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Technical Default?

Well folks, despite markets finishing relatively unchanged to lower yesterday, our picks had a solid day with and Suncor returning 3.9% & 3.2%, respectively. Read on for more inspiration and analysis on what happened with Russia’s crucial debt repayment deadline today.


“Age wrinkles the body. Quitting wrinkles the soul.”

- General Douglas Macarthur


Market Talk

Markets regressed yesterday with the S&P 500 closing down 39bps, however, volatility continued to subside with the $VIX clocking in at 26.95 (-1.03%) by the close. This is quite interesting given Russia’s technical default on the $100M worth of bond repayments that were due by EOD yesterday - the end of their grace period. The Kremlin put out a statement claiming that they had wired the funds to Euroclear (a Brussels-based clearinghouse) before the end of the business day and that it was the West’s sanctions that have forced them into the ‘technical default’ they appear to be in; regardless, it's an interesting situation because rating agencies have been barred from covering Russia since the onset of the conflict and it will be up to the Credit Derivatives Determinations Committee as to whether Russia has formally defaulted. Should this be the case, it is likely to act as a material risk-off catalyst for the broader market.


Long: PetroTal Corp (PTAL.F-PNK) | Timeline: 3-4 days

PetroTal is a Canadian domiciled, oil production company with operations located in Peru. Recently, the stock has experienced a resurgence after seeing catastrophic declines from late 2012 through early 2021. These recent upward movements in share price are also backed by the company’s impressive performance during 2021, as they have experienced a growth in revenue of >400% compared to 2020. Moreover, the company is preparing 720K tendered barrels for shipment and sale in July, which at a conservative $100 per barrel would yield the company $72M. This would represent a >200% jump from the Q4 ‘21 revenue of just over $34M. Additionally, a large section of a PetroTal pipeline in Peru has once again opened after being closed for maintenance during portions of Q1. Aside from future estimated income, the statistics and moving averages support this trade. First and foremost the company is trading at a 1.85 Price to Book ratio, while the oil production space as a whole is trading at 2.29. The company is also trading at a P/E ratio of 7.63. On the technical side, the company is trading above the 50-day and 200-day moving averages, while recently experiencing an upward movement after briefly breaching the 50-day in a downward movement.


Long: Franklin Covey Co. (FC-NYSE) | Timeline: 1-3 days

Franklin Covey Co (FC), a company that provides training and consulting services in the areas of execution, sales performance, productivity, customer loyalty, and educational improvement for organizations and individuals worldwide is set to report earnings tomorrow. With their share price increasing about 20% and overtaking the 200-day MA, investors are confident in this stock reporting a very positive earnings report. Analyst expectations are very optimistic, predicting a 38% increase in earnings and a 13.5% increase in revenue, even though revenue estimates did miss last quarter. Taking a closer look at the chart, bulls have positioned themselves to carry momentum through earnings as they have pushed the price per share over the 200-day MA, while the MACD has followed and crossed into bullish territory above 0. A key pattern that also signifies a reversal from this short bear run is a triple bottom - a widely used technical pattern indicating bulls taking over from the bears, through three equal lows bouncing off support, followed by a breach of its current resistance level. Also, as mentioned yesterday, a good trader should always watch for fakeouts, so make sure your stop losses are set!


Chart of the Day

Abysmal returns in HY bonds have forced flows out of the asset class...


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