 50MA is crossing over the long-term averages. Look to for momentum to continue and an early entry on Monday.

Recent Watchlist Winners

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