Best ETFs to Buy for March 2022

When there’s huge buying and selling in the market, it’s usually unsustainable and coincides with peaks and troughs, especially over the past two years. It reminds me of investor overexuberance. There’s just too much excitement (either of the buying or selling variety), for such movements to be anything that will last.

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Source: www.mapsignals.com

Opportunistic investors can take advantage of these movements, especially when there’s deep selling. Those times have proven to be when stocks and ETFs are on sale. When zooming in to the last three months (below), we see lots of unsustainable selling. This could set up well for some discount buying that may serve long-term investors well.

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Source: www.mapsignals.com

Given these conditions, we’ve identified some ETFs we think have long-term potential, a few of which are priced nicely right now: RDVY, QUAL, IGV, IHI, and FDN.

Long-term investors should look for ETFs (and their stocks), with great setups. Remember, ETFs are just baskets of stocks, so we need to look at them in detail. MAPsignals specializes in scoring more than 6,500 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all from strongest to weakest.

Let’s get to the five best ETF opportunities for March 2022.

#1 First Trust Rising Dividend Achievers ETF (RDVY)

This is a market rotation play as growth stocks are shed in favor of more predictable value-oriented companies that pay dividends. And while dividends are great and rising dividends are even better. RDVY holds some great companies that have histories of raising dividends. It’s likely why Big Money has been buying RDVY in chunks over the past year:

RDVY holds several solid stocks, including some big technology companies; one example is Activision Blizzard Inc. (ATVI), which has a 3-year EPS growth rate of 16.6%, but is still getting sold a lot. Here are Big Money signals for ATVI:

#2 iShares MSCI USA Quality Factor ETF (QUAL)

This one is all about quality. QUAL holds a basket of stocks with excellent fundamentals, many of which are household names. So, it’s not surprising that an ETF all about quality has performed well over the past few years. There were dips around October and February (red bars), but big dips have typically preceded big rises in this ETF:

One great stock QUAL holds is Nike, Inc. Class B (NKE). It’s a long-time Big Money favorite with fantastic fundamentals (3-year EPS growth of 67.2%). As the multi-year chart below shows, it’s been a growing giant for a while:

#3 iShares Expanded Tech-Software Sector ETF (IGV)

This high-flying ETF has seen Big Money buys for a long time, and it’s performed well. It holds some phenomenal stocks, many of which are outliers – the kind that of stocks that produce HUGE gains. But with the recent pullbacks, IGV can be considered a discount buy right now:

One of many big winners within IGV is Adobe Inc. (ADBE). It’s an outlier stock – it’s 3-year sales growth is an impressive 20.8% – and has been a Top 20 Big Money buy for years:

#4 iShares U.S. Medical Devices ETF (IHI)

This one is another on our hunt for bargains. By identifying weaker ETFs holding stocks with strong fundamentals, we can buy in a good spot. IHI was destroyed in January 2022, but not long before that was at peaks, likely because its stocks are phenomenal and medical devices markets remain strong:

One standout within this ETF is Thermo Fisher Scientific Inc. (TMO), a giant healthcare company high huge earnings growth (3-year EPS growth of 40.8%). The multi-year chart below shows lots of Big Money buying. And notice how sells appear to be discounts:

#5 First Trust Dow Jones Internet Index Fund (FDN)

This is another “bargain bin” pick, but that’s because this ETF is getting killed recently (unfairly in my opinion). FDN has seen Big Money buying in the past, but it’s dropped significant value since around last Still, it holds fantastic technology stocks, which makes the current price appetizing:

One great stock in FDN is Amazon.com Inc. (AMZN). It’s been stagnant lately, but Big Money has leaned on AMZN for a long time. Given the firm’s ubiquitous nature, growth vision, and huge performance (26.6% 3-year sales growth and 50% 3-year EPS growth). It wouldn’t surprise to see this one rise high again:

Here’s a Big Money recap:

  • When Big Money buying pours in, stocks tend to go up
  • Red selling on great quality can be a great opportunity
  • Repeated buying usually means outsized gains

Let’s summarize here:

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RDVY and QUAL rank high. IGV, IHI, and FDN, however, rank lower on our list, due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

RDVY, QUAL, IGV, IHI, and FDN are my top ETFs for March 2022. These picks can rise higher, in my opinion, largely because they each hold great stocks. Some of them are discounted right now because of selling pressures. But as we know, deep red days often prove to be big opportunities over time.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in RDVY, QUAL, IGV, IHI, FDN, ATVI, ADBE, TMO, or AMZN in managed or personal accounts at the time of publication; he holds long positions in NKE in managed accounts.

Investment Research Disclaimer

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Top 4 Things Traders Have to Know Today

What is happening with Meta, Paypal and Spotify?

Spotify didn’t actually issue annual guidance, which seems to have exacerbated worries about potential subscriber growth potential. All three were down by double-digits in after hours trading at one point last night.

Competition is clearly much more fierce as larger players are starting to dial it in and use the latest technology to gain better traction i.e. Visa, Mastercard, etc. I also read reports this week that Apple is diving deeper into the payment and banking space and will soon be able to offer all kinds of options via the smartphone.

In simple terms, I wonder if PayPal executives could see they had a “growth” problem and that’s why they took a look at Pinterest a few months back. I heard rumors yesterday perhaps they might be looking at Robinhood.

