September Slums

Sep 12, 2021 | Is September the best month to Swing Trade?

Weekly Newsletter- Week of 9.12.2021 

History Points to Another September Selloff 

Investors are always looking for indicators that may provide clues into a stock’s future price action and looking at historical information can be a great data point. And if history is any indication, September could be another rough month for stocks! The DOW dropped more than 270 points to end the week, signaling its fifth straight loss. Both the S&P and the Nasdaq each shed recent gains and ended the week down nearly 2% each respectfully. As we take a closer look at the charts, it appears the September’s recent selloff may continue. Historically, September has always been a rough month for stocks, with Sept 17th symbolizing the optimal sell point for equities. It appears investors may be preparing for extended selling as September has historically been the weakest month for stocks looking as far back as 1945. 

What’s Driving the Selloff? 

1. Supply Chain Woes Continue: Last week several homebuilders reported earnings and presented underwhelming guidance for the upcoming quarter. Key materials needed for homebuilding continue to spike in price as resources are limited. Demand remains high, but these issues are depressing overall home sales. 

2. The Fed: We’ve talked extensively about the Fed and how Powell is managing inflation. Though we continue to hear inflation is only ‘transitory’ pricing pressure remains which continues to influence stocks. 

3. Congress: Though the additional bonuses previously added to unemployment checks have now ended, an additional aid package is currently being passed through congress. This time, Democrats are looking to pass $3.5T in aid aimed at providing additional support to childcare, education, health care, and climate change just to name a few. This bill is being called 'the reconciliation package’, and with that level of potential spending coming down the pipe, investors are anxiously watching government spending. 

4. Concerns Abroad: We reported extensively last week on the trouble with investing abroad especially in Chinese stocks. It seems we are forced to regularly report on Chinese equities and regulatory concerns as it appears the rules are constantly changing. China continues to send rippling effects across US stocks. 

Despite all the positive sentiment within the markets as of late, it seems like September may continue to be a rocky month. After a huge August, equities were due for a pullback. The markets are forward-looking as this may represent potential buying opportunities    as stocks take a breather. 

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.

Courts Hand Apple a Big 'L'

A new ruling by a federal judge just handed Apple their biggest setback in quite some time. The new decision from the courts has determined that the company's App Store policies are considered "anti-competitive", which sent the stock tumbling down. When a company has been ruled as anti competitive, it means the government has found them guilty of reducing competition in the market. When you hear stories surrounding Apple, Amazon, Facebook, or Microsoft needing to testify on the hill, it's often due to competition concerns. 

The issue occurs when fear rises that one company is becoming too big. In the case of Apple, they were recently sued by Epic Games (developers of widely popular videogame “Fortnite”) for restrictions put in place for developers to use the Apple App Store platform. The violation occurred when Epic Games noted a 30% commission tax that Apple implores to use its app store. The courts ruled "Apple is engaging in anticompetitive conduct under California competition laws. Apple stock dropped nearly 4% after the ruling. 

Bitcoin Can’t Hold $50K 

Cryptocurrency has been on a tear as of late! Bitcoin briefly touched over $50,000 last week, capping a monthly gain of nearly 20%. Though the digital asset has shed those heavy gains and currently sits just over $45,000. The entire crypto market had been pushing higher as Ethereum nearly $4,000, a key level of resistance for that asset. Despite the recent pullback, it’s obvious cryptocurrency is once again viewed favorably by the markets. Bitcoin confidence appears to have been renewed as investors are looking to see if/when the asset can once again touch its all-time highs over $60K!

Upcoming Economic Reports

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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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