The Signal: Whiplash

The Market Signal

It didn’t matter whether you were an investor in crypto, stocks or both this week; there was enough volatility to go around. 

There was a collective sigh of relief in crypto Wednesday as the awaited Biden Administration executive order largely welcomed crypto into the mainstream. No hints of crackdowns in the offing, but instead a commitment to studying the space in the coming 6 months. “We will look back on this executive order as the start of a constructive relationship between crypto and government,” Domain Money’s investment team (DM Advisors) said, specifically with regards to “promoting innovation.” 

It wasn’t just the executive order. We saw the degree to which energy prices are the fulcrum upon which financial markets sit when reports that OPEC member U.A.E was open to the idea of bringing new supply to market. Oil prices plummeted more than 15% at one point, while the near entirety of crypto and equities soared. The S&P 500 had its best day of 2022 - 2 days after registering its worst.  

The optimism lasted one day. The U.A.E clarified it wouldn’t act without OPEC, new Ukraine/Russia talks broke down and the latest official inflation numbers showed the highest annual rate in 40 years – ingredients for a dangerous cocktail for investment assets, with the exception of a few standouts.

Check Prices (only available in-app in iOS)

The Data Signal

Standouts

One of the standouts was CrowdStrike. The cybersecurity stock shunned Thursday’s somber market tone with a double digit gain following quarterly results. It was the best-performing of 130 large cap technology stocks, of which only 25 were in positive territory.  

Amazon, also a holding among Domain Money Strategies*, avoided the sea of market red with its stock split and share buyback program announcement. Seemingly innocuous, a stock split is mostly a psychological tool (it gives an investor more shares but at an adjusted lower price). Nevertheless, the announcement sent shares soaring. The split is among the first major actions for the new CEO Andy Jassey. Amazon’s last split happened in 1999 – a year in which they split the stock two separate times.

Explore Strategies

Is the stock split pop justified?

Ask the shareholders of Tesla and Apple. It seems to be ‘table stakes’ now for megacap stocks, as the EV and iPhone maker's announced stock splits in 2020 within months of one another. Double digit gains ensued. Google parent Alphabet joined the split party in February with a split of its own, galvanizing share performance in the short term. 

A stock split is largely psychological, making it “cheaper” to buy a share. This, despite the fact that many platforms, like Domain Money, offer investors the ability to buy “fractional” shares – or slices of a stock based on the dollar amount they want to invest. The split makes options contracts cheaper, and, in some cases, may position the company for inclusion in indexes (like the Dow Jones) that calculate value based on price (meaning high-priced stocks carry more weight) versus indices that are weighted by market value (like the S&P 500).

Read about stock market basics

Any pops in crypto?

Not on Thursday. The inflation number temporarily sent crypto prices plummeting, only to quickly recover to levels before the data was released. The reading doesn’t largely change expectations that interest rates will rise next week with the Federal Reserve meeting. Of names to watch, Axie Infinity (AXS) and Polygon (MATIC) are popping up recently in Signal** due to trading indicators and social sentiment. Both registered toward the upper end of performance among large cryptocurrencies Thursday, though still saw some declines. 

Read the DM Advisors memo on MATIC


Domain Money, Inc. is providing this information for informational purposes only. While Domain Money believes that the information contained herein is reliable and derived from reliable sources, it makes no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information. Domain Money expressly disclaims any liability or loss incurred by any person who acts on the information, ideas discussed. The information contained herein is not, and shall not constitute an offer to sell, a solicitation of an offer to buy or an offer to purchase any securities or cryptocurrency, nor should it be deemed to be an offer, or a solicitation of an offer, to purchase or sell any investment product or service.  Investing comes with inherent risks and you should always invest within your means and risk tolerance.  Past performance is not an indication of future returns and you should always consult a financial advisor prior to making investment decisions. Please see important disclosures at https://domainmoney.com/legal

* Domain Money Advisors, LLC, an investment advisor registered with the U.S. Securities and Exchange Commission and an affiliate of Domain Money, is currently recommending the following assets contained in this edition of Domain Money’s The Signal as part of Managed Strategies: AAPL, AMZN, BTC, CRWD, GOOGL, MATIC, AXS

** These measurements were generated by Domain Money Social Sentiment Signal on 3/10/2022 and they fluctuate continuously in response to the various contributing data points and trends. Domain Money Signals are tools that aggregate information related to market sentiment and should not be relied on for investment decisions.  More detailed information about Domain Money Signal is available at https://help.domainmoney.com/en/?q=signal