The Big Unwind- Consumer Sentiment Crumbling

May 16, 2021 | Should retail Swing Traders make plays in the alt-coin space

Weekly Newsletter - Week of 5.16.2021 

"Houston, we have a Problem" 

Inflation continues to lead to a seesaw of emotions in the stock market. With consumer sentiment declining (down to 82 from 88), prices rising (3x more expensive to produce lumber than this time last year), and a shortage of workers (many employers can’t even get people to come in for interviews), we’ve seen growing signs of inflation everywhere. In fact, in a study conducted by Factset, the term “inflation” was cited by 175 different S&P 500 companies during Q1 earnings call. This is the highest overall number since early 2010. On the employer front, we’ve seen places like McDonalds, Chipotle, and Walmart all push for increases in pay and incentives for workers. 

Unfortunately, the shortage extends deeper than just labor and lumber. As an example, this week we learned about the chlorine shortage which is potentially causing issues to a pool season that hasn’t even started yet. Let's also not forget about the chip shortage, which might be the most impactful supply chain issue to date. 

Retail Earnings Ahead 

Looking to the week ahead, we'll be eyeing signs for a reversal. In the retail space, many of the top companies are set to reporting earnings. We’ll hear from Wal-Mart, Home Depot, Target, Lowe’s, TJX and Kohl’s, just to name a few. Just last week, we saw April retail sales fall 0.3 percent from March 2021. Although this doesn’t seem significant, it was below consensus numbers due to the hope that the multiple rounds of stimulus would boost sales. Stay tuned for these calls and expect retail to be a major focus in the coming week. 

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.

Crypto.. Dare I Say.. Bubble 

Elon Musk continues to make headlines after stunning investors by announcing that Bitcoin may no longer be used as a form of payment for purchasing Tesla vehicles. This flew in direct contrast to his recent remarks, made just a few weeks ago in March. His announcement comes after a period of consolidation in Bitcoin's price during the month of April (while many of its cryptocurrency peers continue to set new highs). Musk’s comments have fueled growing concerns over the economic impact of mining Bitcoin. Musk recently stated, “We are concerned about the rapidly increasing use of fossil fuels needed for Bitcoin mining. Cryptocurrency has a promising future, but this concept cannot come at the great cost of the environment.” 

Doge Enthusiasm Continues 

In an unexpected announcement, we learned Dogecoin will be added to the Coinbase exchange. Coinbase is the largest cryptocurrency exchange and this move should only stoke Doge's enthusiasm. While no date for the listing was cited, this addition should take place within the next 6-8 weeks. Dogecoin is up 35% for the week. 

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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