Preview of week (22Aug2022) - will Nvidia continue her recovery her earnings

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Nil for Singapore, Hong Kong, China & the USA


Earnings Calendar

One of the companies to watch out for during the coming earnings is NVDA.

The stock suffered a drop of 14.25% from a year ago and has fallen to a recent low of $140.55. The last few weeks saw a recovery but there seems to be a ceiling around the $189 region.

For the coming earnings, the forecast of EPS and revenue are 0.5297 and 6.83B respectively.  This is an important reference for the chip industry and the market outlook will be crucial to set the expectation for the rest of the industry.

Economic Calendar

Home sales (new and pending) in the US will be an interesting area to monitor as we read of more families backing out of their home purchases.  Be it the rising interest rates or reduced disposable income, we are seeing more cancellations.  This has brought duress to the market, especially home builders.

Crude Oil inventories can be seen as a future indicator of consumption.  If the demand for oil decreases, we can expect that consumption and production to reduce.  While there is relief in fuel prices, the greater concern is recessionary.

The initial jobless claims will be watched closely by the Federal Reserve too.  It will provide important guidance for the coming interest rate adjustment as the Fed seeks to balance unemployment with inflation.

My muse & market outlook

from the 1D chart of S&P500, we have the following:

• the Stochastics indicator is on a downtrend
• the MACD indicator looks to have peaked and we should expect a cross-over and a downtrend soon.  However, it is still possible for MACD to continue its uptrend
• the Exponential Moving Averages (EMA) lines look to be converging and a reversal looks in the card for the weakening uptrend.
• the Moving Averages (MA) lines have yet to converge.  For the MA200, it looks to be on a downtrend.  For the MA50, it looks to be on an uptrend.  The candles remained below the MA200 line (and thus, look to be bearish for the longer term.  The candles are above the MA50 and thus, suggest a bullish trend in the shorter future.
• Another indicator is the volume.  The average volume is 3.735B and the volume looks to be smaller than usual for the last week, where only Tuesday's volume is above the average.  For the rest of the days, the trading volume is below the average. This implies that the ongoing uptrend is losing momentum.

My muse and news:

Europe's wholesale gas prices are up 350% year-on-year. High prices are expected to continue this year and next. Rising wholesale energy costs are passed on to consumers.

Data from the Federal Reserve Bank of New York showed a $312 billion increase in total household debt to $16.15 trillion in the second quarter of 2022. Credit card debt, in particular, increased by $46 billion.

More back out from home sales with costs and recession concerns - CNBC.

German producer prices jumped at the fastest pace on record in July, a gloomy outlook for Europe's largest economy, which suffers from soaring costs & weakening growth due to the Ukraine war - Record jump in German producer prices adds to gloomy outlook

Let's monitor the situation in China. hopefully, we can avoid lockdowns that may affect the economy. 

(Reuters) - A recovery in global business travel spending to pre-pandemic levels is likely to be delayed by 18 months to 2026 because of persistent inflation, high energy prices, labour shortages & lockdowns in China. 

There is much room for misinterpretation & misunderstanding especially when we look into non-Western practices using non-Asian lenses.  Let us view Asia through an Asian lens for better understanding and appreciation.

Conclusion

There are signs that the recent rally is losing momentum and the technicals should confirm a reversal (in 1 Day charts) in the coming few days.  We are getting news of more crypto companies limiting withdrawals.  It seems that in most cases, it is challenging to recover the money.  Real estate is facing much headwind as more have reported exiting their (recent)home deals.  8.5% inflation remains bad news and we should expect the Fed to maintain an aggressive stand to bring it under control.  A 50 to 75 basis points hike is expected but the Fed will have more economic data updates before they finalise the next rate adjustment in September 2022.

Europe and various parts of the world have been reporting challenging weather conditions with a drought of great concern.  The impact of drought is not limited to crops.  It is extended to water consumption, energy generation (for hydro-powered dams) and energy consumption.  Heat waves can also affect travel as more opted to stay indoors to avoid the heat.

I remain cautious as we can expect more challenges to come and we are not seeing any strong factors that can rally the market.  With the challenges of food, fuel and finances, the problems are global and not just limited to a few countries.  The fallout of the Ukraine war has impacted many developing nations and this may persist as the conflict drags on.  As we approach winter, it is just going to get more challenging for the people as energy costs have soared.

Let us spend within our means, invest with what we can afford to lose and set aside cash to buy great companies at good discounts.