At the moment the stock market just doesn’t seem real forgiving to those who swing and miss. On a somewhat positive note, Facebook disclosed they purchased back +$20 billion of their own stock in the last quarter.

Bulls are hoping for solid results from Amazon and Snap today to help prevent sentiment in the tech sector from creating more fallout. I’m not holding my breath!

Data to watch

Results are also due from Activision Blizzard, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, SnapOn, Wynn Resorts, and Xylem.

On the economic data front, Factory Orders, the ISM Non-Manufacturing Index, and Productivity and Costs are due today. Productivity and Costs has become a more closely watched report as worries about climbing wages have grown. In the third quarter, productivity fell -5.2% (the most since 1960) and labor costs rose +9.6%.

Obviously, weakening productivity and rising costs is a bad combo for corporate profits so reversing this trend is a high priority. It may be tough to find much relief in the near-term with the labor market expected to remain extremely tight.

The shortage of workers has also been exacerbated by the latest Covid wave. ADP’s private payrolls report yesterday showed a decline of -301,000 jobs for January versus the estimate for a +200,000 gain, the first reported net job less since December 2020 according ADP.

Covid issue

Most analysts blame last month’s Covid surge for the decline and expect it is just temporary. The official January Employment Report on Friday is expected to show a gain of around +150,000 jobs, though the government has warned that the data won’t be reliable due to Covid-related reporting problems. Hopefully we’ll soon stop hearing that excuse as the Omicron Covid wave does seem to be burning itself out in the U.S. Case numbers across the country are about half of what they were in mid-January.

Hospitalizations have finally started to come down, too, which experts say is a more reliable measure. I hate to mention it but health officials are currently monitoring a mutated strain of Omicron known as “BA.2″… when does it end?

The standoff between Ukraine and Russia

Also still on the radar is the standoff between Russia and Ukraine. The U.S. is now readying to send more than +3,000 troops to bases in Eastern Europe as new satellite images appeared to show an even further increase in Russian troop buildup on Ukraine’s borders. Whether or not war is a realistic threat or not, the climbing tensions continue to stoke the flames in the energy markets.

Brent crude futures are trading near $90 as OPEC struggles to meet production targets and global physical supplies continue to tighten. The 19 OPEC+ countries with quotas underperformed their production targets by -832,000 b/d in December. Russia is currently the top OPEC+ producer, so any disruption to those supplies runs the risk of shooting oil prices even higher. Take note the front-end of the natural gas market is up over +50% in the first month of the new year. It’s certainly going to be a wild ride in 2022!

 

Brace Yourself For Another Wild Month In Stock Markets

For the year, the Dow is down -6%, the S&P 500 is down just over -9%, and the Nasdaq has lost -14.7%. The previous record-holder is January 2009, an ugly moment for the economy, when the stock market fell -8.6%. In addition, the VIX – aka the CBOE Volatility Index – has actually dropped back to around 31 after topping 37 earlier this week, its highest point since November 2020.

Keep in mind, the index isn’t registering anywhere close to levels reached during other periods of “extreme” volatility. For example, the index, which is measured between zero and 100, hit its highest point of almost 83 during the financial crisis in 2008. Its most extreme point during the pandemic was around 66 in March 2020. So, by comparison, this week’s volatility has been rather mild.

Federal Reserve

Some insiders equate the wild swings in stock prices to investors, particularly “big money,” trying to establish a new baseline for stock valuations minus the Fed’s easy money policies that have driven a massive amount of cash into markets since the pandemic began in 2020.

At its height, the Fed was pumping as much as +$120 billion per month into the system via its asset purchase program, ballooning its balance sheet to now nearly $9 trillion.

At the same time, the Fed has held its benchmark rate at near-zero and, before that, hadn’t even attempted to raise rates since 2018, and then only briefly. The last full-cycle of rate hikes was 2015. What’s more, investors haven’t really had to factor for inflation since the early 90s and it hasn’t been this high since the 80s.

Bottom line, whatever the new “normal” ends up looking like, it will be dramatically different from the pre-pandemic investing landscape. I’ve heard several large stock traders saying it seems to be the return of Alpha instead of the race to levered Beta. I hear others on Wall Street referencing it to a bit of league recreational youth baseball team where everybody now gets an award simply for participation, but then kids run into a rude awakening when performance really starts to matter.

It feels like we are there in the stock market; every business that was coming into the market was simply being rewarded with participation points, now people are starting to keep a real scorebook and counting the strikeouts and runs scored.

Economy still roars

The good news is that the U.S. economy continues to roar. Historically, a combination of moderate inflation and moderate interest rates has led to some of the biggest boom times for U.S. Last week, the Commerce Department said Q4 Gross Domestic Product (GDP) grew at an annualized rate of +6.9%, stronger than Q3’s +2.3% and well above Wall Street expectations of around +5.7% growth.

Consumer spending climbed at a +3.3% annual pace led by a +4.7% increase in services spending. But the real stand out was private investment which rocketed +32% higher, boosted by a surge in business inventories as companies stocked up to meet higher customer demand. Rising inventories, in fact, contributed nearly +5% to Q4 GDP growth.

On the one hand, the inventory build is positive because it indicates an easing of supply chain dislocations that should in turn help with inflation pressures. On the other hand, many economists note that the big boost from retailer and wholesaler restocking is not likely to be repeated.

Companies will also likely start to unwind at least some of that inventory in the quarters ahead, which could drag overall 2022 GDP, especially if consumer spending also drops off. And investors are more closely tracking consumer behavior as inflation continues to rise.

