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Sep 05, 2021 | How to make money off hurricanes as a Swing Trader

Weekly Newsletter- Week of 9.5.2021 

Hurricane Ida Devastates Business and Consumers 

Nearly 16 years after Hurricane Katrina destroyed so many homes and businesses, another terrible storm landed to wreak havoc this week. Though not nearly as deadly as Katrina, Hurricane Ida has become another historically damaging storm that will take several weeks and months to repair. Categorized as a CAT4 hurricane, this storm is only one level below a CAT5, the highest storm grade possible. 

Damaging Businesses 

When storms like Ida hit, the damage can be widespread, and no person or business is safe. Hurricanes can damage homes as well as infrastructure and leave thousands, if not millions, without basic materials such as food, water, electricity, or gas. 

Gas: Due to the devastation inflicted on their oil rigs, many oil companies are still trying to quantify the true impact of the storm. The immediate concern is any limitation on the availability of gas could cause a spike in gas prices. Though we expect some near-term volatility, we don’t predict any massive or prolonged price increases. For context, when Katrina hit, gas prices almost immediately jumped an average of 50 cents per gallon. 

Insurance: Early predictions are estimating insured damages in the range of $20B for the city of New Orleans- this is compared to $65B during Katrina. 

Electricity: The entire state city of New Orleans lost power during this devastating storm as major power lines and transformers were not immune to the storm’s rage. One of the main power sources of New Orleans predicts it could take several weeks before all its 3 million citizens fully gain back power. Additionally, the state of NY also suffered extreme damage due to the storm. As their subway system became flooded, the city will need to spend millions getting their core transit infrastructure running again. Hurricanes may only last a few days, but the damage caused by these storms can last much, much longer. As we look to rebuild and repair, we'll be watching to see what other businesses are affected and how that may impact the consumer. 

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.

The Zoom Fatigue is Real 

This week, former pandemic winner Zoom reported earnings and share prices have dropped off a cliff- share are now trading nearly 15% lower than before reporting. At the height of the pandemic, Zoom was considered arguably the biggest benefactor from the stay-at-home economy. Overnight, Zoom and virtual meetups became essential to our everyday lives. From work to school, to just staying connected, Zoom was the glue that kept us together while staying apart during the pandemic. Now as we began to come out of the global pandemic, it's obvious the Zoom fatigue is real! The market is forward-looking, and investors have no interest in considering what another virtual economy would look like. Shares are currently trading around $280/share far below their pandemic high of $400/share. Despite the massive selloff, not all investors feel that Zoom has lost all value. Famed investor Cathy Woods added to her position this week, staking an additional $56 million worth of shares. She believes Zoom will continue to take more market share in all of the communications sector and not just in video conferencing.

PayPal Ready to Battle Robinhood 

This week we heard a blockbuster announcement from PayPal, the growing fintech juggernaut. PayPal, and its top product Venmo, have been battling Square and their CashApp platform for years, as both continue to extend their banking services and their cryptocurrency investments. Robinhood has made major headways despite a user base of only 21 million. This compares to the over 400 million active users currently utilizing PayPal. PayPal management recently noted users who utilize their platform for cryptocurrency engagement are logging in twice often as those who don't. As PayPal continues to expand its financial services, it hopes to become a 'super application where all money management can be done in the same place. Thus, limiting the need for a user to ever leave the app. This should be very worrisome for Robinhood and its investors. 

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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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