Rippy Global Weekly Outlook - April 17 to April 21
April 17-April 21, 2023 by Adit Dayal for RIPPYGLOBAL.
Happy Sunday everyone and welcome back to the Rippy Global weekly outlook. We are entering the second half of April as the year continues to fly by, so get ready tot take a look into some of the top catalysts and trades for this week.
Last week we got two big inflation numbers, the CPI and the PPI number, which both showed inflation moderating. This showed the market that the Fed’s monetary policy is finally helping inflation with CPI down over 1% from February. Jobless claims also rose, which helped give the market the impression that the Fed’s work is also hitting the labor market. Remember, higher unemployment means less money in the system and therefore helps inflation.
The forecast currently shows a 77% chance for a 25bps hike in May and then a pause in June.
It’s also tax week! I’m legally required to tell you I’m not a tax professional, so please consult with one before making any decisions. Tax Day is approaching on April 18, which is three days later than usual due to a holiday in Washington. Selling stock held in a taxable account will generally create tax liability for an individual investor who made a profit on the sale. The tax rates for profits from selling stocks held for less than a year are taxed as ordinary income, while those for profits on the sale of stocks held for at least one year are taxed as long-term capital gains. High-income investors may owe an additional 3.8% tax called net investment income tax on their capital gains. If your losses exceed your gains, however, that's called a "net capital loss," and you can use it to offset your ordinary income by up to $3,000. Dividends and options are also taxed.
One more thing is to make sure you don’t get caught in a wash sale, which is when you sell a stock and buy it back within 30 days in order to create a tax loss loop.
#1) Earnings season officially kicks off with some big companies reporting including Tesla, Bank of America, and many more:
Analysts are expecting this to be the weakest quarter in 2023. Though this may sound bad at first, remember the market is forward looking so if these companies indicate that this is the worst it’s gonna get then the stocks will break out.
#2) On Monday, Needham and Company is hosting a healthcare conference with some big biotech names presenting: including VKTX, PEPG, and more. PRME will reach lockup expiration so watch it for downside as there may be extra selling pressure.
#3) On Tuesday we will get housing starts data and there is a 3.1% decline expected. Watch $DRV which is the 3X Bear Real Estate ETF.
#4) On Wednesday, crude oil and gasoline inventory numbers are releasing at 10:30 AM.
#5) On Thursday, April’s initial jobless claims report is coming out which should come out at 238K (versus 239K last month).
#5) On Friday, a Fed blackout period until May begins, so we will have much smoother trading.
The S&P 500 ($SPX index) is trying to break out and this is likely the week where we find out where the market is going to go until May. 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 $412.54.
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 highest volume:
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 holding this bull flag and their earnings will likely be the catalyst that tells is if we have another leg up. If you read my article one or two weeks you read about how I think their price cuts are actually bullish. Under $175 this can correct and fill the gap at $150 and if we break out over $205 again we can run to $240.
Apple dropped after news about slowing Mac sales, but it looks like the market doesn’t care and bought up the dip. On the weekly chart, this would be the perfect place for Apple to reject and on the options flow, it looks like buyers over $1M are buying puts and selling their calls. Can be an interesting short with a stop loss at $170.
Exxon has been in this tight flag here and is about to breakout to new highs. One catalyst that may move this is the crude oil inventory numbers on Wednesday. Options flow near the close on Friday was also very bullish.
The best insider buys are in tow penny stocks - NOGN and BTTX.
High Short Interest Stocks
#1 - CVNA 57% SI
#2 - ALLO 54% SI
#3 - SI 54% SI
#4- PXMD 52% SI (top watch for next week)
#5 - JAGX 52% SI
Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)
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