The Short Trading Week and What Last Week's Boom Means (September 5th-September 8th)
September 5-September 8, 2023 by Adit Dayal for RIPPYGLOBAL.
Happy Sunday everyone and welcome back to the Rippy Global weekly outlook. The market rose around 2.5% last week posting the best week since June in the index. August closed off negative, but now we move into the Fall where they dynamics of the market can change after a slow summer.
Let’s take a look at what this week has in store!
——-
Tuesday’s JOLTS (job openings) survey along with he unemployment report finally showed unemployment increasing. This was great for the market and for the Fed. The uptick in unemployment can be seen as a sign that the economy is slowing down, which may lead the central bank to keep interest rates lower which then makes it easier to borrow for businesses and people, and therefore better for the market which is why we rose so much this week.
An interesting catalyst this week will be in the uranium sector, with Cameco releasing some pretty big news about uranium production cuts. This cut in supply should drive the price higher on many uranium stocks, the main one coming to mind being DNN which is trading at $1.44 and usually runs with news. Cameco is the world's largest public uranium producer and should move off this news. With most of our uranium being imported and a larger reliance on this, the price of uranium may squeeze here and it can be an interesting catalyst into the end of the year.
The average cost for a new home loan is over 7% making it the most unaffordable for home owners since 2002. Redfin reported a huge lack in homes for sale to prices that are the highest in ten months this weekend and paired with interest rates I believe it’s finally time that market cools off. I do not believe the market is rising because of a demand increase but rather a supply shortage. The Case-Shiller home price index, created by Professor Robert Shiller is my favorite index to track home prices and may be at a double top here, which is why it can be interesting to short the housing market into next Summer.
Now, for our weekly update on the car market. Although you may see or have heard about a a drop in sales for used cars, I do not think the price will budge because, just like the housing market, the used car market is entering a period of huge supply shortages. Cars.com’s industry analyst says prices will stay higher for many years and that higher interest rates make it difficult for consumers to go and buy a new car (not that there is even enough supply for that) and therefore used cars demand will go up, but at the same time less people will want to sell their used cars. I will watch car names into this next quarter like Carvana and more.
——-
#1) Earnings week isn’t big but meme names may get a jump post GameStop and Express earnings calls.
#2) On Tuesday, the SWIN brokerage IPO is expected to start trading at $4/sh and may move other fintech companies. There is also a Goldman Sachs conference where eBay, Peloton, IMAX, and more will present new technologies.
#3) On Wednesday, HUBS is hosting their analyst day and the Fed’s beige book will be released at 2:00PM and offers insights from the 12 Fed banks around the nation.
#4) On Thursday, there are a few investor events, but I think the most interesting one will be FSLR which is a solar company. Two Fed officials will be speaking after market close and may move the market.
#5) On Friday, Roblox is hosting an investor conference.
——-
S&P 500
The S&P 500 ($SPX index) is rapidly unwinding and it’s possible a head and shoulders pattern is playing out unless we reclaim some of the key levels above.
My key breaks are $4548 for bulls and $4492 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:
TSLA
Tesla held its key level from last week’s newsletter and may be in a reversal pattern unless we break below $220 again. Long term chart it’s still bullish but needs to break above from this consolidation this week.
AAPL
Apple is chopping around after earnings and has a huge gap above. They are releasing their new products this September and I’m expecting this name to chop for a while.
NVAX
NVAX is basing here and COVID names seem to want to be making a comeback. Huge options flow and I think this can run especially with flu season entering back and high short interest. Action in the $15 call option as well.
——-
Insider Activity
In terms of insider trades, GSAT (Apple’s satellite provider) is running before their event this month and there is more insiders coming into ASAN here which has been hit many times this week.
——-
Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)