In our weekend digest, we summarize the best pieces published from the working week. These can be read in full by clicking on the link over the name/ticker. This was a shortened week due to the UK bank holidays.
With all the carnage in markets right now, Jesse looks to the past to show how some of the best trades have come during bear markets.
European Central Bank (ECB) meetings have typically been pretty dull affairs over the past year or so. Gone are the days of Mario Draghi telling listeners that he’d do ‘whatever it takes’ and the EUR whipsawing around in the aftermath. However, the meeting on Thursday provided us with some interesting action to note.
Stocks – Small Caps, Large Caps
My trade of the week is an Apple short play. However, I do not think this is a weekly play. I think this move will play out over the next few weeks. But the chart setup right.
Apple is one of the largest companies that make up NASDAQ, so this is by no means a trade that will “go to zero”. But with the current market concerns, I think Apple could see a nice pullback, creating a good short opportunity. So, why not capitalise on a pullback before looking for a long entry later on?
Despite the company releasing first quarter revenue way ahead of expectations, they also announced their earnings figures which fell the other side of wall streets estimates. Heading into the quarter, analysts had forecast that Desktop Metal would lose $0.13 per share on sales of $41.6M. In fact, the company lost $0.22 per share, despite sales coming in at $43.7M.
Desktop Metal grew sales 286% year over year and reaffirmed its guidance for the rest of this year, $260M in sales. None of this was enough to convince investors to forgive the earnings miss or the fact that even gross profit margin, which had held steadily in positive territory for the past three quarters, has now sunk back into the red (negative 3%).
FX – Playing For Euro Strength
As our view is for a bullish USD, we don’t like being long EUR/USD, and so rather favour shorting CHF instead. The Swiss still have negative interest rates, and so chatter from the ECB tomorrow about raising rates should help to widen the differential in rates, causing EUR to gain, CHF to lose.
Data – Shorting Is Back in Fashion
Short interest is the total number of shares of a particular stock that have been sold short by investors but have not yet been covered or closed out.
As inflation continues to trend upwards, we are seeing ongoing selling pressure across nearly all stocks, regardless of capitalization or sector. Which specific US stocks are being bet against most heavily?
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