Welcome to Monday folks! As the Coachmen, we always try our hardest to top our own personal bests and last week was one for the books given multiple double digit-trade return trade recommendations. This week the macro environment will shift once again with important economic data being released such as inflation so read on for your daily dose of market inspiration in these trying times.
"The first step is to establish that something is possible; then probability will occur."
-Elon Musk
Market Talk
While the broader market as tracked by the S&P 500 advanced only 1% last week, tech was the big winner with the Nasdaq up just under three percent by Friday close - this week seems to be much of the same with futures up 50 bps all round; the $VIX is also spiking a couple percent this morning. Furthermore, you can find the figures regarding this Q2 reporting period and a graph of the changes in forward EPS below (make special note of the recent concavity of the changes!).
Earnings Scorecard: For Q2 2022 (with 87% S&P 500 companies reporting actual results), 75% of S&P 500 companies have reported a positive EPS surprise and 70% of S&P 500 companies have reported a positive revenue surprise.
Earnings Growth: For Q2 2022, the blended earnings growth rate for the S&P 500 is 6.7%. If 6.7% is the actual growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q4 2020 (4.0%).
Earnings Guidance: For Q3 2022, 42 S&P 500 companies have issued negative EPS guidance and 30 S&P 500 company has issued positive EPS guidance.
Valuation: The forward 12-month P/E ratio for the S&P 500 is 17.5. This P/E ratio is below the 5-year average (18.6) but above the 10-year average (17.0).
Short: Palantir Technologies, Inc. (PLTR-NYSE) | 2 days
Palantir Technologies Inc, a company that builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations has slid over 10% in the pre-market as revenue forecasts fall short due to uncertainty of government contracts. "The size of these contracts, coupled with government procurement, is what makes it so unpredictable,” says CFO David Glazer (Source). This is a huge red flag for investors as the company has admitted to uncertainty within, leaving them with little to no confidence in the future of this operation. Turning to the chart, after a sustained downtrend over the last year the share price has retraced upwards as bulls had hope through the last quarter. Now that there is no longer much optimism, the share price has had a sharp correction and will continue the previously sustained bearish cycle signalled by a bearish flag and an over-exhausted MACD.
Short: Coinbase Global Inc ($COIN-NASDAQ) | Timeline: 3 days
Coinbase, once one of the hottest stocks of the pandemic, has seen a stunning level of price depreciation throughout the past year as the organization deals with a decline in crypto prices, SEC lawsuits, and a myriad of crypto blowups that have cast doubt on the industry as a whole. The company is reporting earnings post-close Tuesday, with the expectation of an EPS of -$2.47, and revenues of $874M - this is in contrast to Q1’s EPS of -$2.06, and revenues of $1.5Bn. While guidance has been cut, the company still has a variety of roadblocks in the way of a positive result. To start, Bitcoin and Ethereum prices are down 49% from March 30, and trading volume on the platform is down from $3Bn/d in Q1 to an estimated $1.7Bn/d throughout Q2. In the wake of the Luna and 3AC collapses, regulators have become much more sensitive to the activities of those who participate in crypto markets, lawsuits from the SEC have plagued Coinbase as the distinction between what constitutes a digital asset, and what constitutes a security has been questioned. On the technical front, last week the company broke through its 50-day moving average, exploding upwards in the trading sessions since. Although, this does not signal the ability for limitless upward momentum, as the stock faced resistance at the $116 level during Thursday's trading session. Throughout the past month, the company has rallied over 71%, while in the past week the company has jumped by close to 55%, as some traders attempted to initiate a short squeeze. We would recommend implementing a stop loss of 10% on this trade, as this ticker has shown itself to be highly volatile in the past, and could attempt to gap up to the much higher 200-day MA of $174 if results are extremely positive, or if the short squeezers are successful.
Chart of the Day - The Cost Of Mining Bitcoin In 198 Different Countries
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