Layoffs Surge, FTX Implodes, and Market Pops after CPI Print

Nov 13, 2022 | Swing-heavy week as markets traded up on CPI print and Crypto crashed due to FTX sell-off.

FTX Files for Bankruptcy 

Sam Bankman-Fried’s cryptocurrency exchange FTX has recently filed for Chapter 11 bankruptcy. As part of the announcement from FTX, Bankman-Fried, the company's CEO has announced he will also be stepping down. The SEC estimates approximately 130 additional affiliated companies will be included as part of the proceedings. 

In their 23 page bankruptcy report, FTX indicated it has more than 100,000 creditors at current. With assets that range anywhere from $10 billion to $50 billion. FTX was considered one of the larger crypto exchanges before things went south. In just a few days, FTX went from a $32 billion valuation to bankruptcy as liquidity quickly dried up. Customers demanded withdrawals as rival exchange Binance attempted to buy FTX for pennies on the dollar.   

Additionally, GameStop is winding down its partnership with FTX as investors look to sever ties. Under the agreement, announced in September, GameStop had been selling FTX gift cards in select stores. Conversely, FTX had also run advertisements and promotions on its platform. 

The shuttering of several other business ventures like the one with GameStop are likely to accelerate after the recent bankruptcy filing. 

Big Tech Continues to Layoff Staff

With crypto crashing, uncertainty from companies like Twitter, and some of the largest companies in the world slashing their workforce, the tech industry is in a precarious spot at the moment. With many investors stoking invoking fears of the dot-com bubble crash 20 years ago. 

Massive Layoffs 

It’s estimated that over 20,000 employees within Silicon Valley were laid off just last week.  This comes after numerous companies like Amazon, Microsoft, Google and Meta have all announced they would be looking to slow down their hiring, while others have even begun implementing a hiring freeze.. Amazon as an example,  blamed their oversaturated workforce on the pandemic, and the hiring frenzy it helped launch. 

Twitter, Meta, Stripe, Salesforce, Lyft and several others, are among a growing list of companies who have laid off at least 10% of their workforce. That means tens of thousands of engineers, sales people and support staff, for some of the largest companies in the world are now all without jobs. 

These massive departures within Silicon Valley are adding fuel to the fire that the bull market of the past decade may be coming to an end.. We may need to start envisioning a stock market that is once again built on earnings and fundamentals, and not based around ‘growth potential’.

There are a growing list of reasons why hiring has been slowing with the big tech space:

  1. Overzealous tech companies who hired too many engineers during the early-stages of the pandemic
  2. Slowdown of eCommerce spending and activities 
  3. Eagerness for people to get back to in-person events 

What it Means: Big tech has been one of the most dominant sectors of the stock market for years. But after a once in a lifetime global pandemic, you have to wonder if the FAANG stocks will ever be as hot as they were during the height of COVID.

As the world continued to rapidly digitize, some of the largest tech companies in the world went on hiring sprees. But now, as the world gets back to normal, many of those same companies are no longer able to maintain their current workforce. Add in 2 years of soaring inflation, and it’s left big tech looking for ways to cut costs, and unfortunately, they’re using layoffs to affect their bottom line. 

Weekly Swing Trades

Stock 2

December 18, 2022

Entry Price:

74.20

Stop Price:

72.65

Target Price:

77.20

Time Frame:

3 Week Hold

Caught a key support level last week. Monitor your 5 & 9 day moving average to ensure we don't lose momentum for this swing trade. Full info for our premium members.

Stock 1

December 18, 2022

Entry Price:

118.09

Stop Price:

114.24

Target Price:

125.08

Time Frame:

4 Week Hold

Classic moving average play here, looking for support off the 50 day MA. Closing last week, there was a slight uptick. If momentum holds, should make for a nice swing trade. Full info for our premium members.

Hydrogen Power Plants Open in Europe

We’ve extensively discussed the effects the war is having across Europe in previous newsletters. But as more and more countries begin to look outside of Russia for their energy needs, we are now experiencing an unprecedented energy crisis within Europe. 

This coincides with the first network of hydrogen power plants, set to be released across Europe next month. With gas prices still well above their historical averages, this may be a great opportunity for hydrogen to finally take off. Not only will these hydrogen plants help produce clean energy, they will also offer tons of carbon credits, similarly to Tesla. 

Here in the United States, hydrogen has the potential to play a huge role in the nation’s transition to clean energy. The U.S. Department of Energy has recently invested billions to scale up production of clean hydrogen. The United States plans to roll out six to ten clean hydrogen hubs across the nation. 

With energy costs still at a premium, and with the ongoing war in Russia, now might be the perfect time for hydrogen to look into disrupting the energy sector. 

Upcoming Economic Reports

Market Performance- Week of 12.18.2022

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Weekly Watchlists

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Weekly Review

Market Performance- Week of 12.18.2022

Recent Winners

BLDR (Builders Firstsource)

BLDR (Builders Firstsource)

Entry Price:

62.30

December 18, 2022

Price at High:

70.00

Return for Members:

11.00%

Timeline:

3 Week Hold

Simple moving average play here. Anticipating a 3-4 week swing trade as momentum has been growing for a move up.

EVI (EVI Industries)

EVI (EVI Industries)

Entry Price:

18.11

December 11, 2022

Price at High:

26.92

Return for Members:

48.64%

Timeline:

3 Week Hold

We're tracking EVI on its 4-hour chart, specifically looking at the 50MA as a level of support. If we can bounce, there is enough momentum for a quick swing trade.

FMC (FMC Corp.)

FMC (FMC Corp.)

Entry Price:

128.14

December 4, 2022

Price at High:

134.38

Return for Members:

4.90%

Timeline:

1 Week Hold

FMC has been on a bull run over the last month. As Swing Traders, we'll look to take advantage of the momentum and get in for a quick trade. Wait for a brief pull-back before entering.

Recent Watchlist Winners

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