STATE OF THE MARKETS

Stocks rebounded on earnings optimism. US stocks rebounded on Wednesday, erasing earlier losses as earnings reports picked up. Dow (+0.93%), Nasdaq (+1.19%) and S&P (+0.93%) including Russel (+2.35%) advanced higher as more companies reported better than expected earnings. Breadth was generally bullish but volume was light as the US 10Y yields edged lower, below 1.56%, after bonds sell-off subsided.

Crude continues to be under selling pressure, closed below $61.35/bl, as covid resurgence in India hit the highest in one day, which further risking to dampen crude demand. On the other hand, gold continues its upward trajectory, approaching $1,800/oz as of this writing, after Feds re-affirmed its stand on keeping interest rate low for some time.

In the FX space, Loonie reversed earlier losses in the short term as BoC signaled a potential hike as early as next year, which sent King Dollar on the supply territories across the board. Risk sentiments seemed turned on as Swiss and Yen retreated in demand. Investors seemed to favor Kiwi over Aussie as Crude weakness might cap demand for Loonie. Euro and Pound continues to be in a tug of war as risk sentiments improves.

OUR PICK – NIO (NIO, NYSE)

Gearing for Q1 earnings report. In mid March our plan to short NIO went better than expected as the stock broke below $37.50, where we expect to re-initiate our long. At this point, 50% retracement of all time low to all time high seemed respected. We saw quite some buyers are trapped in the $40-44.50 area where sellers seemed ready to re-initiate their shorts to drive price lower to the 61.8% retracement (circa $27). Given the earnings release next week (29/4) we rather long given current sentiments, and re-asses our positions afterwards. As of Q4, 2020 this stock is about 36% institutionally controlled and had a 2.1 million net purchased. Analysts consensus is a buy with 13% upside to fair value per S&P GMI.

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.