Rippy Global Weekly Outlook - April 10 to April 16
Happy Easter everyone and welcome back to the Rippy Global weekly outlook. We are about to have one of the largest week in terms of economic data and catalysts, so let’s take a look at what we have coming up!
Around 65,000 tonnes of LNG imported from the UAE was exchanged for yuan over the last week and I’ve been seeing a lot of articles online this week about how the US’ reign on dominance as the world's primary reserve currency might be over. I do think this is just a passing phase and a little bit of exaggeration from the media. Although I do think it’s possible we can have a trade from this information. This information can cause a boost in Gold and, as a riskier trade, into crypto as people move money into what they consider a “safe” asset.
Bank of America sees oil refiners leading their energy sector outlook as they upgrade their earnings outlooks for all of those names, citing Valero as their top pick.
Last week we also got our jobs report which shows claims finally rising. Investors are caught between two sets of worries. The first is that a strong labor market, which puts upward pressure on wages, will keep the rate of inflation elevated and force the Fed to continue tightening monetary policy with higher short-term interest rates. The second is that a weakening labor market will undermine the consumer spending growth that has kept the economy afloat during this inflationary period, resulting in a recession. This jobs report, in my opinion, keeps us on track for a soft landing:
#1) Earnings season officially starts this Friday, as we have the big banks reporting. We also have Tilray (weed company) reporting on Monday after close and this is interesting because the whole marijuana sector is extremely sold off, so if we get a catalyst those stocks are in for a big run.
#2) On Monday, Taiwan Semiconductor is providing their March sales data so watch all the semiconductor stocks which have been hot over the last month.
#3) Wednesday is the most important day of this week. The March CPI report is coming with the expected Y-oY rate lowered to 5.2%.
#4) On 2PM on Wednesday the Fed’s minutes will be released.
#5) On Thursday at 8:30 AM the PPI producer price index inflation report (expected is 3.1%) along with April’s Initial Jobless Claims data (expected is 205K) will be released.
#5) On Friday, retail sales reports are released and banks kick of earnings season!
The S&P 500 ($SPX index) has made a W shaped recovery pattern here but likely the move for this week will be decided by the CPI number. A key break above our bullish breakout level sets us up for $4300 before our next major move to the downside.
The most important levels on the dark pool tape are $407.76 and $409.19 on SPY.
My key breaks are $4150 for bulls and $4074 for bears.
The best ways to play the S&P 500 are via. SPY/SPX options or SPXL (3X Bull S&P 500 ETF.
Options Flow Reading
Here are the options with the largest open interest:
To me the most interesting contract here is on NKLA because this is a known runner with a good amount of short interest trading right near 52wk lows.
INDIVIDUAL STOCKS & LEVELS
Let’s recap some of the levels of some popular names:
Tesla is right on the trendline of maintaining this bull flag. Under $175 this can correct and fill the gap at $150 and if we break out over $205 again we can run to $240.
As long as Apple doesn’t close over $167.50 I think this remains a good short as it’s quite overbought. Wall Street sees revenue declining 4% in the March quarter and 1% for the full year. This past week, Apple contract manufacturer Foxconn said it expected business to decline in the second quarter.
My top watch for next week is DIS over $100. This could be a huge breakout and cheap options make this one of my top watches. The options flow on this is great as well as they are being calls and selling puts.
One of the best insider buys is PED. They are trading at just $1 and as I mentioned earlier oil and gas names could have a run, so this would benefit from that.
Bankruptcy Plays & High Short Interest
A few companies announced a bankruptcy and I think these can be great. The first one KAL because their holding company announced bankruptcy but not the tradable stock itself from what I can see. They also have a low float of just 750K shares so if this dips down back to $1.50 this may be a great play. The next trade is TRKA which is a penny stock that has been gaining momentum. The most shorted stock on the market is OPAD at 97% short interest. The key is to keep a 10-15% stop loss and not hold these overnight.
Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)