With consumer spending accounting for about 70% of the U.S. economy, any signs that belts are tightening or moods are getting overly pessimistic will likely set off some alarm bells.

Data to watch

Turning to next week, it will be another busy one for both key economic data as well as earnings. The main economic data highlight will be the January Employment Situation on Friday. Other key data includes ISM Manufacturing, Construction Spending, and the JOLTS report on Tuesday; ADP’s private payrolls report on Wednesday; Productivity & Costs, Factory Orders, and the ISM Non-Manufacturing Index on Thursday.

Earnings wise, results are due from NXP Semiconductor and Trane on Monday; Advanced Micro Devices, Alphabet, Amgen, Chubb, Electronic Arts, Exxon, General Motors, Gilead Sciences, Match Group, PayPal, Sirius XM, Starbucks, and UPS on Tuesday; AbbVie, Aflac, Allstate, Boston Scientific, CNH, Corteva, D.R. Horton, Ferrari, Humana, Johnson Controls, Meta (Facebook), MetLife, Novartis, Novo Nordisk, Qualcomm, Siemens, Thermo Fisher, TMobile, and Waste Management on Wednesday; Activision Blizzard, Amazon, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, Snap, SnapOn, Wynn Resorts, and Xylem on Thursday; and BristolMyersSquibb, CBOE, Phillips 66, Regeneron, and Sanofi on Friday.

Bottom line, brace for another huge week of extreme volatility.

Will Azure Undermine Microsoft Quarter?

Dow component Microsoft Corp. (MSFT) reports fiscal Q2 2022 results after Tuesday’s closing bell, with analysts looking for a profit of $2.32 per-share on $51.0 billion in revenue. If met, earnings-per-share (EPS) will mark a 14% profit increase compared to the same quarter last year. The stock rose 4.2% in October after beating Q1 estimates and lifted to an all-time high at 349.67 just ahead of the Thanksgiving holiday. The stock has given up all gains posted since July 2021 in the last two months.

Slowing Azure Growth?

The Azure cloud computing segment continues to book strong growth but there is disagreement about the most recent quarter, with some market watchers worried that tough comparisons and adverse seasonality will negatively impact results. Meanwhile, the More Personal Computing segment continues to weigh on profits, yielding lower estimates in expectations of weakening PC sales. Note: the company’s recent Activision-Blizzard Inc. (ATVI) acquisition won’t impact the reporting quarter.

Citigroup analyst Tyler Radke just reiterated his ‘Buy’ rating while lowering Microsoft’s price target from $407 to $376. His commentary notes “a modestly positive set-up” for the quarterly report, powered by “strong renewals by enterprise customers, with particular strength in Office 365 and Dynamics”. However, he admits that Azure revenue growth could disappoint, moderating “on a tough comparison and seasonally weaker bookings”.

Wall Street and Technical Outlook

Wall Street consensus stands at a ‘Strong Buy’ rating based upon 30 ‘Buy’, 2 ‘Overweight’, 4 ‘Hold’, 0 ‘Underweight’, and 0 ‘Sell’ recommendations. Price targets currently range from a low of $294 to a Street-high $425 while the stock is set to open Tuesday’s session right on top of the low target. Short-term downside appears limited with this humble configuration but lower-than expected Azure growth could generate enough bearish sentiment to power a selloff.

Microsoft has been an outstanding performer since 2016. It mounted the February 2020 peak at 190.70 in June, entering a strong uptrend that cleared secondary resistance at 233 in January 2021. Price action carved a string of higher highs and higher lows into November’s all-time high, ahead of a decline that relinquished more than 20% into Monday’s intraday low. That session could mark a tradable low but market volatility is too high to make a bullish call.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Best Stocks, Crypto, and ETFs to Watch -ETH, FDX, FXI and ATVI in Focus

Ethereum (ETH) has outperformed Bitcoin (BTC) by a country mile in the last seven weeks, holding much closer to November rally highs. It’s pulled back just 19% since that time while the crypto king has relinquished nearly 29%. In addition, the decline has found support near the .382 Fibonacci retracement of the rally starting in September while BTC is struggling to hold the .786 retracement. And, unlike its rival, ETH hasn’t failed the breakout above the May high.

We’re headed into December triple witching options expiration, marking the last chance for fund managers to lock in 2021 gains (or losses) before heading out for the holidays. Expect volatility and two-sided action to surge, with growth, inflation, and Omicron competing for traders’ attention. The week could mark a good opportunity to think contrary and look for Peloton Interactive Inc. (PTON) to burn short sellers riding down a 61% six-week slide to a 19-month low.

Fedex Corp. (FDX) rallied above 2018 resistance in the 270s in November 2020 and failed the breakout 10 months later, entering a decline that tested the 200-day moving average successfully in September. It’s now bounced back to resistance at the 50-day moving average, just in time for Thursday’s after-hours report, when the shipping giant is expected to post a profit of $4.82 per-share on $22.4 billion in revenue. Look for the stock to make little progress after the news, with supply disruptions, inflation, and Omicron weighing on the holiday sales outlook.

iShares China Large Cap ETF (FXI) sold off to the .786 Fibonacci retracement level of the 2020 rally in July 2021 and has spent the last six months testing this support level, which has narrowly aligned with the 200-month moving average. This confluence predicts that bulls will ultimately prevail, ahead of a substantial rally wave that persists well into 2022. Relative strength indicators are flashing the same message, deeply oversold and trying to cross into buy signals.

