Happy Friday folks! The fallout for equities continued yesterday with the S&P 500 booking a 0.63% loss by the end of after-hours trading. Price movement was largely due to many updates regarding the way in Ukraine, most notably Russia's re-affirmation of the nuclear option as well as Putin’s calling up of 300,000 reservists to join the fight. Regardless, it's a shorter’s market and we’re playing to that with our pick’s on $GIS and $CHTR, the latter of which would have netted you just over 9%! The market is following suit today with more red in premarket trading as Dow, S&P and Nasdaq futures are trading over 1% lower across the board this AM - read on for your daily dose of market inspiration for these choppy waters!
Markets in Review
The market is having a hard time holding above the resistance level of its new price channel as many are in the camp that the S&P 500 is in a bottoming process fueled by further inflation fears and central bank rate hikes. Under this school of thought, the market’s next real rally won’t begin until late Q1 2023, as that is when we’ll be past the last of the Fed’s rate hikes in theory. However, there are a couple of catalytic events that will take place prior to this that will likely serve to keep equities oscillating up and down in a sideways channel until then, while this won’t be great for long-term investors, a sideways market is one of the best for day and swing traders. As such, a couple of these catalysts fast approaching are the Q3 reporting period, next Friday's jobs report, and also the oil supply decisions published by OPEC following their next Ministerial meeting. One major unknown that could throw a wrench into the market are further developments in the Ukraine-Russia conflict as it seems Russia is at a pivotal point in relations with the UN.
Trade of the Day - Short: Aurora Cannabis Inc. (ACB-NASDAQ) | Timeline: 2 days
Aurora Cannabis Inc. (ACB), which produces, distributes, and sells cannabis and cannabis derivative products in Canada and internationally reported Fiscal 2022 Fourth Quarter and Full Year Results a couple of days ago and although revenue was topped up, net loss also followed suit increasing 78% YoY, resulting in the company missing earnings estimates by a whopping 1447.39%. That said, the technicals also follow this bearish narrative as the stock has struggled to gain positioning over its 50-day MA through all of 2022 so far, and it's not looking too promising for bulls going into the last 3 months of the year. Moreover, it’s just broken down from a descending triangle - a widely used bearish continuation pattern, and the MACD has rejected its equilibrium and is now pointing downward, making for a great short opportunity over the next couple of days!
Zooming out...
New economic plan sends UK markets into a crisis
Earlier this morning, Chancellor of the Exchequer Kwasi Kwarteng announced the UK’s new plan to stimulate the economy. While you may be asking yourself “stimulate? Aren’t they in an inflationary period?” don’t worry, the world is already asking the same questions, as the Pound has fallen by over 1.5% against the USD so far into Friday, marking the lowest level since 1985. This package contains a myriad of stimulatory efforts including a £60B energy bailout as costs soar, while also introducing tax cuts for workers and companies. This announcement has led the UK’s Debt Management Office to increase gilt sales by £62.4B up to £193.9B in order to fund the spending.
JPow’s housing warning
During Wednesday’s FOMC speech FED Chair Jerome Powell had some stark warnings for the US housing market. For context, the current market seems to be trending downwards, with both buyers and sellers becoming fearful of making a housing transaction. As shown above, while starting strong in 2022, the past few months of home sales have been the weakest of the past four years. These cooling home sales volumes are compounded by the slowing of listings displayed below.
Slowing listings and sales have come at a time when houses are extremely unaffordable for the average American, Powell had this to say during his speech “We’ve probably in the housing market got to go through a correction to get back” to a place where prices become more reasonable. China says Ukraine’s territory must be respected
In an interesting twist of events, on Thursday during China’s address to the UN Security Council, foreign minister Wang Yi said that Ukraine’s territory and sovereignty should be respected. He added that dialogue should commence between Ukraine, Russia and any other interested parties, while also stating that Ukraine should be used as a bridge between east and west, rather than as a conflict zone. This was a stunning shift in rhetoric for many geopolitical analysts to witness as prior to these comments it had seemed that Russia and China were on the same page in regards to the conflict. This statement comes at an interesting point in time for the war, as Putin has begun an expansion of the conflict, and secession voting within occupied Ukrainian territory has begun. Even as allies have begun to voice their doubts publicly.
Making headlines...
PM agrees to lift pandemic border measures…
The federal government has decided to drop the vaccination requirement for people entering Canada, end random COVID-19 testing at airports and make the use of the ArriveCan app optional by the end of this month (Full Story)
Amazon launching 'buy now, pay later'
Amazon customers in Canada will soon be able to pay for their purchases on the website in smaller, monthly instalments as the e-commerce giant expands its partnership with payments company Affirm north of the border. (Full Story)
Bond selloff risks liquidation of world's most crowded trades…
Global government bond losses are on course for the worst year since 1949, and this year's bond crash threatens credit events and a liquidation of the world's most crowded trades, BofA said in a note on Friday. (Full Story)
Credit Suisse Shares Hit Record Low on Strategy Questions…
Credit Suisse Group AG shares slumped to a record low as investors signaled that doubts remain over the troubled lender’s upcoming strategy revamp and its capital position. (Full Story)
UK’s Biggest Tax Cuts Since 1972 Trigger Crash…
Liz Truss’s new UK government delivered the most sweeping tax cuts since 1972, slashing levies on rich households and companies in a bid to boost economic growth in a move that triggered a massive market selloff of the currency and bonds. (Full Story)
Chart of the Day - 2022 Compared to Other Midterm Years
“You have to believe in the long-term plan you have but you need the short-term goals to motivate and inspire you.”
- Roger Federer
The Coachman's Report - Terms and Conditions
Comments