Preview of the week starting 8th August 2022 - has Palantir bottomed up?

Public holidays (Singapore, Hong Kong, China & USA)
9th Aug 2022 - National Day of Singapore


Earnings Calendar

Earnings Calendar for week starting 8 Aug 2022

For the coming earnings, the ones of greatest interest for me are Palantir, Coinbox and Rivian.

In fact, we can foresee some volatility in cryptocurrency as big players of Coinbase and Celsius report their earnings.  For Rivian, this was touted to be one of the biggest US challengers to the EV leader Tesla.  For Palantir, they have hit a recent low and this week could see a turnaround or a further dip.

Palantir

Palantir's stock has fallen 47.53% from a year ago.  Though we were away from a low of 6.44, we are still a good way from the high of 29.29.  

The forecast of Palantir's Q2/2022 EPS and revenue is 0.0307 and 469.09M respectively.  Will Palantir be able to continue its recovery as they venture to secure more non-government customers?  Let us hope that the climb can continue.

Coinbase

Coinbase has tumbled from its high of 368.90 to its recent price of 93.05.  There seems to be a strong correlation between its price and that of Bitcoin.  With this 63.97% loss of value from a year ago, Coinbase has crawled its way up from the recent low of 40.83.  Cryptocurrency remains a volatile asset class but is still something that we need to consider.  The capital (funds) flow amongst the different classes (bonds, equities, properties, etc) has implications on the stock market.

The forecast of Coinbasde's Q2/2022 EPS and revenue is -2.44 and 879.69M respectively.  Will Coinbase be able to continue its recovery as Bitcoin climbed above the (psychologically) strong support of 20k?  Let us hope that the climb can continue.

Economic Calendar

Economic Calendar for the week starting 8 Aug 2022

In the coming week, there are a few important economic indicators that we will like to look into.  It is possible that the market remains edgy till the CPI (YoY for July 2022) is released.  This is probably the most "watched" event for the week as this represents inflation in the economy.  Through selling off assets and increase of interest rates, the Fed has been putting up measures to contain this beast (of inflation).  While inflation is expected to be "heightened" at 8.7% YoY, it is expected to drop off in response to the measures taken.  With the FOMC due to meet in late September, this news may just be transitory as there is another CPI update before the Fed needs to decide on the next interest rate hike.

What are important as forward-looking indicators are the crude oil inventories and the PPI (July).

Investing dot com explanation of Producer Price Index (PPI)

Before the inflation reaches the consumers, this can be found over in the PPI where we can note the changes affecting US producers of goods and services.  Thus, this can be a prequel to the inflation that will hit the market as producers deflect some of the inflationary effects to the consumers.

This is the same for crude oil inventories.  Crude oil is at the production upstream before the final products reach the market.  The consumption can give an indication of how the market forecast for their production and thus, a glimpse into the future of the economy.

The last (but not least) is the initial jobless claims.  Apart from managing inflation, the Fed's other main role is to drive employment.  Thus, this data will be an important consideration for the Fed as they tackle both employment and inflation together.  While it will be till 21 September for the Fed to advise, these will be important milestones for the Fed to review the effectiveness of their plans and executions.

News and my muse

Stagflation combines the words “stagnation” & “inflation.” It describes an economy with heightened inflation & unemployment with low or no growth.

During a recession, the economy struggles, people lose work, companies make fewer sales & the country's overall GDP declines.

Price is the result of demand meeting supply.  Thus,  demand & supply affect both price & inflation.

The supply chain challenges limit supply and causes inflation. Adjusting the interest rate alone does not solve supply & supply chain-driven inflation.

In a bullish market, the magnitude of the climb is usually more than the drop.

In a bearish market, the magnitude of the drop is usually more than the climb.

There are always exceptions to the rule.

it seems that USA's carrier advantage is under threat due to the rise of hypersonic missiles.

Cryptocurrency is not within my circle of competence and thus, both $BTC & $ETH are not subjects of interest. For those who are in crypto, I wish you good fortune and good health. this is just not for me.

It is interesting why Ms Nancy Pelosi does not include China as part of her APAC visit when China is USA's biggest trade partner (2021).

China threatens to strike should Ms Pelosi visit Taiwan.  China is not one that shouts empty threats.

with this, the demand for charging, data security, personal data privacy and analytics will surge. we can expect the development and rise of new services and more. 

we can also use robotaxi as part of the virtual power grid as energy storage or sources pending the hours.  Let us throw in some solar roofs, develop proximity charging and autonomy can be extended to other transport modes. 

as we dream, we will need to work together with legislators to contain criminal exploitation and develop various business contingency plans. 

Market Outlook

1D S&P 500 chart as of 7 Aug 2022

From the S&P500 1D chart above, we can note the following:

• The stochastic indicator is ranging above and looks to be peaking.  This implies that we may see a drop over the coming days.
• The MACD indicator still shows an uptrend.
• For the moving averages (MA), the candlesticks are above the MA50 which is also turning towards an uptrend.  for the MA200, the trend remains down.  Thus, we can read this as more bullish in the short/mid-term.
• For the exponential moving averages (EMA), we can see that there is a clear and strong uptrend.
• For the last week of trading, the daily volume was lesser than the average of 3.88B (except for Tuesday) and thus, the strength of the current trend seems to be weakening.
• Based on my technical setup above, we can see an uptrend though the lack of volume does imply that the "ongoing climb" is losing strength.

Technical Analysis of S&P500 1D chart

From the above (investing dot com) technical analysis, we can see that there remains a "STRONG BUY", ie uptrend for the coming week.  Personally, I think that the coming week would be volatile due to the following considerations:

• CPI/inflation data due on Wednesday
• PPI data is due on Thursday (forward-looking inflation indicator)
• Jobless data is due on Thursday (where we can expect more)
• following Friday's dip, it would be interesting to see if the market remains bullish or cautious
• While there are more who claimed that the dip is over, 2 quarters of GDP decline, a heightened inflation rate point to weakness in the market and the disposable income available.
• With the extreme weather events, it is interesting to see how it will affect the harvest and current cropping.
• While China may have finished their military exercises, they have basically used Pelosi's visit to challenge the boundaries of Taiwan and literally, crossed them at will.  While the 4 days of exercise are temporary, China was unchallenged as they cross the waters or airspace.  Personally, the exercise may have ended but we can expect China to roll out more "measures" in response to the visit.  While the market did not "suffer" from the visit, we can expect non-military responses coming up.
• Personally, I am glad that there were no conflicts during this time.  It would be another mess that the US has created for their allies (in this case, Taiwan).

I do not think that we are out of the woods as yet.  Thus, I continue to be cautious.  I am in the midst of identifying great companies in anticipation of more dips to come.  For those who DCA, please continue to disciplined buying.

As always, let us spend within our means, and invest with what we can afford to lose into great companies at good discounts.  Personally, I am about to close up my season of buying up defensive stocks and will be setting aside more "cash for crash".