Activision Blizzard Inc. (ATVI) has been crushed in 2021, dropping 37% in reaction to a poorly-handled sexual harassment scandal. CEO Bobbie Kotick faces widespread calls to resign but he continues to act like a Marvel villain, refusing to step down. Coca-Cola Co. (KO) could strip him of his Board membership soon while outraged employees are trying to unionize. All in all, this is perfect set-up for a profitable short squeeze when the CEO finally cleans out his desk.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held Coca-Cola in a family account at the time of publication.

Why Activision Blizzard Stock Is Down By 15% Today

Activision Blizzard Stock Falls After Company Delays Diablo IV And Overwatch 2

Shares of Activision Blizzard  found themselves under strong pressure after the company released its third-quarter report. The company reported revenue of $1.88 billion and adjusted earnings of $0.72 per share, meeting analyst estimates on revenue and beating them on earnings.

In the next quarter, Activision Blizzard expects to report revenues of $2.02 billion and adusted earnings of $0.62 per share. Net bookings are projected to total $2.78 billion in Q4 2021.

The company announced that it will delay Overwatch 2 and Diablo IV as it needs more time to develop the games. This delay will surely have a negative impact on analysts’ estimates for the next year.

What’s Next For Activision Blizzard Stock?

Currently, analysts expect that Activision Blizzard will report earnings of $3.83 per share in 2021 and $4.34 per share in 2022, so the stock is trading at 15 forward P/E.

However, analyst estimates for 2022 have been trending lower and will continue to move lower in the upcoming weeks, and it remains to be seen whether current valuation levels will attract value-oriented investors.

The stock is down by more than 35% from highs that were reached at the beginning of the year. Some employees have left the company after a recent workplace culture scandal, and it looks that the whole workplace culture story may have had a negative impact on productivity, leading to delays.

While Activisiion Blizzard owns strong franchises which will likely remain attractive in the longer-term, the company’s short-term problems may continue to put pressure on its stock. The current valuation levels do not look cheap, and it looks that there is more room for multiple compression. Most likely, the company will need to show some progress on the workplace culture front to make the market believe that it will continue to deliver great games at a reasonable schedule.

For a look at all of today’s economic events, check out our economic calendar.

Activision-Blizzard Could Sell Off to 50

Activision-Blizzard Inc. (ATVI) has sold off nearly 12% since reporting Q3 2021 earnings on Tuesday evening, dropping to the lowest low since May 2020. The video game provider posted a profit of $0.82 per-share, beating estimates by $0.14, while revenue grew 6.8% year-over-year to $1.89 billion, meeting consensus. Shareholders headed for the exits after the company warned about the fourth quarter, significantly dropping earnings-per-share (EPS) and revenue guidance.

Sexual Misconduct and Brand Destruction

Controversy struck in July when allegations of widespread sexual misconduct prompted a SEC investigation, as well as California regulatory lawsuits and mass firings. Local authorities have objected to an $18 million settlement with the U.S. Equal Employment Opportunity Commission (EEOC), stating it will impact their active litigation.  However, despite ongoing brand destruction, the company chose to blame game delays for the bearish guidance.

 Activision pushed back expected launches of Diablo IV and Overwatch 2, apparent victims of the scandal and staffing shortages, while announcing the departure of Blizzard second-in-command Jen Oneal after just three months on the job. Worse yet, the Nov. 5 release of Call of Duty: Vanguard isn’t expected to slow the stock freefall while Diablo Immortal, a mobile version of the classic game, may get banned in China as part of their video game crackdown.

Wall Street and Technical Outlook

Inexplicably, Wall Street has chosen to ignore the controversy, posting a consensus ‘Buy’ rating based upon 22 ‘Buy’, 6 ‘Overweight’, and 5 ‘Hold’ recommendations. Price targets currently range from a low of $65 to a Street-high $125 while the stock is set to open Wednesday’s session less than $3 above the low target. This dismal placement reveals a shocking failure by analysts in evaluating a major issue that’s impacting investor decision-making.

Activision-Blizzard completed a round trip into the 2018 high at 84.68 in August 2020 and pulled back, completing the handle in a multiyear cup and handle pattern. A December buying spike stretched to an all-time high at 104.53 in February 2021, giving way to a descending triangle that broke to the downside in July, failing the breakout. Persistent selling pressure since that time has now pierced major support at the 200-week moving average near 70, adding to major sell signals that may presage a decline toward 50.

For a look at today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Why Activision Blizzard Stock Is Under Pressure Today

Activision Blizzard Stock Falls As SEC Gets Interested In The Company’s Work Culture

Shares of Activision Blizzard continued to move lower after recent reports indicated that SEC had started an investigation of the company’s workplace culture. Earlier, a union filed a federal complaint regarding the company’s work culture while California sued the company for the same reasons.

Activision Blizzard stated that it was working with regulators to resolve the complains that it had received. The company has recently announced that Julie Hodges from Disney would become Chief People Officer, effective September 21, as Activision Blizzard tries to solve its problems with the workforce.

The stock has been under pressure in recent months as investors were worried about the company’s problems on the HR front. Activision Blizzard stock traded close to the $100 level at the beginning of June but found itself under strong pressure and moved below the $75 level.

What’s Next For Activision Blizzard Stock?

