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SomaBull, Washington, America, Washington Heights, Manhattan, NY (2026)

05/04/2022

Dalio, the founder of Bridgewater Fund, believes that the bubble of innovative technology stocks has burst, but it does not mean that it is a good time to enter the market to buy.
In January, Dalio warned that innovative tech stocks including Tesla and Roku were in an extreme bubble.
Dalio highlighted other signs of a bubble, including a boom in special-purpose acquisition companies (SPACs) and IPOs, and a surge in options trading activity. Subsequently, the bubbles in related technology stocks burst one after another, and the overall price fell by about a third from last year.
Overall, U.S. stocks remain overvalued, Dalio added. History shows that bubbles tend to overcorrect into downtrends rather than stabilizing at more "normal" price levels.
Ruidario is known as the "Steve Jobs of the investment world" and is in charge of the $150 billion Bridgewater Fund. His opinions have always been valued by our team. This time, how do we understand Mr. Dalio's view?
We select the Nasdaq index, which can represent the trend of technology, among the three indexes for analysis.
Above, is the weekly cycle chart of the Nasdaq index.
The 250 moving average represents the basis for a long-term bull market. The price only briefly touched the 250 SMA twice, the first on October 3, 2011, and the second on March 23, 2020.
The 120 moving average is the basis of a strong bull market. After 2016, the trend adjusted and fell below the 120 moving average only on December 17, 2018, March 9, 2020, and April 25, 2022.
December 12, 2018 and March 9, 2020 can be regarded as a group of adjustments. The current adjustment only fell below the 120 moving average once, and the level of adjustment is obviously lower. So Dalio is referring to a mid-term adjustment. The previous set of high-level adjustments took 15 months, so maybe, this mid-term adjustment takes 15/2=7.5 months, that is, about 6-9 months.
Specifically, we are looking at Tesla, the representative of technology stocks.
The picture above is Tesla's weekly cycle.
We select the time point when Tesla began to rise on June 3, 2019, and the time point when the adjustment ended on May 17, 2021, as an upward trend line, which is the support line for Tesla's trend. Now, the price of Tesla is still at the support line.
Based on the above analysis, we are slightly more optimistic than Mr. Dalio about the trend of global technology, and believe that the global technology rally is still continuing, but it was adjusted some time ago.

05/03/2022

Investors in the S&P 500 ETF are experiencing a 15% drawdown at this point. Unfortunately, given that the tech sector makes up 27% of the overall index and the consumer discretionary and communications sectors another 20% combined -- nearly 60% of the index, SPY is vulnerable to even bigger losses.
However, in my opinion, the first phase of the bear market is complete. Therefore, investors who fail to sell should probably hold on and wait for the opportunity to sell at higher levels, or whether to sell at all - it really depends on whether an actual recession will follow and whether it will be enough to cause the economy decline. Credit crunch.
From the perspective of SPY short sellers, in Phase 1 of a bear market, shorts make easy money. The second phase of the bear market has yet to begin and the market can be very volatile as some short sellers will be forced to cover at higher prices.
As such, I'm currently tactically neutral on the S&P 500, more likely to play a relief rally on the bulls' side, and tactically I remain bearish on a Fed-induced recession -- just looming.

05/02/2022

Inflation, especially stagflation, makes investing more challenging.

Stagflation is when inflation is high but growth is low or negative.

Cash and bonds are obviously a tough place, as their yields are typically below inflation levels in an inflationary environment. A bond is a promise to pay a certain amount of money in the future, and the purchasing power of that currency is being diluted.

Stocks usually don't do much better. If the purchasing power of the currency is relatively stable, it is easy for businesses to plan for the future, sign long-term contracts, and so on. If the currency is unstable, planning becomes more difficult. A company's revenue increases with prices, but so do their expenses, and it's hard to predict whether revenue or costs will rise faster. In addition, high-value stocks are also under valuation pressure as bond yields rise.

Real estate tends to do better than stocks and bonds, especially if you have a fixed-rate mortgage. Over time, house prices (assets) typically adjust upwards with inflation, while fixed mortgages (liabilities) are inflated. It depends on valuation, though; on inflation-adjusted terms, a given house price is likely to trade sideways for quite some time.

Industrial commodities, such as oil and copper, tend to be big winners in an inflationary environment. Almost by definition, if inflation is high, it means that commodity prices are rising. Typically in an inflationary environment, commodities are undersupplied and it often takes years to bring in sufficient new supply, dragging down real economic growth and causing stagflation. Commodities, however, can be very volatile, subject to sharp pullbacks even in environments favorable to them.

