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Nancy Takes On Taiwan

Morning folks! After a relatively choppy Monday, a holiday for us Canadians, we’re back and ready to give you a rundown on markets, geopolitics in the Asia Pacific region, as well as a few trade opportunities throughout this extremely important earnings week.

 

“Live or die, sink or swim.”

- George Peele

 

Market Talk

The market was very indecisive yesterday indicated by the most recent doji candle, as the SPX reaches a key resistance area around 4100 points. This indecisiveness could potentially bleed into today due to a multitude of factors, however, the anticipation prior to this Friday’s jobs report looks to be carrying the most weight as it could make or break July’s rally.

As we discussed in Friday’s edition, the possibility of Nancy Pelosi visiting Taiwan has become a reality. With reports of her planes on the way to the island nation as of Tuesday morning, Chinese troops have been amassing on the shores of Fujian (pictured below) at the same time as US government websites have been rocked by a cyberattack. We can’t say what the outcome of this visit will be, however, it must be known that this is one of, if not the closest that the countries have been to open conflict within modern history. Any hostility between the nations is likely to rock markets, and as such, we’d advise exercising extreme caution when investing in any companies that rely on China for a large share of their business, or those that are headquartered within the country.

 

Long: AMC Entertainment Holdings Inc. (AMC-NYSE) | Timeline: 4 days

The name that has rocked trading forum message boards for the better part of 2 years is set to release a monster of an earnings report this Thursday, August 4th, and as a result we believe in the company for the short term. The 2nd quarter was big for movies and theatre operators, as many companies began to abandon the hybrid release model and return to premiering their movies solely within theatres. Over the second quarter, US domestic box offices raked in roughly $2.323Bn with blockbusters like The Batman, Top Gun Maverick, Jurassic World Dominion, and Doctor Strange 2, driving Americans back to the silver screen in droves. Due to AMC’s position as the largest theatre company in the US they are poised to reap a lion’s share of the rewards from this profitable quarter. We recommend instituting a stop loss at 10%, as the company is extremely volatile and could maneuver wildly even with an earnings beat.

 

Long: Uber Technologies, Inc. (UBER-NYSE) | Timeline: 2 days

Uber Technologies, a company that connects consumers with independent providers of ride services for ridesharing services has reported stellar earnings this morning as the company turns cash flow positive for the first time as the company reaps the benefit of easing covid restrictions resulting in a 55% jump in its mobility bookings and 7% boost from its delivery business (Source). Traders caught wind of this fairly quickly as the stock has jumped +10% in pre-market trading, and will most likely gap up at the bell - a great sign for bulls as gapping up shows great strength through key resistance areas like the 50-day MA. Moreover, the MACD has followed the bullish narrative as it blows past its equilibrium, giving investors more gas to add to the fire as an incoming reversal for Uber looks probable.

 

Chart of the Day

Gold miners now have the highest dividend yield in almost a decade.



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