It is not surprising to see that Activision Blizzard stock is under pressure due to problems on the HR front as workforce is the key asset of any company that makes video games. Improving the situation may take time while the company may also face costs due to lawsuits.

Interestingly, analyst estimates have improved in recent weeks. Currently, analysts expect that Activision Blizzard will report earnings of $3.83 per share this year and $4.4 per share in the next year, so the stock is trading at roughly 17 forward P/E which is an attractive valuation level in the current market environment.

However, it remains to be seen whether value-oriented traders and investors will rush to buy Activision Blizzard shares as workplace changes take time while the stock has significant headline risks. In addition, there are plenty of stocks with a strong upside trend available at the marketplace right now, so Activision Blizzard stock will certainly need more positive catalysts to attract more investors and change the current downside trend.

For a look at all of today’s economic events, check out our economic calendar.

The Hottest Stocks On The Market Right Now

Stocks are back at all-time highs so the party goes on!

AMD bounces off the 38,2%  Fibonacci and aims higher again.

Autodesk climbs up after a short break inside of the flag.

Activision Blizzard is still below crucial horizontal resistance.

Equinix escapes from the symmetric triangle to the upside.

3M does the same but to the downside.

Same with British American Tobacco.

T-Mobile patiently waits for the buy signal inside of the wedge pattern.

Same for Royal Dutch Shell, but in this case, we’re in the triangle/rectangle.

Rolls-Royce climbs higher after the breakout of the crucial horizontal resistance.

For a look at all of today’s economic events, check out our economic calendar.

Best Stocks to Buy Now September 2021

The hard part is finding them.

At MAPsignals, that’s where we focus.

And this month we look at my best stocks to buy now for September 2021. Keep in mind, I like to use a lot of data in my process and this isn’t personalized advice.

But let’s touch on the market first. The big indexes are chugging higher but are largely being propped up by a handful of the biggest stocks. The data under the surface is deteriorating quickly. The Big Money Index is falling rapidly indicating more sellers than buyers. It’s often a leading indicator, so recent weakness isn’t surprising.

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Pullbacks are part of the game. In fact, that’s an opportunity for long-term investors. Patience is the key to investing.

For MAPsignals, we focus on Big Money buying the best stocks. We find that oftentimes how a stock trades can alert you to the forward fundamental picture more than just looking at a company’s financials. I like the odds in my favor when looking for the highest quality stocks.

Up first is Thermo Fisher Scientific Inc. (TMO), which is a leading medical devices company. They have been trucking higher for years.

When we decide on the strongest candidate for long-term growth, we consider many fundamental and technical considerations.

Here we see great 1 and 3-year sales and earnings growth. We also see a hefty profit margin. Just for fun, juice is good, so-so is ok, and not ideal is underwhelming:

Source: MAPsignals, FactSet

To see if Big Money is plowing in, we can look at the MAPsignals Top 20 charts. Below are all the top buy signals TMO has made the past few years. Blue bars are showing that Thermo Fischer was likely being bought by a Big Money player according to MAPsignals.

When we see a lot of blue signals, we call it the stairway to heaven:

Source: MAPsignals.com

Next up is Intuitive Surgical, Inc. (ISRG), which is a leading surgical robotics maker. Imagine being a surgeon in one country operating in a patient in another! This company makes it theoretically possible.

Let’s take a peek under the hood:

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Source: MAPsignals, FactSet

While the stock has outperformed recently, look at the long-term picture. These are the top buy signals ISRG has made since 2015. Clearly the Big Money has been into it for years:

Source: MAPsignals.com

Another growth name to consider is Activision Blizzard, Inc. (ATVI). The video game maker has seen negative press regarding work culture and other assorted stories. But it doesn’t change the monster business they do.

Looking at the fundamental picture we see a strong history of 1 and 3-year sales and earnings growth and a chunky profit margin:

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Source: MAPsignals, FactSet

Below are the big money signals Activision has made since 2015. This stock has been a magnet for Big Money with one notable rough patch. Clearly, they turned it around and have been in a strong long-term uptrend:

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Source: MAPsignals.com

Number 4 on the list is Generac Holdings Inc. (GNRC), which is an industrials leader making electrical products such as their popular home generators. The shares have been in juice-mode for years.

Check out the fundamental picture. For GNRC we see growing sales and earnings:

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Source: MAPsignals, FactSet

Below are the big money signals that GNRC has made since 2015. Notice that it’s only recently come to Big Money attention in late 2019:

Source: MAPsignals.com

Our last growth powerhouse is PayPal Holdings Inc (PYPL), which is a specialty finance company focusing on digital payments.

This company boasts strong fundamentals with great 1 and 3-year sales and earnings growth. A gross profit margin of 55% is awesome.

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Source: MAPsignals, FactSet

Below are the big money signals PayPal has made since 2016. You can see how powerful the performance has been:

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Source: MAPsignals.com

The Bottom Line

TMO, ISRG, ATVI, GNRC, & PYPL represent my best stocks to buy now for September 2021. Given the strong historical revenue & earnings growth, and multiple big money buy signals, these stocks could be worth extra attention, especially if they pull back with a likely pending sell-off in the market.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in PYPL in personal and managed accounts. He holds no positions in TMO, ISRG, GNRC, or ATVI at the time of publication.

