Well folks, while the market has managed to hold this price level through the week, our picks have benefited from the continued earnings season with our most recent $LYFT trade up 3.4% yesterday. Read on for your daily source of market inspiration in this largely now pacified market.
"Intentions do not insulate us from the consequences of our actions."
- Jon D Harrison
Market Talk
Markets were strong during Wednesday’s trading session, bolstered by relief from relatively strong earnings from giants such as Moderna and eBay, alongside a lack of hitches from Nancy Pelosi’s Taiwan visit. Energy stocks declined as the EIA print revealed a large build-up of both oil and gasoline. While this excess is artificially propped up by Biden’s SPR sales, this rise in supply signals a price decline within the near future. Throughout the day, the S&P rose by 1.56%, the NASDAQ jumped 2.59%, and the DJI climbed 1.29%. As we head into Thursday, S&P, DOW, and NASDAQ futures are all in slightly positive territory below 20bps, while crude oil futures are up by 35bps, with many rallying on the hopes that the July non-farm payroll results set to be released at 8:30 AM tomorrow.
Long: Alibaba Group (BABA-NYSE) | Timeline 2-3 days
Alibaba, a company that provides technology infrastructure and marketing reach to merchants, brands, retailers, and other businesses to engage with their customers internationally has reported exceptional earnings this morning as tech continues to perform through this week. The company beat revenue and EPS estimates by 1.07% and 9.72%, respectively, and CEO Daniel Zhang stated that “during the past quarter, we actively adapted to changes in the macro environment and remained focused on our long-term strategy by continuing to strengthen our capability for customer value creation" (Source), giving bulls more confidence in driving this stock back to pre-pandemic levels sooner than expected. Speaking of which, Alibaba’s technicals do carry bullish sentiment for a couple of reasons. First, after the MACD had previously been exhausted through June, it has cooled off and has begun to pivot around its equilibrium - a strong sign of a reversal as this indicates an increase in buys. Second, a falling wedge has been formed by the most recent batch of candles printed through June, and the price has broken out upwards in this morning's pre-market due to great news amid market constraints.
Short: Lucid Motors (LCID-NASDAQ) | Timeline: 2 days
Last night after market close Lucid reported earnings, and to the market’s horror, they were much worse than expected. The company cut production forecasts for the year from 20k to 6k after making only 1405 cars during the first half of the year. 679 of these 1405 cars manufactured came within the second quarter. Net revenue was equally as disappointing, coming in at $97M vs $147M expected. Cash burn within the first half of the year was $1.5Bn, relative to cash on hand sitting at $4.3Bn, meaning that at current levels the company can’t survive for more than 18 months without a large bump in sales or a capital raise. This company may still be a Tesla competitor down the line, however, as Elon Musk knows, production has a lot of problems. The coming downtrend has been forecasted by the MACD, which has declined to roughly .18, while momentum sits at -.71. While the stock has already dropped 12% in after-hours/pre-market trading, we believe that these poor sales figures and dismal guidance warrant a further decline throughout the next two trading days.
Chart of the Day - European Electricity Prices (Euro/Megawatt hour)
