Markets Plunge on COVID Fears

Jul 25, 2021 | Swing Traders played COVID variants and other at-home plays

Weekly Newsletter- Week of 7.25.2021

Covid Fears Cause More FUD 

With fears of a second wave of infections growing (thanks to the rising threat of the Delta Variant) we saw the market directly react to Covid for the first time in several weeks. Despite ending the week higher, the markets opened this week with heavy red. In fact, Monday represented the largest one-day loss for the stock market in several months. Fear is rising as new restrictions are once again being considered, and implemented, worldwide. Most notably, parts of Asia and Australia are once again implementing new guidelines to help slow the rise in Covid cases. These restrictions have become more prevalent, most notably at the Olympics, where Japan is struggling to fend off another wave from the virus. 

The NASDAQ and the S&P 500 each suffered their worst two-day stretch in nearly three months. Market losses were felt around the globe as London dropped their major indexes by 2.6%, while Germany shredded 2.5% from their overall markets, and France contributed a 3% loss of their own. Despite most indexes recovering those early-week losses by week's end, uncertainty is certainly growing within the stock market. It’s not just overseas where restrictions are once again being considered. Right here in the states, California is once again implementing mask orders- this comes after removing their previous restrictions just last month. Any major changes overseas are sure to affect stocks in the US. Remember, the market is forward-thinking, and any unforeseen issues may be seen as a new threat for stocks. Investors may once again start flocking to stocks that benefit from a more virtual environment. For example, digital signature behemoth Docusign has jumped 13% just this month. 

New Homes Begin to Hit the Market 

After four straight months of declines, sales of previously owned homes rose 1.4% in June. We've previously reported that limited inventory has been driving home prices sky-high. The number of available homes ticked slightly higher last month, now showing 1.25M available homes. This translates to a 2.6 month supply of housing inventory. Additionally, it appears the rising prices have finally started to dwindle demand. We saw a slight decrease in those looking for housing last month- any demand decreases are expected to reflect positively on home prices. Home sales are still significantly higher than they were at this time last year. June represented a 22% year-over-year increase in home sales as the stay-at-home economy continues to give workers opportunities to choose where they want to live. June also represented a new high for the average price of a new home. The national average for a new home now sits at 363K. This is 23% higher than just one year ago! Despite rising prices, more available homes should help alleviate some pressure off the high home price- last week there was a 9% spike in home listings. 

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.

Bitcoin Looks to Reestablish Support 

Bitcoin briefly dipped below $30,000, a key support line for the cryptocurrency recently. Despite the significant drop, BTC is currently trading back above $34K. With that said, we might not be out of the thick of it yet. BTC continues to tread water as we saw a 9-month low in trading volume. We'd previously reported that many of the traders selling BTC during its recent decline were newer crypto investors, and thus maybe not as willing to stomach the highly volatile asset. Recent options activity shows many of the market's biggest whales may have their doubts about BTC pushing new highs anytime soon. BTC has been trading much lower since breaking through $60,000 back in April.

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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