US Credit and Goldman Sachs Ideas- May 15 to May 19
May 15-May 19, 2023 by Adit Dayal for RIPPYGLOBAL.
Happy Sunday everyone and welcome back to the Rippy Global weekly outlook. The market is still choppy and, even much inflation data and economic metrics, we have no breakout in the main indexes.
This week, the main headline on Wall Streets continues to be the fear that the US may default on its debt. We currently have a $31.4 trillion ceiling that is set to run out by June 11 if the ceiling is not lifted. Janet Yellen, the US Treasury secretary stated that, ”[m]illions of Americans could lose their jobs, household incomes would be reduced. American businesses would see credit markets deteriorate, and millions of American families that receive government payments would likely be left without the resources that they were promised”.
This would be economic disaster. The inability of the government to pay out its bills would hurt the confidence investors have in the government. In 2011, the S&P downgraded the government from AAA to AA+ when it got close to defaulting. Zillow details housing costs soaring by 22% in this case, CNN stating stocks can lose 1/3 of their value, and everyone from social security beneficiaries to the military would be impact.
What’s interesting is that uncertainty in the stock market is near lows, with IV at lows, especially in aerospace and defense stocks. A lot of traders I know take advantage of these opportunities to add insurance in the market when it’s cheap.
Another interesting article I got access to this week was Goldman Sachs trade ideas:
They recommend buying $NOW calls prior to their investor day on May 16th. They also like TMO and CRM call options.
#1) Earnings this week is slower than usual, but we have a lot of classic names reporting, including Walmart, Home Depot, and Cisco.
#2) On Monday, this is one my favorite days of the quarter as it’s the day hedge funds will file their 13F filing, and we see what they buy. I will keep an eye out for small companies bought by large investors as those should make a great move.
#3) On Monday, Roblox is also releasing their monthly metrics and it’s possible Robinhood releases important metrics, like trading data as well. If these numbers are out of the expected range, we can get a nice move.
#4) On Wednesday, we will get an interesting report on US video game sales for April. I am watching high momentum names like GameStop for a play. BlackBerry also will have an analyst day.
#5) On Friday, Fed Chairman Powell will be speaking at 11 AM regarding monetary policy.
The S&P 500 ($SPX index) is about to break out and it looks like it will here. A key break above our bullish breakout level sets us up for $4300. Over this resistance or under this support and we will get a very clean move as this consolidation is distribution of price.
My key breaks are $4170 for bulls and $4110 for bears.
The best ways to play the S&P 500 are via. SPY/SPX options or SPXL (3X Bull S&P 500 ETF.
INDIVIDUAL STOCKS & LEVELS
Let’s recap some of the levels of some popular names:
Tesla reminds me of Nvidia before it’s big run this year (it was the #1 name for short seller losses as shorts just kept piling on and it kept running up) and I think Tesla may experience the same thing. It’s still at an interesting spot and especially with Elon allocating more time to the company by positioning a new Twitter CEO, that may be a positive catalyst for the stock.
The negative news is that Soros Fund Management from legendary investor George Soros exited their Tesla and Rivian position in Q1. They added Netflix and boosted their stake in Uber.
Apple is consolidating at this huge spot here. They are expected to launch their VR headset soon which is rumored to be very different from that of its competitors in the coming weeks. I do this this is a great opportunity for our metaverse stocks, and specifically Unity.
LYFT is an interesting name to me because of the huge deviation in strength from Uber which has been one of the strongest stocks in my screeners. I do think we have the potential for a temporary bottom here and we try and fill one of the gaps above.
In terms of insider trades, I really like PLSE which had one of the biggest buys and has a great chart. I also like GSAT which just went under $1 but they have a contract with Apple, so it’s an interesting play.
High Short Interest Stocks (From MarketWatch)
#1 - CVNA 58% SI
#2 - ALLO 54% SI
#3 - EH 45% SI
#4- BIG 42% SI
#5 - NVAX 40% SI
Biotech Stocks Catalyst Watch (from bPiq)
• Q1 hedge fund holdings due by Mon 5/15.
• $XFOR presenting new data on call on 5/16.
$ICPT adcom meeting 5/19 Ocaliva for NASH.
XFOR is one of the main ones to watch this week.
Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)
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