Welcome to Week #8 of the Coachman’s Report! We hope this weekend treated you well as markets returned to grace with the VIX receding to a recent low of just under 26 - keep reading for what we’re focusing on in the market and our take on the state of affairs!
"Conformity is the jailer of freedom and the enemy of growth”
- John F. Kennedy
Market Talk and Trade #1: Volatility Index - Long $VIX, Timeline: 2 Trading Days
When all was said and done, the S&P 500 gained 6.1% through last week - this marked the 2nd best week that we’ve seen in 2022 thus far, with positive price action like this not seen since the second week of March. In this market, however, for every step forward, two are taken backwards and the S&P 500 is trading at a key price level.
Given that investor cash balances are at a historical high alongside bearish market sentiment, which has moved from 50% to 53.5% of investors (1-month high), it is likely that the index will bounce off of this resistance level. As such, with investors possibly flocking to sell throughout the first half of the week at this level, the VIX will likely appreciate from these lows; pictured below is the volatility index, which is currently at a decisive level it hasn’t dropped below for a while. The target price target for this level is around 30, with a two-day timeline.
Long: Oppfi Inc. ($OPFI-NYSE) | Timeline: 2-5 days
OppFi is a Chicago-based neo bank which gives lower-income Americans the opportunity to rebuild their credit score while building their wealth. Their target market is over 60 m American consumers and counting. Currently the company’s P/E ratio of 1.85 as of Q1 2021, and their price to cash flow ratio of .22 as of Q1 2021. Compared to the S&P’s current P/E of 22.83, and P/CF ratio of 14.05, making this company is criminally undervalued. Moreover, last week the company’s dozens of thousands of dollars worth of the stock, and as we all know insiders sell for a variety of reasons, but only purchase because they believe the stock will increase in value. Additionally, the company has recently bounced off of its 50-day moving average, signalling that it will be able to climb into next week.
Earnings Preview - Week of May 30 - June 3
Chart of the day - Combined Big Tech Market Cap, Is the correction over?
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