Happy humpday Coachmen! On a day that markets were down around 1% across the board, we hit the trifecta yesterday with all of our picks returning 2%+. While we still have a high level of conviction in our $VIX play, the big winner thus far has been our earnings fueled short on $PII which has returned around 4.25% currently.
“Don’t let the noise of others’ opinions drown out your own inner voice.”
- Steve Jobs
Market Talk
A slew of housing market data has been published over the last couple of days and the figures substantiate our dire narrative from last Friday’s report - the slump in housing growth is officially upon us. The House Price Index and new home sales ran short of estimates within May, as housing prices increased only 1.4% and recent home sales clocked in at 590K, over 10% lower than forecasted!
Another interesting phenomenon is the decoupling between rental and ownership markets as rents have still increased double-digits this year to all-time highs in certain city centers - this is likely a result of the 6% average mortgage interest rate being pushed to the end consumer.
Short: Short: Shopify Inc. (SHOP-NYSE) | Timeline: 1-2 days
Shopify Inc, as we all know by now, is a commerce company that provides a commerce platform and services to companies worldwide. The stock has posted a deficient earnings report this morning as they continue to suffer from foreign exchange headwinds, supply chain bottlenecks, and unsustainable growth. The company said in a statement they now expect 2022 to be “more of a transition year, in which e-commerce has largely reset to the pre-Covid trend line and is now pressured by persistently high inflation” (Source). Taking a look at the chart, the company has not been able to reverse back from a bearish cycle all year, signalled by a death cross, and the MACD has not broken above zero over the last 6 months. This stock needs good news and a solid company outlook to be in contention for a reversal, and without that bears will continue to pressure this stock downwards as they receive the opposite.
Long: Exxon Mobil Corporation (XOM-NYSE) | Timeline: 3 days
Exxon Mobil is set to report earnings Friday before the market opens, the company is poised to beat analyst expectations of $111.3 Bn in revenue, and $3.84 EPS. After a stellar quarter for a variety of the firm's core offerings including gasoline, crude oil, and refinement, Exxon is set up to cruise through their Q2 earnings report with a win. Moreover, the company has clear plans for the future and is continuing to discover new sources of energy in the global markets. Although, it should be noted that there is potential for the company to downgrade forecasts due to recessionary fears. The company is currently retesting its 50-day moving average after falling below it at the end of June, while also having a momentum of just over 5 on its side. Additionally, the MACD, while still remaining negative at -0.49, has been climbing steadily throughout the past two weeks, with signs that it will return to a positive figure if the current trend holds. Although the upside in this trade does paint a rosy picture for the company’s performance into next week, due to the volatility, and instability rocking global markets, we wouldn’t recommend holding this trade over the weekend.
Chart of the Day - Oil and Gas to Tech Ratio Bottoming Out?
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