Rippy Global Weekly Outlook - May 1 to May 5
May 1-May 5, 2023 by Adit Dayal for RIPPYGLOBAL.
Happy Sunday everyone and welcome back to the Rippy Global weekly outlook. This is going to be the first week of May as we get closer to the summer trading season and things may start to become smoother for us here in the market. Also - will “sell in May and go away” be true this year or not?
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Last week was a huge week for earnings for large and mid cap companies. Earnings and future plans are (in my opinion) one of the most important factors for any stock and their performance for the next quarter. For example - I will try to never buy a company that has dropped on bad earnings unless I think the market has overlooked something and it will help the company later.
This week, Apple, the largest holding in the S&P 500 is reporting earnings and as many say: where Apple goes, the market goes. Results were optimistic despite Wall Street pessimism last week from other large tech names, including Microsoft and Meta. For Apple results, I’m going to be focusing on how they’re handling China demand as I do think there is still a lot of opportunity in the China sector. In fact, the Chinese EV companies are reporting delivery numbers on Monday, and if they are good I expect those stocks to run. Piper Sandler states that the iPhone remains popular among teens, and Morgan Stanley expects continuation to their $180 price target.
Wedbush analyst Dan Ives stated “The narrative for the tech sector is becoming clearer and clearer despite many tech haters yelling fire in a crowded theater.”
The next event for this week is going to be the Fed’s interest rate decision and Fed Chair Jerome Powell’s press conference on Wednesday at 2PM and 2:30 PM respectively. It’s highly likely that rates are 5.00-5.25%.
Another interesting thing I saw this weekend is that volume on credit-default swaps that the US government will default on its debt is increasing. In fact, bond prices are rising proving that the people don’t exactly believe that the government will pay them. Returns on these swaps are now near 2400%!
Lastly, Stanley Druckenmiller who is a legendary investor and made over $250M in 2008 released his one high conviction trade: he’s short the US dollar. He believes the US will halt rate hike and that currency runs usually last two to three years and we are overextended at this point.
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#1) On Monday, expect Chinese EV companies to report monthly delivery numbers. This will cause a move in stock price and, if the numbers are good, the charts are set up for a multi day run.
#2) On Wednesday, the FOMC interest rate decision will be released along with Jerome Powell’s press conference. After market close, Costco will release their monthly sales report.
#3) On Thursday, Cloudflare $NET has an investors day and at 8:30 AM we get the initial jobless claims report so keep an eye on initial jobless claims as it will hint to where inflation is going.
#4) On Friday, the jobs report for April will be released. This is crucial because we need to see unemployment go up in order to confirm that inflation is going down.
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S&P 500
The S&P 500 ($SPX index) is about to break out and it looks like it will A key break above our bullish breakout level sets us up for $4300 before our next major move to the downside, if even. The market seems extremely strong as money is flowing into speculative names as well showing this is risk-on.
My key breaks are $4170 for bulls and $4109 for bears.
The best ways to play the S&P 500 are via. SPY/SPX options or SPXL (3X Bull S&P 500 ETF.
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INDIVIDUAL STOCKS & LEVELS
Let’s recap some of the levels of some popular names:
TSLA
Tesla fell short after earnings, but it closed that gap to the downside and I think it’s now in a position to run again as long as we don’t break those lows. I am still bullish on this name here and I think it will still go in the summer.
AAPL
Apple has shown no signs of slowing down here, but it’s at the top of this rising wedge. If earnings are strong we will break out to Morgan Stanley’s $180 price target, but otherwise we could be in for a move back to $152.
DKNG
With the Kentucky Derby coming up and Draftkings having a partnership, this may break out over this 22 level here. Nice chart and setup to move.
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Insider Activity
I really like the insider trades this week. ENPH is a large cap stock which just fell on earnings but it looks like the Director is buying the dip so this may have a short term bounce.
Penny stock wise - SDIG got a huge buy at $1 for $1M so that may move the stock and FNMB is a regional bank with a chart that looks like it can break out.
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High Short Interest Stocks (Mix of S3 Data and MarketWatch)
#1 - CYTO 115% SI
#2 - JAGX 61% SI
#3 - CVNA 57% SI
#4- ALLO 54% SI
#5 - SI 51% SI
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Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)
-By reading this newsletter, you agree to my disclaimer at www.aditdayal.wix.com/disclaimer.