Investment Research Disclaimer

Activision Blizzard Under Pressure Ahead of Report

Activation Blizzard Inc. (ATVI) reports Q2 2021 earnings after Tuesday’s closing bell, with analysts expecting a profit of $0.75 per-share on $1.88 billion in revenue. If met, earnings-per-share (EPS) will mark no improvement over identical results in the same quarter last year, when gamers were emerging from lockdowns. The stock bounced off a multi-month low in May after a mixed Q1 report but the uptick failed, with downside since that time reaching the lowest low since December 2020.

Toxic Workplace Allegations

June 2021 video gaming spending rose just 5% year-over-year, failing to overcome tough comparisons after last year’s pandemic sales windfall. Social distancing and the run-up into new console releases by Sony Group Corp. (SONY) and Microsoft Corp. (MSFT) generated the most industry excitement in ages, translating into higher stock prices and extremely overbought technical readings that are partially responsible for year-to-date losses in top sector plays.

Activision is also dealing with fallout from sexual harassment allegations at Blizzard’s “World of Warcraft”, one of the hottest titles of the 21st century. That game no longer tops the sales charts but the toxic culture being exposed by unit employees could damage the corporate brand, which includes many titles directed at female players. California just filed suit, citing a culture of “constant sexual harassment”, so this story is likely to attract attention and potential disgust into 2022.

Wall Street and Technical Outlook

Wall Street consensus remains overly bullish, with a ‘Buy’ rating based upon 24 ‘Buy’, 5 ‘Overweight’, and 3 ‘Hold’ recommendations. Price targets currently range from a low of $100 to a Street-high $145 while the stock is set to open Tuesday’s session more than $18 below the low target. This dismal placement highlights Main Street skepticism after 2020’s 56% return. In addition, analysts have been as quiet as church mice since the scandal broke, most likely because they have no clue how it will impact sales.

Activision topped out at 84.68 in October 2018 and got cut in half in the next four months. A slow but steady uptick reached the prior high in August 2020, yielding a pullback, followed by a December cup and handle breakout that posted an all-time high at 104.53 in February 2021. The subsequent decline completed a descending triangle breakdown after the sexual harassment news, also failing the breakout. None of this bodes well for the stock in coming months.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

A Post-Covid Hangover – Should You Worry About Your Portfolio?

Amazon executives noted shifting consumer habits as the pandemic eases and people become more mobile. Amazon forecasted the next quarter’s sales at between $106 billion and $112 billion, compared to Wall Street expectations for right around $119 billion.

Amazon’s projections would still represent growth of +10% to +16%. Keep in mind, bears are also pointing to ongoing fears of supply chain hiccups, higher-trending inflation, and new coronavirus outbreaks. Earnings come at a busy pace again today with results from Caterpillar, Cerner, Chevron, CNH Industrial, Colgate Palmolive, Enbridge, Exxon Mobil, Johnson Control, and Procter & Gamble.

The worry on Wall Street is that this new normal rate of growth will be slower than many analysts and trading firms are forecasting coupled with higher inflation and or supply chain dislocations corporate profits could fall under some pressure or in this case be less than Wall Street is forecasting for the next few quarters. Bulls expect more consumer spending will shift from goods and pandemic-related services (delivery, video games, cloud/collaboration software) but are still betting on pent-up demand for things people missed out on during lockdowns, as well as goods and services that are currently in short supply.

Data to watch

Updated inflation data is also on tap with the ISM Manufacturing Index on Monday and the Services Index on Wednesday.

There will be plenty more earnings next week too, including Simon Properties and Zoom on Monday; Activision Blizzard, Alibaba, Amgen, Clorox, ConocoPhillips, Eli Lilly, Fidelity, Match Group, Monster Beverage, Occidental Petroleum, and Phillips 66 on Tuesday; Allstate, CVS, Etsy, General Motors, Kraft Heinz, Marathon Petroleum, MetLife, MGM Resorts, Rocket Companies, Roku, Trane, and Uber on Wednesday; Adidas, AMC, Carvana, Cigna, Cloudflare, Corteva, Duke Energy, Kellogg, Moderna, Nintendo, Novo Nordisk, Siemens, Square, Wayfair, Zillow, and Zoetis on Thursday; and Dish Network, Dominion Energy, and DraftKings on Friday.

Insider Accumulation

ES ##-## (Daily) 2021_08_01 (19_25_02)

I have mixed feelings about SP500. There are a few signs of weakness. However, it might be the result of low summer activity. Advance-Decline Line is clearly bearish. Insider Accumulation is also not that strong. Moreover, the Volatility Index is very low and potentially it could bring a pullback. In any case, SP500 futures failed to close the week above Gann resistance. And that is also a negative sign.

The Federal Reserve policy is still supportive. But keep in mind, that SP500 has rallied around 100% since the pandemic bottom without any pullback. And the retest of key support zones near 4200 and 4000 is realistic.

On the other hand, the continuation of the rally is also possible but only if price sustains above 4400. If that happens, bulls will target 4500 and 4600 in extension.

Best Growth Stocks July 2021

The hallmark way we go about finding the best stocks…the outliers, is by looking for quiet Big Money trading activity.

Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are ATVI, SHOP, PYPL, GOOGL, & QFIN.

For MAPsignals, we believe the true tell on the near-term trajectory of the stock lies in the trading activity of the stock. The bottom line here is that oftentimes the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than by simply looking at a company’s financials alone. We want the odds on our side when looking for the highest quality stocks.

