LiveWire

Investor expectations are high in this market and Meta is the latest victim. Its 26% single-day stock wipeout on Thursday triggered a growth scare in the whole market, sending investors hitting the sell button across tech names, pulling down the Nasdaq 100 by 4%. The USD251.3 billion single-day wipeout is the largest ever. We must ask ourselves, were some large investors willing to get $FB off their books at any price. As the dust settles, investors are debating whether the stock deserves a second look due to its solid financials, low valuation, buybacks, versus the threat of an increasingly difficult advertising business as a result of changes in the Apple IOS and changing consumer preferences to less profitable areas such as short videos. From a technical analysis perspective, the stock seats at a key long-term support level. The stock of the most-disliked brand is up 1.6% in US pre-market at USD241.6. 

The technical picture for the S&P500 is mixed, with momentum still weak. We also note RSI has rebounded to mid range. The next 2 days should give some answers. Interesting to note, that only roughly 1/3 of all stocks (as of 12/20 close) are trading above their 20-day moving average (m.a.) while 38% are above their 50-day m.a. Finally, the percentage of S&P500 stocks above their 200-day m.a. is just 58% as of 12/20/21 close. That’s an astoundingly low number considering that the S&P500 is so close to all high high territory. This  explains how the broader market has suffered more damage when excluding the Large-Cap Technology stocks since mid-November. Investors are increasingly selective and searching for quality/stable earnings growth at attractive valuation multiples. 

The Sterling is heavily challenged by a doomed macro picture, with deeply negative real yields, a large debt burden and a structural current-account deficit. On the other hand, the USD has continued to strengthen against major currencies on the back of a strong economy, and investors positioning into bullish USD trades on the back of expectation of the Fed reducing its asset purchasing program and eventually beginning raising rates. The Omicron variant has also added pressure particularly to the UK and likely contributed to weakening the near-term GBP outlook. With the current GBP/USD at 1.3225, on a technical level, support may come at 1.32 and if breached there is the psychological level of 1.30. The USD should be particularly volatile this week with the US Fed on Wednesday. 

Bitcoin failed to hold key psychological level of $50,000, currently trading at $47,800. On a technical level the largest crypto is caught in a no man's land as buyers most likely prefer remaining on the sidelines until it either reaches key support levels or if it climbs back and holds solidly above $50k. The key question will be whether Bitcoin is too hot, and if adoption amongst institutional investors will continue, fade, or accelerate going into 2022. 

PayPal's business benefited greatly during the pandemic. Its stock recently faced heavy headwinds amidst a rush for investors to sell stocks with higher valuation multiples. Valuation has come down with the stock down by approximately 38% since July 2021. From a technical analysis perspective the stock has maintained its key support level of $180. Price earnings ratio multiples are now close to pre-pandemic levels, but remain high given the payment leader's high growth profile. Earnings will be out early February 2022.