💼 Inside the Portfolio: Updates from our Swing Trading Desk

28 Oct2024 - Insights, adjustments, and forecasts about our latest swing trades 💹

The financial landscape continues to surprise market participants, with today's trading session delivering unexpected results. While consensus expectations pointed toward a bearish gap-down opening and surge in crude oil prices due to geopolitical tensions, the market painted a different picture. The Nasdaq-100 tracking ETF (QQQ) demonstrated remarkable strength with a gap-up, while oil prices retreated, contradicting widespread predictions.

Position Updates:

In line with our disciplined approach to risk management, we've executed several strategic adjustments to our portfolio:

• Embraer (ERJ) Position Closure: We've made the tactical decision to close our position in ERJ with minimal profit. The lack of momentum and capital efficiency concerns prompted this move, allowing us to reallocate resources to more promising opportunities.

New Positions and Subscriber Insights:

Our active monitoring system continues to identify emerging opportunities:

• PDD Holdings (PDD): Friday's alert on PDD has proven timely, with the stock showing strong upward momentum alongside broader strength in Chinese equities. While we maintain a measured outlook on this position, our risk management strategy includes raising stop-loss orders to breakeven levels, effectively creating a risk-free trade scenario.

• One addition from Europe (starter) and a couple of new positions also from the US Market.

1. PDD Holdings Inc. (PDD)

PDD Holdings Inc., through its subsidiaries, operates an e-commerce platform in the People's Republic of China. It owns and operates a portfolio of businesses, including Temu, an e-commerce marketplace in the United States; and operates Pinduoduo, a mobile platform that offers a range of products, including apparel, shoes, bags, mother and childcare products, food and beverages, fresh produce, electronic appliances, furniture and household goods, cosmetics and other personal care items, sports and fitness items, and auto accessories.

Technical Analysis and Investment Rationale

Financial Performance:

Q2 2024:

• Total Revenues: RMB97 billion, an 86% year-over-year increase.

• Operating Profit: RMB32,564.5 million, a 156% increase from Q2 2023.

• Net Income: RMB32,009.4 million, a 144% increase from Q2 2023.

Q1 2024:

• Total Revenues: RMB86.8 billion, a 131% year-over-year increase.

• Operating Profit: RMB25,973.7 million, a 275% increase from Q1 2023.

Future Guidance:

• The company is entering a phase of high-quality development, focusing on strengthening its supply chain and supporting high-quality merchants.

• PDD Holdings is prepared to accept short-term sacrifices in profitability to build a sustainable platform ecosystem.

Revenue Estimates:

• 2024: CN¥405.76 billion

• 2025: CN¥519.95 billion

• 2026: CN¥621.67 billion

EPS Estimates:

• 2024: CN¥84.66

• 2025: CN¥99.98

• 2026: CN¥121.13

Technical Analysis:

The security exhibited a classic inside-day formation during Friday's trading session, presenting a compelling technical setup for strategic position initiation. This price action pattern, characterized by a complete price range contained within the previous day's high-low range, occurred on notably diminished volume metrics, suggesting a potential accumulation phase following the recent sharp price retracement.

Entry Day: 25 October

Price: $122.73