Up first is Activision Blizzard, Inc. (ATVI), which is a leading gaming and entertainment firm. They have been cruising higher for years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for ATVI being:

  • 1-year performance (+36.17%)
  • YTD underperformance vs. NASDAQ ETF (-2.6% vs. QQQ)
  • Historical big money signals

Just to show you what our Big Money signal looks like, have a look at all of the top buy signals ATVI has made the past few years. That’s one strong uptrend. Green bars are showing that Activision Blizzard was likely being bought by a Big Money player according to MAPsignals.

It’s clear there’s a lot of green historically with this stock. That’s exactly what you want to see when looking for a great growth name. The lone red signal occurred during a broad market pullback:

Source: MAPsignals, End of day data sourced from Tiingo.com
Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, you need to look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Activision’s revenue numbers have been strong:

  • 3-year sales growth rate (+6.09%)
  • 3-year earnings growth rate (+196.28%)

Next up is Shopify, Inc. (SHOP), which is an ecommerce software company. The company has been a huge winner over the years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for SHOP being:

  • 1-year performance (+62.22%)
  • YTD vs. technology ETF (+4.83% vs. XLK)
  • Recent big money signals

While the stock has outperformed recently, look at the long-term picture. These are the top buy signals Shopify has made since 2015. Clearly the Big Money has been consistent for years:

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of a great long-term technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Shopify has grown revenues massively:

  • 3-year sales growth rate = +64.02%
  • 3-year earnings growth rate = -63.12%

Another growth name to consider is PayPal Holdings, Inc. (PYPL), which is a leading digital payments company.

When we decide on the strongest candidate for long-term growth, we want to see a history of big money buying the shares. PayPal has that. Also, recent underperformance can be attractive:

  • 1-year performance (+74.5%)
  • YTD outperformance vs. technology ETF (+6.79% vs. XLK)

Below are the big money signals PayPal has made since 2015. After the pandemic lows, it’s been moon-bound:

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of a strong technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. PayPal’s growth rate is impressive. I expect more growth in the coming years:

  • 3-year sales growth rate = +17.96%
  • 3-year earnings growth rate = +36.06%

Number 4 on the list is Alphabet Inc. (GOOGL), which is the leader in online search amongst other growth areas. The shares have been in bull-mode the past couple of years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for GOOGL being:

  • 1-year performance (+72.37%)
  • YTD outperformance vs. technology ETF (+29.13% vs. XLK)
  • Historical big money signals

Below are the big money signals that GOOGL has made since 2015:

Source: MAPsignals, End of day data sourced from Tiingo.com
Source: MAPsignals, End of day data sourced from Tiingo.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Alphabet has been growing nicely:

  • 3-year sales growth rate = +18.06%
  • 3-year earnings growth rate = +60.69%

Our last growth candidate is 360 DigiTech, Inc. ADR (QFIN), which is a leading Chinese finance firm. The stock has zoomed recently.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for QFIN being:

  • 1-year performance (+322.5%)
  • YTD outperformance vs. financials sector (+231.7% vs. XLF)
  • Historical big money signals

Below are the big money signals 360 DigiTech has made since 2019. You can see how powerful the performance has been the past year:

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, 360 DigiTech has grown revenues massively over the past few years:

  • 3-year sales growth rate = +504.91%
  • 3-year earnings growth rate = -761.38%

The Bottom Line

ATVI, SHOP, PYPL, GOOGL, & QFIN represent top growth stocks for July 2021. Given the strong historical revenue & earnings growth, and multiple big money buy signals, these stocks could be worth extra attention.

To learn more about MAPsignals’ Big Money process please visit.

Disclosure: the author holds long positions in PYPL & GOOGL in personal and managed accounts. He holds no positions in ATVI, SHOP, & QFIN at the time of publication.

Investment Research Disclaimer

Best ETFs For June 2021

A portfolio of outlier stocks can become chock full of monster gains for years to come, if chosen wisely.

But wouldn’t it be great if there was already a collection of outliers we could buy without even having to think about it?

Well maybe there is a way to do just that… through outlier ETFs.

So, here I’m going to give you the best ETFs that big money is getting involved in this month.

First thing’s first: to find them, I looked at all the ETFs making Big Money signals. I did that by heading over to MAPsignals.com and then looked at the Big Money ETF Buys and Sells chart. I looked at days with the biggest buying, circled here:

Once I had all the ETFs, I wanted to know which were the best potential opportunities. ETFs are baskets of stocks. And because MAPsignals scores over 6,000 stocks every day, as long as I know which stocks make up the ETFs, I can rank them all.

Here are the 5 best ETFs with scores: The Composite score, Technical score, and Fundamental score. These were computed by accounting for each components stock’s score and its associated weighting in the ETF. (keep in mind that weightings will change from time to time)

Below we see each ETF, their recent Big Money activity, and their scores. XLF, ITB, and XLC are top ranked ETFs. That makes sense because financials, home builders, and communications stocks have been leading the market much of this year so far.

IGV and ARKG, however, rank low on our list of ETFs. But there is opportunity here because the low scores are due to weak technicals. Big Money has been selling these ETFs, largely because they are heavily concentrated in growth stocks. But these stocks have excellent fundamentals: growing sales and earnings and big profits. These weak ETFs represent great potential bargains.