Monetary commodities such as gold and bitcoin are ultimately correlated with inflation, but not necessarily at the exact moment of high inflation like industrial commodities. Gold tends to do well especially in stagflationary environments where economic growth is decelerating but inflation remains high. It also tends to hold up well in outright recession/deflationary environments, at least compared to stocks.

05/01/2022

The FOMC announcement and press conference will be held on Wednesday, May 4. Unless the Fed announces something completely unexpected, it could be a de-risking event for stocks and the S&P 500 and S&P 500 ETFs (NYSEARCA: SPY). The VIX, which measures implied volatility, is currently trading around 33, which is Indicating that the options market is pricing in a near 2.1% daily swing in the S&P 500.

A fall in the VIX indicates that implied volatility levels are falling, which would lead to a rapid devaluation of put options. The decay in value of put options is likely to cause traders and investors to sell put options they may have acquired ahead of the FOMC meeting. Selling these put options will cause market makers to over-hedge and will cause market makers to start buying S&P 500 futures, providing a tailwind for the index to rise.
Since the end of 2021, the S&P 500 ETF has seen a sharp rise following the FOMC meeting, while the market has fallen sharply after the FOMC minutes. Unless the Fed does something completely unexpected, I think there's a good chance the cycle will continue with the S&P 500 after the meeting, for the reasons outlined above.
The VIX is typically lower around the time of the FOMC minutes and higher before the FOMC meeting. Ahead of the FOMC meeting, the VIX once again found itself trading at high levels
That could help generate a rebound after the session. Still, any rebound is likely to be short-lived, as the fundamentals of the S&P 500 ETF and the broader stock market are deteriorating; as higher rates compress, P/E ratios and earnings are likely to be lower. .

04/28/2022

UBER blocked its own downside. A rise will begin shortly after a break below the previous low of 28.278. The increase is expected to be close to 100%.

04/27/2022

The Q1 Earnings Season for the Silver Miners Index (SIL) is just around the corner, and one of the first companies to release its results is Hochschild Mining (OTCQX:HCHDF). Unfortunately, the company has seen a slow start to the year with just ~80,900 GEOs produced, continuing a trend of declining production. However, Hochschild has reiterated its guidance and could see a meaningful boost to output with Posse potentially coming online in 2024. At a share price of US$1.49, Hochschild is cheap, but with the stock in the middle of its range, I see the low-risk buy point at US$1.25 or lower, closer to key support.
Moving to the technical picture, it's clear that Hochschild has been a terrible performer, sliding more than 65% from its August 2020 highs. This has left several resistance levels stacked overhead, with the closest one coming in at US$1.80, where the stock was rejected three times since the start of the year. Meanwhile, the next support level doesn't come in until US$1.30, translating to $0.19 in potential downside to support and $0.31 in potential upside to resistance, or a reward/risk ratio of 1.63 to 1.0.
Generally, when it comes to small-cap producers that have above-average costs, I prefer a reward/risk ratio of 5.0 to 1.0 or better and typically prefer to buy right at support. So, while Hochschild is cheap at a double-digit free cash flow yield and less than 0.85x P/NAV (non-spot prices), I don't see a low-risk buy point just yet. However, if the stock were to decline to US$1.30, where it would rest right on short-term support, I would view this as a buying opportunity from a swing-trading standpoint.

04/26/2022

U.S. stocks closed higher on Monday after Musk's acquisition of $Twitter (TWTR.)$ reignited traders' risk appetite and gave a much-needed boost to technology stocks.

However, the Fed's plan to quickly raise interest rates since the beginning of the year has caused the U.S. tech sector to falter, while other macro factors such as soaring inflation and the Russia-Ukraine conflict have weighed on overall sentiment, and the tech giants must also deal with changes in online to offline consumer spending as the epidemic recedes.

MAMAA (including $Meta Platforms(FB.)$, $Apple(AAPL.)$, $Microsoft(MSFT.)$, $Amazon(AMZN.)$ and $Google-A(GOOGL.)$, the parent company of $Google-C(GOOG.)$, will be announcing their financial results in the next few trading days. Many investors are eager to see the latest round of results to help them get out of trouble.

Edward Moya, senior market analyst at Oanda, said: "These companies, which account for a third of the weight of the S&P 500, will report earnings this week, and the market will likely see much the same thing: most will beat revenue and profit expectations; companies will discuss margin pressure and say they will pass on price pressure to consumers; but they will still emphasize a generally optimistic view of the economy."

