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7/22/22 Downtrend Broken! Plus, a Surprise Rate Hike & An Insider Trading Bust

News:

Yesterday markets opened lower and with good reason…

EU flag

The European Central Bank (ECB) surprised the markets with a 0.5% boost to its lending rate.

  • Traders expected a 0.25% increase
  • This is the first rate increase for the ECB in 11 years

And new unemployment claims jumped to a new 8-month high with 251,000 filings.


Image from Wikipedia

But by the end of the day, the bulls showed more resilience and more strength … All the indexes closed in the green for the second day in a row.

It was a busy day in the news cycle, so let’s hit the headlines…

Headlines

Tesla logo

Shares of Telsa (TSLA^) rose nearly 10% after reporting quarterly earnings.

  • The energy company broke a string of record quarterly profits but still managed to top profit estimates.
  • Its slowed profits were driven primarily by the Covid-19 shutdowns at its Shanghai plant.
SEC & Coinbase logos

The SEC charged three people with connections to Coinbase (COIN) with insider trading.

  • An employee alleged, “tipped the timing and content of upcoming listing announcements” to his brother and friend.
  • The trio made “over $1.1 million in illegal profits,” according to the SEC’s press release.
  • This is the first such insider trading charges related to cryptocurrencies.
snapchat logo

Shares of Snap (SNAP) cratered after dismal earnings.

  • At writing, shares are down 29% in premarket trading.
  • The smaller social media platform “confirmed fears” that ad spending is slowing, according to one analyst.
  • The company reiterated its metaverse position, saying, “we remain … committed to [the] AR business.”

Sector Update

9 of 11 sectors close the day in the green.

  • Consumer Discretionary was on top
  • Healthcare came in a strong second
    • Notably, Amazon (AMZN) acquired 1Life Healthcare (ONEM) for almost $4 billion—about a 70% premium to the stock’s previous close
  • Energy underperformed, falling nearly 2% after Russia resumed the flow of natural gas to the EU
  • This morning Bitcoin^ is trading above $23,000—holding most of its gains for the week.

Technicals:

Trends are breaking.

Let’s look at two charts today … First, the S&P 500:


SPY Daily Candles – Chart via thinkorswim

The downtrending channel that it’s been stuck in since late March has been broken.

On to the VIX


VIX Daily Candles – Chart via thinkorswim

The VIX closed at its lowest level since mid-April.

Both charts show bullish signals.

Timing:

Twitter (TWTR^) is reporting earning premarket today.

Next week will be busy for both earning and macro news…

We will have an overview for you on Monday morning.

Watchlist:

*Low Float
^Open Position

*TBLT is on watch
*^FNKO has support at $22, resistance at $25
CLNN has support at $4, resistance at $5
SMR is on watch
^CBIO has resistance at $1.80
TH has support at $12
VERV hassupport at $30
SIGA has resistance at $15
CELH support at $80
MREO has resistance at $1.80, support at $1.50
RYTH has support at $12
NCNA has support at $1.50
VUZI has support at $7.50
VERU has support at $16
GOSS has support at $11
CNK has support at $19
PAYO has resistance at $5.75

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