Dollar Weakness Gives Stocks a Rebound

Sep 11, 2022 | Stocks have a slight rebound as the dollar comes down, but what does it mean going forward?

Stocks Rebound As The Dollar Weakens

The dollar fell last week as stocks saw their best performance in weeks. This snaps a 3-week losing streak for all major indexes. Stocks took home gains as the U.S. dollar fell compared to most currencies last week.
These moves come ahead of another key report due out from the Fed that may highlight the size of the next rate hike. 

Weekly Performance
Stocks soared on Friday to end a positive week for the market. But were these gains simply a brief rally during a Bear Market? Or the start of a new Bull Market? The Dow ended higher, jumping 2.66% for the week, while the S&P 500 gained 3.65%. 

Meanwhile, the tech-heavy Nasdaq saw the biggest gains, jumping 4.14%. The technology sector continues to underperform the greater market. For the year, the Nasdaq is still down 20%. Digital signature provider DocuSign was one of the biggest winners on Friday after a positive earnings beat. The stock jumped over 10% for the day while dragging the Nasdaq higher as well. 

Friday’s rally also helped the S&P 500 reclaim its 50-day moving average (DMA). A potentially positive sign that stocks could be turning around. But stocks do face another key inflation report, due out this upcoming Tuesday. Looking ahead, if the S&P can hold down its 50 DMA, this would be another sign of positive momentum. 

Dollar Weakens

The U.S. Dollar also lost value last week. The Dollar Index has been slowly moving down after setting a record high back in May. Mainly because investors have become more fearful about slowing economic growth and a recession. All this, despite the positive news we’ve been receiving in the job and labor market. 

At the same time, treasury yields against U.S. government debt have also been dipping from their recent highs. This gives overseas investors less reason to buy dollars to be able to snap up debt. This could be good news for the stock market though, as the U.S. dollar is still up over 6% for the year due to inflation and wage growth, while the S&P is down over 10% for the year. 

It isn’t just a weaker dollar that could boost sentiment in the broader market though. Companies with sales in other currencies may also gain because that revenue converts into even more dollars as the greenback falls. 

What it Means: Stocks were hot all week, as the value of the dollar ticketed lower. With inflation at record levels, it's no surprise we’re seeing the dollar start to cool. But this could be yet another example of bad economic news, being good news for the stock market. We expect at least one more large rate hike from the Fed. With the S&P 500 beginning to form a strong support line, and with a key inflation report due out on Tuesday, we may finally have a positive outlook for the rest of the trading year. 

Amazon Closes Telehealth Services

Amazon has become the true definition of a monopoly over the last several years. With a product library that ranges from eCommerce, cloud services, groceries, telemedicine and so much more, it’s clear Amazon has become an increasingly diverse enterprise. Well, Amazon has recently decided to shutter one of those businesses, after announcing they would be closing all telehealth services after determining ‘that it wasn’t a complete enough offering for customers. 

Amazon Care

Amazon Care was one piece of Amazon’s strategy to upend the healthcare industry. This, alongside a library of pharmacy and consumer diagnostics endeavors. Interestingly, while Amazon care will be shuttering, they did outline a plan to further expand into broader healthcare. This includes another key acquisition on the horizon. For a company like Amazon to immediately make an impact in a new sector, acquisition can often be the quickest way to gain market share. 

Amazon Care was launched in 2019 as a pilot program for its employees. The service provides virtual urgent care visits, as well as free telehealth consultants and in-home visits from nurses. As Amazon closes its door on its virtual and telehealth care line, it’s expected that over 300 different roles within the company will be affected. 

What it Means: We’ve seen Amazon openly talk about plans to slow down future hiring, this in part to the large number of new employees they brought on board during the pandemic. But now, Amazon has been rapidly working to cut down its operating cost. In the second quarter alone, Amazon released 99,000 people. In another move to increase their bottom line, it now looks like they will be closing their telehealth operations. Telemedicine has become an increasingly popular sector after Covid launched the industry forward years.

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.

White House Calls for Crypto Mining Standards

The Office of Science and Technology Policy had called for a new initiative aimed to measure the energy impacts of crypto mining. As we’ve discussed in the past, mining Bitcoin requires a large amount of energy, which has been proven to have harmful effects on the planet. This executive order will become one of the earliest of its kind under current President Biden. The new effort asks for state and local officials to work with key government agencies to develop standards for the industry’s impact on the environment. It’s expected, several new legislative measures and laws will come out of this initiative. Many expect Congress is aiming to limit or eliminate the use of high energy and intensive mechanisms for crypto mining. 

What it Means: Regulating crypto has become an increasingly hot topic over the last couple of years. Now, we’re seeing one of the first executive orders being created, aimed solely to help regulate crypto and its environmental impacts on the planet. As crypto continues to gain more acceptance, the current administration now looks poised to prioritize the matter.

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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