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Sakatas Homma's Technical Take is a weekly newsletter that shares actionable trading advice for investors looking to stay ahead of the curve in the Indian stock market. It breaks down the most complex technical analysis concepts that even a complete beginner can understand.

US labor market cooling; leading indicator flashes recession (5 min read)
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The number of Americans filling new claims for unemployment benefits increased moderately last week. This suggests that the US labor market is gradually slowing due to the Fed’s year-long interest rate hiking campaign. The slowing labor market, along with declining retail sales and manufacturing activity, have added to concerns about a possible recession in the second half of the year. Banks have also tightened lending, which could make it harder for households and small businesses to access credit.

US Home sales fell in March amid volatility in mortgage rates (3 min read)
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Sales of previously owned homes in the US fell by 2.4% in March compared to February, due to a sharp rise in mortgage interest rates. With home prices still high, buyers are sensitive to daily moves in rates. The average rate on the popular 30-year fixed mortgage started January around 6.45% but dropped below 6% by the end of the month. However, rates rose sharply in March, hitting 6.85%. At the end of March, there were 980,000 homes for sale, an increase of 1% from February, but still historically low.

Tesla Signals More Price Cuts Ahead Despite Margin Damage (4 min read)
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Elon Musk has said Tesla will continue to cut prices to boost demand, even after earlier price cuts this year impacted profitability. The company's operating margin fell to a two-year low of 11.4% in Q1 after markdowns in January and March. Despite this, Musk has made several more price cuts this month and is "comfortable making less money on each car sold". Tesla shares fell 10% following the announcement. While some have questioned whether Musk is operating from a position of strength or weakness, Tesla remains ahead of other automakers in return on sales.

TSMC expects Q2 sales drop as clients struggle to clear inventory (4 min read)

TSMC, the world's largest contract chipmaker and a major Apple supplier, forecasts a 16% sales drop for Q2 due to an inventory glut and weak demand. The manufacturer said industry inventory levels were higher than expected but would likely rebalance to a healthier level in Q3. It expects business to hit a bottom in Q2 and pick up after that, which is in line with the outlooks projected by Apple, Nvidia, and Advanced Micro Devices. TSMC's net profit in Q1 was up 2% from a year earlier, but its the smallest quarterly growth in almost four years.

Falling Rates Create Opportunities for ETF Investors (3 min read)
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If interest rates continue to fall, bonds will look more attractive than they have in years. This article highlights three ETFs that will benefit from a falling rate scenario based on their underlying strategy. They are Invesco S&P 500 Equal Weight Utilities ETF (RYU), Shares 20+ Year Treasury Bond Buy Write Strategy ETF (TLTW), and Van Eck Fallen Angel High Yield Bond ETF (ANGL). More detail on the potential advantage of each ETF in a falling rate market is available in the article.

This one-of-a-kind suite of ETFs may help investors during economic slumps (3 min read)
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Innovator launched a new suite of barrier ETFs that offer protection to investors by buying US Treasuries and selling equity options. The funds offer protection against losses of 10%, 20%, 30%, and 40%, with distribution rates ranging from 5% to 9%, depending on the level of protection. The company said the ETFs provide diversification benefits by removing credit risk and providing daily liquidity. Barrier and buffer ETFs have grown rapidly in the last several years, from just about $100,000 in AUM in 2018 to around $21 billion today. 

That's it for today! You can reply to this email if you have any comments or feedback.

Thanks,
Thomas

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