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RoboStreet – August 4, 2022
July Employment in Focus Following Strong Earnings
As another week comes to a close, the market has continued to push and pull in both directions, supported by strong or promising earnings and pressured by growing signs of inflation and recession. Currently, U.S. indices are on track to finish the week with gains although all three major U.S. indices, at some point this week, sold off. Major name earnings are primarily behind and the market focus now turns to Friday’s employment report and then next week’s monthly Core CPI data release.
With, likely, another successful week in the books, investors in the United States are still contemplating if the current boom is merely a rally in a bear market or the return of the bull market. The majority of earnings results return positively while GDP data points towards recession and aligns with several such trends. Determining the legitimacy of this advance is not simple as investors’ perspectives are mixed. Apart from the last month’s CPI warning, the market has responded favorably to the most recent employment, retail, and now earnings news.
I, however, have outlined my belief and see no signs to move off this stance.
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside the next 3 months, so my weekly updates are timely enough for you to act.
For me, the current increase in the market is not an indication that the bull market has begun.
Rather, strong earnings and timely Federal Reserve action appear to be propelling the advance, suggesting that we are still in a bear market. To confirm, let’s inspect the current market conditions.
This week, $VIX finished lower, near the $21-22 level, off mid-week highs which neared $24. We’ll be monitoring the volatility index as we enter into uncertain times following the earnings season, as the dust settles on the most recent reporting.
Looking at the SPY Seasonal Chart below, I expect the market to continue the short-term rally for the next one to four weeks.
Overhead resistance levels in the SPY are presently at $420 and then $430. The $SPY support is at $406 and then $401.
I believe this is a short-term rally and the bear market will likely resume. I encourage users not to chase the market and buy on pullbacks.
I’d be a seller into the rally and have a NEUTRAL portfolio right now. The market is currently overbought, and it is on the verge of top building.
The market is overbought, as several indicators allude to, and I believe the market is building a top that can make marginal highs but risks a large downside. I expect the top building to occur for one to four weeks but the sell-off to resume sooner rather than later.
As I’ve previously stated, mega-cap can be a good indicator of what the rest of the market will do and while we are nearing high following earnings, there is potential for the restart of the bear market to occur within the next two to three weeks.
One particular strong performer I am keeping an eye on is Uber Technologies Inc., (UBER) which released its earnings just this week.
Uber shares rose toward a three-month high this week as the company met Wall Street’s expectations in its quarterly report. Just this week, $UBER had its best day in nearly two years when saw its first cash-flow positive quarter. Rivals Lyft and DoorDash, likewise, saw growth in their shares as well.
But I am concentrating on Uber. With its strong earnings, I expect the symbol to continue to ride this wave as the top building for the market continues.
According to this week’s release, Uber has continued to grow in the fourth quarter of 2017. Overall gross bookings rose from $29.1 billion in 2016 to $29.8 billion in 2017, exceeding expectations for $28.93 billion, according to the company’s press release. Analysts predicted that ride gross bookings would be $12.64 billion and delivery gross bookings would be $14.49 billion; ride-sharing and delivery gross easily topped estimates. Revenues expanded by more than 100 percent to $8.1 billion from $3.93 billion in the same period last year.
These are some strong indicators the company should not face untimely pressure and could continue to grow. Having interpreted its latest earnings as a symbol of sustainable growth in the coming weeks, I am interested in verifying with A.I. arsenal.
Running UBER through Tradespoon’s elite A.I. tools I am seeing several signs I like. In just the past couple of days, the Tradespoon Seasonal Chart is showing four “higher” probability readings for the next 20, 30, 40, and 50-day periods. This clean sweep is something I like to see in a symbol that I think can trend higher.
Looking at the 10-day Stock Forecast Toolbox predicted data, we see a similar reading that shows the potential for this symbol to grow. Current UBER pricing is between our predicted support and resistance levels.
Over the last 6 months, UBER is down 15.16%. With the current market conditions, in my opinion, looking overbought while maintaining some runaway for additional rallies in this bear market, I am betting on this symbol to catch up and make some waves these next few weeks.
The Stock Forecast Toolbox 10-day prediction shows a strong trend towards the upside and if the symbol could continue this trend with the momentum it currently has from its strong earnings I believe we will be in a good position.
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The market continues to shape up to be as unpredictable as I’ve seen since the pandemic broke out in early 2020 – and we still have more than 5 months to go! Inflation, upcoming Fed decisions, geopolitical tension, and the Ukraine war – all factor into how money is being made and lost. Don’t go at it alone in this investing landscape, but instead, put RoboInvestor to work today and add a big layer of confidence to your portfolio going into tomorrow. We’ll be with you every step of the way!
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside the next 3 months, so my weekly updates are timely enough for you to act.
*Please note: RoboStreet is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.
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