Square Goes Crypto

Jul 18, 2021 | How should Swing Traders get exposure to Square?

Weekly Newsletter- Week of 7.18.2021


Square Continues to Expand DeFi Services 

Last week, Square CEO Jack Dorsey proclaimed the company will start producing their own hardware for a Bitcoin wallet. Dorsey released the following statement “We’ve decided to build a hardware wallet service to make Bitcoin custody more mainstream”. 

Crypto wallets are used to store private keys, which are used to key your crypto safe and accessible. Through crypto wallets, users can stay in control of their assets, instead of letting third parties like crypto exchanges handle the keys for them. Jack Dorsey has been a very public endorser of Bitcoin for quite some time. Recently, Bitcoin accounted for $3.51B in revenue through Square’s CashApp in the first quarter of the year. 

Now, Square is investing even further into cryptocurrency. Square will not start building a Decentralized Finance (DeFi) business, using Bitcoin. Dorsey released a statement on Thursday that said "We will be focused on building an open developer platform with the sole goal of making it easy to create non custodial, permissions, and decentralized financial services." 

For context, DeFi applications are those that don't rely on centralized authorities like banks, but instead, they use blockchain-based contracts to execute financial transactions. DeFi has become increasingly popular due to its potential for much higher yields than traditional banks, but like all of crypto, it comes with many risks. Square is positioning itself to become the bank of the future, we'll be reporting any other breaking news. 

Netflix Expanding into Videogames 

Netflix made big headlines this week when they announced they would be expanding beyond tv and movies! Netflix has hired former Electronic Arts executives to lead the new effort. Going forward, Netflix plans to start offering video games on its streaming platform within the year. As competition in the streaming wars continues to heat up, the move is seen as a form of differentiating from Netflix. 

Disney as an example has multiple forms of revenue outside of simply Disney +. They generate sales through theaters, cruises, theme parks, toys, and much more. The same can be said for Comcast, another growing competitor to Netflix. Netflix has had an amazing run for its shareholders but slowing growth on its platform has begun to spook investors. Netflix currently has 208 million global subscribers, but they only added 4 million in the last quarter. This number missed expectations and was also lower than Netflix’s own guidance. With slowing growth, many believe this might be the shot in the arm the streamlining giant needs.

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.

Inflation Keeps Climbing 

We've been highlighting the effects of inflation over the last several editions of our newsletter. Whether we like it or not, inflation continues to be a key driver for overall market sentiment. This week we learned the Consumer Price Index (CPI) had jumped over 5.5% from this time a year ago. This was the largest monthly gain since August of 2008. Used car sales continue to be one of the highest industries hit by inflation, accounting for nearly 1/3 of the overall jump. Investors are growing more fearful that this current period of inflation may stay with us much longer than anticipated. Much of the pressure on inflated prices has come from sectors hit the hardest by the pandemic. Industries like use cars, airfare, and transportation costs continue to be the most affected by the shutdown. 

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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