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The Coachman's Report - How low can we go?

Updated: May 26, 2022

Welcome to Week #7 of the Coachman’s Report Folks! With last week presenting some of the most volatility markets have seen in a while the long weekend was a much-needed breather for investors to really take stock of the state of affairs and decide whether this 20%+ market sell-off will continue or not…As US markets opened up yesterday, we have a good feeling for Canadian equities today, however, it's important to remember there are still some key risk-off catalysts that could hold up any material advances in equity prices.


“Be tolerant with others and strict with yourself.”

- Marcus Aurelius


Market Talk

The broader market as tracked by the S&P 500 advanced a solid 2% yesterday while the VIX rose as well but held below the key 30 levels, this was a welcome advance in the face of a 12% sell-off in the later end of last week. That said, the market is still in a bearish price channel, with yesterday’s movement only acting as a relatively small retracement to the higher level given the aforementioned Thursday-Friday sell-off. To break this downward spiral, we first need to see the S&P 500 get back above the key, 4000-point psycho

logical price level and then have a sustained spree of buying to the tune of a couple percent for at least two weeks - this would get the 50 day MA above the 200, marking a meaningful bullish sentiment having taken the reigns again.


Short: Amazon ($AMZN-NASDAQ) - Timeline: 2-4 Days

Amazon has begun offloading warehouse space, with reports that the company plans to sublease up to 10m square feet, while potentially ending leases across the United States. As a recession is predicted by the majority of individuals on the street, brands that rely on disposable income, or provide easily replaceable products, will likely suffer. That’s where Amazon is doomed, as gas and grocery prices continue to rise, and people begin to spend less on frivolities, many will ask themselves “is Prime worth it?”. Moreover, when faced with the choice between online goods, and food on the table, my guess is that many will curtail shopping habits before spending less on necessities. It also seems that many families have already had this conversation, as a lack of growth in Prime subscribers is what sent the stock tumbling downwards just a short time ago. The company’s technicals are looking as bleak as their outlook, as the momentum is less than -1000, while the MACD is sitting at -266. One thing to note for anyone considering this idea for their own trading, the market could see extreme volatility during the FED notes being released on Wednesday at 2:00pm EST, so plan accordingly.


Long: Zim Integrated Shipping ($ZIM-NYSE) Timeline: 3-7 days

For today’s second trade idea we’ll be reiterating our confidence in this steadfast shipping powerhouse. Zim continues to outperform the majority of stocks on the street, already having a stellar start to the week with a 7.77% gain during Monday’s trading session. For a quick recap of this stock’s price action. Since IPOing in January of last year, the company has had growth akin to a biotech company after an FDA approval, however, it’s not being valued like one. Zim’s current P/E ratio is a mere 1.35, a far cry from the outlandish valuations often attributed to young companies. Moreover, this valuation comes after a 617% in gross profit, and a 730% gain in operating income during the 2021 year. On the technical side of things, the stock has bullish momentum behind it, while also trading above all moving averages. One thing to note for anyone considering this idea for their own trading, the market could see extreme volatility during the FED notes being released on Wednesday at 2:00 pm EST, so plan accordingly.


Earnings Preview: Week of May 23-28


Chart of the Day: Nasdaq 100 P/E Level

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