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Bounce Sold

Updated: Dec 14, 2022

Happy Friday folks! After hitting 52-week lows last week, the market added a stream of gains with the S&P 500 advancing 6% before pulling back to the tune of almost 1% yesterday. This came as our long trade recommendation on $PBF yielded to the tune of 2% by the close. The macro story continued to unravel in a big way, so read on for your daily dose of market inspiration as September’s employment figures get released this morning.


Markets in Review

Despite the unemployment rate for September clocking in above consensus forecasts of 250K for the month of September, futures are still down in the premarket with the Dow, S&P and Nasdaq losing 34, 66 and 116 bps respectively. Despite the market discounting it, this is still a big win considering the fact that firms weren’t hesitant to keep hiring with the knowledge that an excise rate hike would be right around the halfway mark of the month.

Regardless, these are usually lagging indicators to the effects of rate hikes, so October’s employment figure release will be a true indicator that the Fed will be eyeing closely as it calculates how much further to raise rates.


Long: Aehr Test Systems (AEHR-NASDAQ) | Timeline: 2 days

Aehr Test Systems (AEHR), which provides test systems for burning-in semiconductor devices in wafer level, singulated die, and package part form worldwide, reported stellar earnings yesterday after the market closed, and bulls are likely to flood into this stock today - pricing in a massive beat. The company exceeded earnings and revenue estimates by 400% and 25.23%, respectively, while reporting net sales growth of 89% year-over-year. (Source) Turning to the chart, the stock didn’t have much volume running through for the most part of 2022, up until their 2nd quarter’s earnings beat back in august. Bulls ran the stock to the low teens after that announcement and the price has oscillated in that range since, forming a pennant - a popular continuation pattern formed when there is a large movement in a security, known as the flagpole, followed by a consolidation period with converging trend lines.


Zooming out...

US Cannabis Pardon In a move that shocked many Joe Biden has pardoned “all prior Federal and D.C. offences of simple marijuana possession”. This announcement was followed by a plea to governors to consider issuing similar state-level pardons. This pardon does not cover charges for the possession of other illegal drugs, or charges for possessing or producing marijuana with an intent to distribute. This move is part of a wider effort by many elected officials, and individuals to soften the stance on marijuana with an eventual goal of legalization. Nuclear Threats Spike

This week in an address to the Lowy Institute, which is an independent Australian think tank, Ukrainian leader Volodymyr Zelensky called on NATO to neutralize Russia’s nuclear capability. Unfortunately, his plan to do so revolves around NATO preemptively striking Russian territory. In his words:

“We need preemptive strikes so that they’ll know what will happen to them if they use nukes, and not the other way around. Don’t wait for Russia’s nuclear strikes.”

The Kremlin has since responded that these comments are a call to begin a nuclear war. This all while US President Joe Biden has said that the threat of nuclear armageddon is back for the first time since the Cold War. Biden also believes that the Russians have used, or will begin to use chemical weapons in Ukraine due to the underperformance of their armed forces throughout the conflict.


Making headlines...

North Korea Fires More Ballistic Missiles

  • North Korea fired two short-range ballistic missiles into the sea on Thursday in the direction of Japan, after the return of a U.S. aircraft carrier to the region and a U.N. Security Council meeting in response to the North's recent launches. (Full Story)

Serious Sabotage Found by Swedes

  • The Swedish Security Service stated that detonations caused the damage to the undersea Nord Stream pipeline system just outside its territorial waters. (Full Story)

War in Tigray Continues

  • More than 50 people were killed in an air strike on Tuesday that hit a school in northern Ethiopia’s Tigray region that was sheltering people displaced by the conflict between the federal and regional governments, two aid workers and Tigray forces said. (Full Story)

FTX and Visa to launch crypto debit card worldwide

  • Crypto exchange FTX is partnering with Visa (V) to make it easier for individuals around the globe to use crypto holdings for everyday purchases. (Full Story)

Oil Dispute Continues

  • A trio of Democratic lawmakers wants to pull all U.S. troops out of Saudi Arabia and the United Arab Emirates after an alliance of oil-producing countries announced it was slashing production, a move which is expected to drive up U.S. gas prices. (Full Story)

September jobless rate falls to 5.2%

  • Statistics Canada says the Canadian economy posted a modest gain of 21,000 jobs in September. (Full Story)


Chart of the Day: The Biggest Asset Bubble Yet…


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