VIX Melts - Have we found a bottom?

... plus earnings season ideas

Author

Swaggy Stocks
October 23, 2022

Swaggy’s Top Stonks. We compile and analyze data from multiple sources bringing you the top trending tickers from around the internet. If you haven’t subscribed already, please do so below.

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We have merged with several content creators to bring you an entirely new set of tools and market updates, which will start rolling out in November. Here are some things you can look forward to in the near future:

  • A new "macro trends" edition of the newsletter that will be using charts and data from our upcoming premium dashboard that is currently in BETA testing.

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  • and much, much, more!

Let's get started in today's letter.

Today's Letter

  • Market Update

  • Earnings SZN - What stocks am I watching?

  • Trending Cryptos

  • Top Meme Stocks

Market Update

Investors, the VIX is melting with a 6% decline this past week and global stock funds had record inflows of $9.2 billion. Of course, we're still facing many challenges ahead of us, such as persistently high inflation, supply chain bottle-necks, risk of recession, and squeezed energy prices. "Experts" say that the markets have more room to fall... of course they do, they also have more room to go up and that's how this game is played. These inflows may start meaning big players are beginning to play ball again and buying the dip. IMO we are still in a bear market until some technicals turn in our favor. Larger trend-lines like the 50 day and 200 day moving-average don't necessarily hold much water when predicting prices, but they can tell us where the trend may be (hint: up or down).

Is it a coincidence that the market saw a bounce nearly one week after this chart began floating around on Twitter? (originating from SentimentTrader)

This data shows us that PUT buying (protecting for downside) is at all time highs... This strengthens my confirmation bias that the market is simply designed to destroy short-term wealth, while maintaining the capability to exponentially grow long-term wealth. Thus, this uncertainty has all sorts of investors, big and small, 'buying protection' by opening short-positions or purchasing puts as a hedge against the market collapsing... but for a lot of these hedges large short positions, has the ship nearly sailed? Buying protection to the downside after a 25% drop in the markets is like not having wings on Sunday football, it just doesn't feel right. However, the market is going to do what the market is going to do, and that is to inflict the maximum amount of pain on the way up and on the way down.

We've got a BIG earnings week ahead where management may leave clues on the direction the economy is headed. I went through some of the most anticipated names I'm looking at this week and what kind of data I'm keeping an eye on.

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Earnings SZN - What am I watching?

Sometimes what management says in their earnings call might affect companies in a different sector when they have some relation to the macro environment. I'll leave a few notes for some of the tickers that what I'm watching, the rest are simply ones I am interested in (and the more popular names). Remember the reporting times are:

  • BMO = Before Market Open

  • AMC = After Market Close

Monday

  • Logitech (LOGI) - AMC: The computer hardware company had sales that nearly doubled due to the pandemic, but have been somewhat stagnant over the last 12 months. Margins were beginning to compress from higher input costs and supply chain issues and the their decline in EPS has been the proof. LOGI is down 50% YTD.

Tuesday

  • UPS (UPS) - BMO: Delivery companies have been fighting labor shortages that started over a year ago and have seen their gross margins contract by several percent. With the holiday quarter coming up I'd like to see what kind of info management can provide regarding demand for deliveries in our current macro environment and how they are handling labor. UPS is down 20% YTD.

  • Cleveland Cliffs (CLF) - BMO: After an acquisition the company has 10x'd their revenues compared to 4 years ago (reflected in a 300% increase in share price). Due to their acquisition and vertical integration of a new processing plant they've been able to expand gross margins from 5% to 20%. I'd like to see what the CEO has to say about the current headwinds they are seeing with prices of commodities, and how it affects their top and bottom-line revs. CLF is down 25% YTD and 50% from peak earlier in 2022.

  • Microsoft (MSFT) - AMC: All eyes will be on Microsoft Azure and the cloud to see if they come in above expectations. MSFT is down 27% YTD.

  • Alphabet (GOOG) - AMC

  • Enphase Energy (ENPH) - AMC: Enphase is set to benefit from this global surge of energy prices. However, the company is trading at a P/E of 175x and a Forward P/E of 50x, which is relatively high compared to the industry average... P/E usually doesn't matter until all of a sudden it does. I'll be keeping an eye on this one and see what guidance management provides going into the next quarter. ENPH is up 36% YTD.

  • Visa (V) - AMC

  • Chipotle (CMG) - AMC: Chipotle has been growing revenue while expanding margins over the last several years. Looking to see what effect rising commodities does for the company and what they expect of consumer durability. As we teeter on the edge of recession and a decline in purchasing power + consumer disposable income, will Chipotle come out strong?

  • Spotify (SPOT) - AMC

Wednesday

  • Boeing (BA) - BMO

  • Meta Platforms (META) - AMC: All eyes on Zuck's Metaverse as (hopefully) the company sheds some light on future plans. News has reported that Meta's "Metaverse" is kind of off to an underwhelming start.

  • Teladoc (TDOC) - AMC: Cathie's TDOC is under immense pressure. What was once one of the ARK's largest holdings has declined in their portfolio weighting caused by a... wait for it... 80% decline in share price.

Thursday

  • Shopify (SHOP) - BMO

  • Apple (AAPL) - AMC: Apple released a headline that they are curbing production on new phones since demand came in lower than forecasted.

  • Amazon (AMZN) - AMC: Amazon has done a corporate hiring freeze for it's retail business as well as reduced investments in their warehouses.

  • Intel (INTC) - AMC: The U.S chip export ban has semi-conductors under geo-political pressures and stocks like INTC, AMD, and NVDA have been down severely across the board.

  • Pinterest (PINS) - AMC: PINS and SNAP usually follow similar charts (SNAP posted poor earnings last week). With most media companies displaying a decline in advertising and a tougher path to tread from Apple's privacy prompt, let's see what PINS comes up with this Q.

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Top Meme Stocks

Top "meme stocks" this week:

#1: Tesla TSLA: Elon being Elon.

#2: Netflix NFLX: Outperformed on earnings.

#3: Snapchat SNAP: Tanked on earnings.

#4: Apple AAPL: Lower demand + earnings next week.

#5: Meta Platforms META: Metaverse flop + earnings next week.

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