The bears were back this week, with multiple pundits and market influencers characterizing the summer rally in stocks as a textbook bear market rally in advance of a coming decline that will take the market back down to the June lows or below. With the federal reserve set to continue hiking rates aggressively, slowing consumer spending, a recession brewing, a war in Ukraine, an energy crisis in Europe, and China-U.S. tensions over Taiwan rising, it's hard to put up a good counter argument.
Last week we mentioned good bets were the SQQQ, which shorts the NASDAQ by 300%, buying VIX option calls and buying the dollar index ETF, UUP, as good hedges against a market setniment that is quite gloomy. The SQQQ was up nearly 10% last week, UUP up 1%, and the VIX was down -6% but remains elevated and likely to have large swings in both directions over the next couple months.
It's a tough market to be a long-term investor right now, so we continue to believe that trading events is the best way to preseve capital and generate profits. Just be cautious on days when futures are pointing to very large negative moves at the open, as the negative sentiment can hold back investors from reacting to positive news.
Play of the Week
AREC Stock Buyback
American Resources Corporation announced Monday that they have authorized a stock repurchase program. The stock jumped 17.18% in reaction, before settling up 10.14%. The coal distribution company earned over $13M last quarter and is now sitting at a market cap of 224.84M. Coal stocks have been in a major bull run, as coal price increases fueled by increased demand from European countries continues to rise in the face of dwindling Russian natural gas supplies. As winter approaches, it's unlikely this trend will change.
- Peak-Trough Move: +17.18%
- Event Impact: +10.14%
Did You Miss?
Build-A-Bear Workshop
Build-A-Bear Workshop announced Thursday a new share repurchase program of $50.0 million following the completion of the previous $25.0 million share repurchase program which was announced in November 2021. The announcement sent the toy retailer on a whipsaw: reaching as high as +13.09% before closing down -3.52%.
- Peak-Trough: +13.09%
- Event Impact: -3.52%
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With a market cap of 211M and earnings last quarter of $96.67M- the stock is down -34% this year, following a +400% run in 2021. Consumer discretionary stocks have fallen out of favor as consumers tighten budgets.
Mass Layoffs at Credit Suisse
Credit Suisse announced Friday that they are looking at cutting around 5,000 jobs. This comes just over a month after the company announced that CEO Thomas Gottstein would step down as the bank reported a massive second-quarter loss, as poor investment bank performance and mounting litigation provisions hammered earnings. Regardless of poor performance, the announcement sent the stock up +5.93% before closing at +2.40%.
- Peak-Trough: +5.93%
- Event Impact: +2.40%
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Koerner, the newly appointed CEO, is cutting more than $1 billion in costs to help the bank recover from an array of setbacks. CS announced earnings of over $3.5B last quarter and currently has a market cap of 13.27B.
Where are they now?
Snap Inc.
After dropping more than -70% this year, the social media company snapped back Wednesday. Announcing plans to cut 20% of staff as a result of a downturn in digital ads revenue, the stock reached a high of +8.26% before closing at +6.99%.
- Peak-Trough: +8.26%
- Event Impact: +6.99%
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Revenue (Last Q): 1.07B
Market Cap: 18.50B
Looking Ahead
Highlights from the LevelFields Calendars section and beyond.
Sep 7
InMed Pharmaceuticals Inc. (INM), 1 for 25
Sep 14
Palo Alto Networks Inc. (PANW), 3 for 1
Notable Upcoming Earnings Releases:
Sep 6
- Coupa Software
- Guidewire Software
- UiPath
Sep 7
- Casey's General
- American Eagle
- Dave & Buster's
Sep 8
- FuelCell Energy
- DocuSign
- Smith & Wesson Brands
Sep 9
- Kroger
Other Events
September 7
@8:30 A.M
U.S Balance of Trade
@8:55 A.M
Redbook Retail Sales YoY Report
@2:00 P.M
Fed Barr Speech
September 8
8:30 A.M
Initial Jobless Claims
9:10 A.M
Fed Powell Speech
3 P.M
Consumer Credit Change
The LevelFields Team