Santa Brings More Red

Dec 19, 2021 | Can swing traders profit in a high volatility environment?

Weekly Newsletter- Week of 12.19.2021

Is a "Santa Clause" Rally Coming?

December trading has been riddled with high volatility as the VIX volatility index spiked over 25% this month. The major indexes have all struggled- the DOW and S&P are each down nearly 2% this month. No index has been hit harder than the tech-heavy Nasdaq, which has seen significant losses of nearly 5%.

Santa a Rally Imminent?

As we look to close out 2021, we should be aware that trading volume will be compressed over these final sessions. Thin volume can lead to increased volatility. While investors are hoping for another annual Santa Claus rally from stocks, we need to be aware that a lack of volume can also lead to dramatic swings downward as well. Though December has historically been a bullish month for stocks, the "Santa Claus Rally" relates to the final trading days of December, into the first days of January. Though, if we don't see positive action to open the week, the Bears may come out and the selling may once again pick up as we close out the year.

Looking Ahead

As earnings season wraps up, there will be plenty of fresh economic data to drive market sentiment over the coming weeks. The personal consumption index comes out this week which helps track overall spending. We also have the PCE Deflator, which is another key inflation report closely watched by the Fed. This report will be especially critical to overall market sentiment after November gave us a massive 7% year-over-year increase in inflation. The consumer confidence index will also be released next week. This monthly report tracks overall business and market conditions while detailing consumer attitudes for topics such as inflation, interest rates, and stock prices. We also will receive some    key data regarding real estate numbers. On Wednesday, we’ll gain insight into existing home sales, and Thursday will highlight new home sales.

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.

Spider-Man Carrying AMC this Christmas

It’s no surprise that movie theater sales have been slumping throughout the entire pandemic. We’ve reported in the past about how Disney pivoted to a hybrid model that allowed for new movies to be released at home and in theaters concurrently. This has caused a lot of strife within Hollywood, as theatrical releases are still viewed as significantly more lucrative than an at-home movie release. Last week saw the release of Spider-Man: No Way Home. The third release in the latest Spidey trilogy, but also arguably the biggest movie to be released since Covid hit.

Analysts were watching closely as this was expected to be the biggest test for movie theater sentiment since Covid. In surprising news, Spider-Man absolutely crushed its opening weekend ticket sales. The latest superhero adventure is the first pandemic movie to garner over $100M in opening weekend revenue. It did so while bringing in over $250M. For context, the latest Venom movie generated $90M in its opening weekend and this was seen as a massive success. In only three days, Spider-Man: No Way Home has become the highest-grossing film of this year OR last year! The massive opening helped reignite another meme stack rally.

AMC Rockets Again

AMC shares exploded on Friday, jumping 20% as early numbers for the Spider- Man release began to trickle out. The cinema chain announced its largest December night opening, with over 1.2M Americans paying to see the new film on opening night. This was the highest number of people attending a movie in nearly 2 years. This helped fuel a jump in AMC shares as short interest continues to stay inflated for the popular ‘meme stock.’ AMC has also been making additional headlines lately over its expansion into NFTs. GameStop, another frequently noted meme stock also ended the week with a win. Shares closed over 8% higher on Friday. Both stocks have seen monumental gains in the last calendar year.

Musk Losses 20 Billion

With the market continuing to display violent swings in price action, Elon Musk, the world’s richest man has certainly been feeling the effects. The CEO of Tesla saw his Tesla shares drop by nearly 10% last week. And they’re down 15% for the month. With all the increased selling, Musk's estimated worth dropped by another $20B this week alone. It was an interesting week for Musk as he was also named "Person of the Year" by Time magazine. After receiving criticism from Senator Warren, Musk went on to claim he would pay more taxes this year than any American in history. Forbes estimates the billionaire mogul to owe roughly $8.3B in taxes this year. Musk has continued to sell Tesla shares, as he recently unloaded another 1.9M in shares. He noted he will also be selling upwards of 10% of his total equity in Tesla. Since reaching a $1 Trillion market cap earlier this year, Tesla has seen its value plummet. Its valuation has now been trimmed by 24%, and Elon Musk's net worth has also dropped by 23%

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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