Brian Belski, chief investment strategist at BMO Capital Markets, said, "Technology companies seem to have a free pass right now as the overall sector is in a downtrend. That doesn't mean earnings performance will be bad, it just means they have the opportunity to really lower their standards, lower their expectations and improve their results."

Wedbush analyst Dan Ives believes that the results of the two tech giants, Microsoft and Apple, "could determine the direction of technology stocks in the months ahead. "So far, we expect both Microsoft and Apple to report strong results this week, which will be much-needed good news for the tech sector at this time of stress," Ives said, "while companies that have benefited from the work-from-home trend during the outbreak, such as $Nefly (NFLX.)$, Meta (NFLX.)$, Meta, $Zoom Video Communications (ZM.)$ and $DocuSign (DOCU.)$ may find that their P/E ratios may decline as their results come off the highs."

Alphabet and Microsoft will be the first to pull the plug after the U.S. stock market session on Tuesday EST. The market now expects Alphabet to invest heavily in YouTube and other Google services, while investors will also be watching closely for information on commissions paid within the app and comments about anti-trust actions by regulators alleging the company's search service. The market generally expects Alphabet's Q1 earnings to be $25.55 per share and revenue to rise nearly 23 percent year-over-year to $67.8 billion.

The market also expects Microsoft to get good results. Among them, investment bank Piper Sandler believes that Microsoft's cloud business is expected to help Microsoft achieve double-digit overall revenue growth, considering that the business is so large (48% of cloud revenue) and growing at a rate of more than 35% per year. In addition, investors expect the company to reveal more details about its $69 billion acquisition of video game maker Activision Blizzard (ATVI.)$ to understand the company's move into the metaverse. The market generally expects Microsoft Q2 revenue to be $49.05 billion and earnings per share to be $2.20.

Meta will announce its Q1 financial results after the US stock market close on Wednesday EST. At this stage, the market is of the view that the impact of Apple's privacy policy change on revenue will still lead to a hit in advertising revenue, which will cause a slowdown in revenue growth, and for the next growth phase, the high investment in the short-term meta-universe business will undoubtedly add a new layer of risk for the company. The market expects Meta to earn $2.57 per share on revenue of $28.28 billion in the first quarter.

Apple and Amazon will be the last to make their debuts after the market hours on Thursday. For Apple, the market will be concerned about whether the negative impact of severe supply constraints on the hardware business will continue in a core-starved environment, while the services business is expected to face a high base effect. The market generally expects Apple's Q2 earnings per share to be $1.43 and revenue to be $94 billion.

In the impact of high inflation and the epidemic, the market is not optimistic about Amazon's retail business, but the high-margin AWS cloud services, advertising business is expected to offset part of the negative impact. The market expects Amazon Q1 revenue to be $116.52 billion and earnings per share to be $8.50.

04/26/2022

Stock price hit a new high after the performance! Why does Warren Buffett love Coca-Cola for 34 years?

So far this year, the S&P 500 (purple line) has fallen by 9.86%, while Coca-Cola has surged by 12.22%, significantly outperforming the index.

Inflation is high! How did Coca-Cola deliver the goods?

Specifically, Coca-Cola reported net income of US$2.8 billion in the first quarter, up 24% year-over-year. Comparable earnings per share were US$0.64, up 16% year-over-year and higher than the market's estimate of US$0.58.

Net income for the quarter was US$10.5 billion, up 16% year-over-year and ahead of market expectations of US$9.8 billion, driven by a 7% improvement in price mix and an 11% improvement in concentrate sales.

In the eyes of the stock market gods, Coca-Cola is the perfect anti-inflation product that can easily raise prices, expand at low cost and generate a steady stream of cash flow. A company like this, even if its production facilities were to be scrapped, could still recover with the Coca-Cola brand and a paper recipe.

04/26/2022

The Dow extended its decline to 2 percent, and among the components, Nike (NKE.N) fell more than 5 percent and Boeing (BA.N) dropped 4.9 percent.

04/25/2022

Are you optimistic about Apple's earnings report?

Can Apple hold up to the expectations of the market?

Is there a possibility of a "$100 billion buyback plan"?

04/25/2022

Given Apple's growth prospects, Wall Street is very concerned about Apple's stock buybacks. Apple's overall earnings are healthy in these tough times for tech stocks, which makes Wall Street see Apple even more as a reliable tech stock like the Giant Rock of Gibraltar

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