The market hates surprises. There was an assumption that inflation has cooled down on recession worries and the US Central Bank would go on a pause to ensure growth does not suffer beyond a point. But the US Fed Chairman Jerome Powell came out with an extremely hawkish statement and indicated that the US Central Bank would like to kill inflation before worrying about economic growth. It means more rate hikes and the US Fed would not be in any hurry to bring it down. This was enough to spark a dramatic sell-off on Friday. Today the market saw some recovery from the lows but here’s how the individual stocks discussed over the last few weeks stand.
Ford price action looks good
Ford stock did a Gap up move on July 28 post earnings. The stock rallied from $14 to $16.5 and now the stock seems to be trading sideways. The bullish structure continues to be intact, and it looks like after some consolidation, the stock might resume its uptrend.
Ford delivered a strong earnings report and its EV business seem to be on the right track. The company’s revenue soared 50% year over year to over $40 billion, and net income jumped 19%. The company is generating substantial cash and this might help fund its EV ambitions. There is business momentum in EV business.
Ford increased sales of electric vehicles by 176% in July, and the company now has a 10.9% market share of the EV market in the US.
Nokia disappoints again
Nokia is one stock that consistently disappoints. This time turned out to be no different. The stock just could not sustain gains and the gap-up move fizzled out.
Nokia is a preferred provider of 5G network equipment in important markets like the U.S., and Japan. The company delivered a strong earnings report but somehow the stock fails to perform
Climate Bill is Good news for Nuclear Energy and Uranium Stocks
Russia’s Ukraine war is going to push European countries to look at Nuclear energy options closely. The Climate bill in the US also helps. The act could provide up to $30 billion in production credits, and this has the potential to delay the closure of a significant number of nuclear power plants. This increases the demand for Uranium.
I recommended two stocks: 1. CEG and 2. URA Uranium ETF.
CEG Constellation Energy, a play on Nuclear Energy first popped up on Climate Bill and then made a large candle move on earnings (recommended near 71)
Uranium stocks are surging and the best way to play that was URA ETF. It is surging. I recommended it at 22.35. The stock leading from the front is CCJ.
The Bull market is in Oil and Gas stocks be it Devon Energy DVN, Equitrans Midstream ETRN, and SWN. I panicked and exited DVN 🙁
Can we trust Gap up move in Palo Alto Networks PANW?
Palo Alto Networks PANW is a cybersecurity play. The stock did a huge 12% Gap up on a strong earnings report. The company delivered both on revenue growth and profitability. The stock has sustained the Gap above 550. I would add the stock below 560 with stop loss below 520
Cloudflare NET also surged on strong earnings but now there is worry about whether it will sustain the Gap and trade above 58
SOFI – Hope turned into a disaster
Sometimes it’s just bad timing. The company comes out with a brilliant earnings report and just when you thought the stock would rally, it collapses. Jerome Powell excessive hawkish speech just soured the sentiment on fintech stocks. Sustained higher interest rates is not good for Sofi business. The chart is so damaged that it’s hard to say what to do next. Hopefully, you liquidated 50% of the holdings on the way down.
A new idea: FREY
One more beneficiary of the Climate Bill – Battery players. Clean battery producer Freyr is a beneficiary. The stock gapped up recently on partnership news and the stock seems to be doing well.
Other Notes
I recommended booking profit in AMD at $100. AMD has dipped to 88 and I would be looking to buy again below 80.
Solar stocks continue to do well. I like FSLR and recommended near 99. Now at 120+
Will Paypal sustain the Gap above 90? See
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
State of the US market:
“The market structure is broken, so when there’s a fundamental reason for the market to go down, it will go down so quickly that the heads are going to spin. There are no stabilizing forces in the market now. It is all run by machines.” – Leon Cooperman