Christmas Rally Pushes Stocks Green

Dec 26, 2021 | Airlines cancel the holiday season as COVID forces closures

Weekly Newsletter- Week of 12.26.2021

Santa Rally Punches S&P to New Highs

In last week's newsletter, we touched on the so-called "Santa Rally", which is categorized as an upswing in the stock market for the final week of December and into January. With all three major indexes tracking losses for December, investors were eager to see if history would repeat itself and propel stocks higher into 2022.

Stock End Higher

After a massive selloff for most of November and December, stocks roared back this week. All three major indexes pushed higher during the shortened trading week. The DOW and the S&P erased all their early December losses and are now tracking to end the month with another win. The tech-heavy Nasdaq is still down for the month, but futures have the index set to open the new trading week in the green. Despite the low trading volume associated with stocks during the holidays, securities gained across the board this week. Bank stocks soared higher this week, while tech favorites Microsoft and Nvidia pushed the technology sector to greener pastures. Additionally, as more information has come out regarding the Omicron variant, many investors began to feel as if the recent selloff was too overdone. With many stocks in the market operating at significantly lower market caps, especially in technology, there were a lot of positive factors working for stocks this week. The selling has also led to numerous opportunities for investors to ‘Buy the Dip’.

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.

Omicron Updates

Despite cases continuing to rise, new research has pointed to this variant being very transferrable, but less deadly. This new data has been viewed favorably by Wall Street, adding additional fuel to the Santa Rally. The Food and Drug Administration (FDA) also helped fuel positive market sentiment this week when they declared Omicron was less likely to result in hospitalizations. Additionally, the FDA also granted emergency use authorization for Pfizer's new Covidpill, the first oral antiviral drug developed to fight the disease. The FDA has also approved a new pill from Merck this week, which has helped fuel additional market sentiment.

Airline Forced to Cancel Christmas

More than 750 flights were canceled on Christmas day alone through airline providers such as Delta Air, United Airlines, JetBlue, and American Airlines. Cancellations are set to continue through Sunday, causing mass delays during the busiest time of year for travel. Countless horror stories of travelers being forced to spend Christmas alone in a hotel or airport have been trickling out all weekend long. Delta estimated they have had to cancel nearly 15% of Christmas flights. While United estimates they have canceled close to 12% of their Christmas travel. What's been driving the cancellations? Surging Omicron cases have been sighted as the major issue. Though the biggest reason for all of the cancellations has been all of the airline staff they have been unable to come to work, due to the new Covid variant.

Delta noted they’ve been seeing an increasing number of their staff members calling out sick, due to Omnicron. All of these flight cancellations come at a time where most airlines have been operating at their highest staffing levels since the pandemic began. JetBlue offered their sincerest apologies to travelers, before noting the issues may continue into the New Year. Despite being offered packages and amenities for their canceled flights, most travelers simply want to be with their loved ones during the holidays. Even rebooking later fights has done very little to calm the anxious nerves of holiday travelers. We’ll see how the market reacts to the shrinking number of flights.

Is Crypto Regulation on the Way in 2022?

U.S. Senator Cynthia Lummis (R-Wyoming) will be pitching a digital asset and policy bill for 2022 that will look to finally set some guidance for crypto. Ms. Lummis is one of the more bullish and outspoken supporters of Bitcoin and she is looking to establish clear guidelines for the entire cryptocurrency ecosystem. Lummis sits on the Senate Banking Committee and wants full normalization for all digital assets in the U.S. She will be looking to establish federal guidelines for stable coins, consumer protection and also updated tax guidance. She will also be proposing a new self-regulation watchdog committee.

This comes fresh off the back of numerous hearings that have taken place in Congress regarding cryptocurrencies as of late. Lumis’ bill will target one of Congresses biggest gripes, the idea that many securities laws are too murky to work with crypto. This could be a major bill for all of crypto in 2022. We’ll be monitoring any key updates or advancements.

Upcoming Economic Reports

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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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