The Dollar Slides

Aug 01, 2021 | Can Swing Traders make a profit off the US Dollar?

Weekly Newsletter- Week of 8.01.2021

US Dollar Has Worst Week in Two Months 

The US dollar hit a two-month low after the Federal Reserve stated the US job market “still has some ground left to cover” before they could begin easing monetary stimulus. The dollar index, which measures the strength of the US dollar against six    other foreign currencies, was down 0.38%. The dollar index is still up 1.6% since the Fed’s June meeting. GDP has increased at a rate of 6.5% over the last quarter- this figure still falls below economist estimates as predications expected an increase of over 8%. Additionally, Treasury yields have been slowly increasing (a potential warning sign of continued pressure on the US dollar). The dollar ended the week slightly up after early losses, mostly as investors look for a safe haven to park their money. With the delta variant becoming a greater concern and additional regulations mounting in China, the dollar is a very good proxy for overall sentiment. 

Amazon Sinks Markets 

Amazon reported earnings this week and despite another blowout quarter, which was fueled by at-home spending, it dropped an incredible 7.5% just on Friday! With such a large market cap, Amazon’s drop was a key reason the S&P 500 traced back 0.6%. The massive selloff ensued despite Amazon shattering Earnings-Per-Share (EPS) projections. So why the selloff? Amazon noted they expect a slowdown in online sales for the coming quarter. As restrictions presumably continue to lift, this may lead to consumers shopping in person vs online shopping. Despite a 44% increase in sales for Q1, Q2 may only rise 16%. Consumers have also begun shifting their disposable income from online shopping to restaurants, travel, and events.

Additionally, the European Union hit Amazon with a record $866M fine for violating the bloc’s privacy laws when handling personal data during transactions. This was the first earnings report since former CEO Jeff Bezos stepped down to focus on BlueOrigin and space tourism. The new CEO, Andy Jassy, clearly has his work cut out for him over the coming months.

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.

Chip Shortage Worsens 

Mega-cap and tech-giant Apple also reported earnings this week. And once again, another blowout quarter from Apple. Revenue soared 36% year over year, while iPhone sales alone exploded by 50%. Despite the massive earnings beat, Apple shares are down nearly 2% this week. Why the drop? The chip shortage isn’t going anywhere anytime soon. During their earnings call, Apple CEO Time Cook noted “We are seeing shortages, where demand is so great and beyond our own projections that it’s difficult to get our own parts.” Translation, Apple is having a hard time getting the chips it needs for its wide library of products. Stemming from the shortage, Apple has had to prioritize which phone and iPad models will get their microchips first. The chip shortage has forced companies like Apple to stock up and buy as many chips as they can because there's just no telling when this will subside. Apple is walking a tight rope where they must determine which chips should be prioritized? Their most popular? The most expensive? The cheapest model? 

What about the Chip Makers? 

5G chipmaker AMD just had its best quarter ever! Why? Limited supply means they get to control costs. During their conference call, AMD noted they have had to ration their supply and focus on the most strategic segments of the market. In other words, what chips will make AMD the most money, and what chips are needed the most. As we have noted in the past, consumers should always be mindful of increased production costs. When it costs more to make something, it will cost more to buy something. As the chip shortage continues to cause massive production issues, we expect a shift in manufacturing over the next several quarters and years. Companies like Apple won't allow themselves to have such a heavy reliance on another company for its products. Apple has already started laying out plans to develop their own chips in-house. 

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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