Let’s quickly look at the year-to-date performance of these 5 ETFs:

  • XLF +29.3%
  • ITB +29.2%
  • XLC +13.5%
  • IGV -4.0%
  • ARKG -18.1%

Now let’s quickly look at Big Money buying in the ETFs. Each chart below has many green bars which represents unusually large buying. The few red bars represent unusually large selling. What jumps out is the huge buying in all the ETFs.

Only with IGV and ARKG, there was recent selling too. But again, selling on ETFs and stocks with great fundamentals represents a value opportunity.

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Here’s why I like these ETFs: they are highly concentrated with fundamentally superior stocks. Below we see a table of three stocks in each ETF. They are some of the highest weightings in each.

Notice their fundamental scores are very strong on a scale from 0-100. This means strong growing sales, earnings, and profits over one and three years. This is how MAPsignals boils down all its fundamental research into one elegant score.

Now with XLF, ITB, and XLC – we see the stocks also have strong technical scores. That means Big Money has been pouring into them, lifting them to new highs. They are buoyant with Big Money support. But in IGV and AKG, we see weak technical scores. This means Big Money has been exiting the stocks.

But before you get spooked, let’s keep the recent environment in mind: Growth has fallen out of favor while value and reopen stocks have become all the rage. But it’s essential to remember these growth companies create phenomenal products and services enhancing our lives. I don’t foresee that stopping in the future. The recent selling is temporary and thematic.

What really drives this home is looking at how long-term Big Money buying can lead to monstrous gains. Below are charts showing all the instances these stocks were Top stocks in our research since 2015: our weekly report of outliers. We don’t need to go into details on each chart.

I’d like you to notice a few things:

  • When Big Money buying pours in, stocks go up
  • Repeated outliers, especially for years often means outsized gains

Owning outlier stocks is the way I try to beat markets. Easy exposure to many stocks can be achieved by buying ETFs. But just like anything, you must be in the 1% if you want to be in the 1%.

We can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when we catalog the components and find outlier stocks underneath… that’s the winning recipe.

So, there you have it: the 5 best ETFs that Big Money has been trafficking in recently. Outlier ETFs hold outlier stocks. Finding them is the key to finding potentially outlier gains.

Now let’s look at what those look like:

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

The Bottom Line

XLF, ITB, XLC, IGV, & ARKG represent top ETFs for June 2021. Financials, homebuilders, & Communications stocks have performed well lately, which should continue. Software and Genomics companies have reached interesting levels, too. Paying attention to the fundamental quality of ETF constituents is paramount.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions GOOGL, CRM, & REGN in managed accounts, but no positions in XLF, ITB, XLC, IGV, ARKG, BLK, SCHW, SPGI, DHI, LEN, LOW, FB, ATVI, ADBE, MSFT, TDOC, & VRTX at the time of publication.

Investment Research Disclaimer

Will Earnings Season Bring Volatility To The Stock Market?

The Commerce Department last week reported that the U.S. economy grew at a +6.4% annual rate in the first quarter, slightly below estimates but still strong. If it would have come in real hot and much higher bears would have pointed to fanning the inflation flames even further.

This mindset of “bad-news-could-be-good-news” is helping to keep the stock market at or near all-time highs. If economic data somewhat disappoints it means the Fed stay dovish and accommodative for longer.

Fundamental analysis

That might be important to keep in mind as April data starting this week is expected to be extremely good. The April Employment Report is due next Friday and with upper-end of Wall Street estimates look for upwards of +1 million new jobs being added. Other key April data next week includes the ISM Manufacturing Index on Monday, and the ISM Non-Manufacturing Index on Wednesday.

employment

If the data comes in better than expected the bears will win the nearby battle and have the upper hand when talking higher inflation and the Fed perhaps tightening sooner than anticipated. So this week could be a bit tricky whereas “disappointing-data” could actually be digested as a win for the bulls and “strong data” a win for the bears.

The earnings calendar is packed again next week with big names including Activision Blizzard, Adidas, AllState, Cerner, Cigna, CVS, Dominion Energy, Enbridge, Etsy, Hilton Worldwide, Moderna, Monster Beverage, Nintendo, PayPal, Peloton, Pfizer, Rocket Companies, Square, TMobile, Wayfair, and Zoetis.

COVID-19

Checking in on U.S. progress against Covid-19, the number of adults that have received at least one dose is around 60%-65%, depending on the source. Global cases continue to rise led by India, where new infections have been hitting new record highs every day for weeks now. The country reported a staggering 380k new infections and 3,645 new deaths on Thursday while less than 10% of the population has been vaccinated.

Bottom line, the global restart will not be synchronized like many bulls had hoped would be the case and global growth may continue to struggle. At the moment the U.S. market doesn’t seem to care. It will be interesting to see if increasing inflation and continued global headwinds will eventually come home to roost.

SP500 technical analysis

SP500 earnings season

Earnings season can bring volatility to the stock market. At the beginning of May, cycles turn to the downside. Note, this is only a timing tool and it never shows the amplitude or strength of the move. When cycles are topping, it means we can expect a move down or choppy trading. This is it.

But relying on cycles only is not a good idea. Insider Accumulation Index shows bearish divergence on a daily chart. At the same time, Advanced Decline Line is still strong. The key resistance is around 4250 at the moment. I believe earning season can bring a profit booking to the stock market. If that happens, watch 4000 – 39500. It was a massive resistance and now it might turn into support. Intermarket Forecast is neutral. But if it turns to the downside, we will finally see a pullback in SP500.

For a look at all of today’s economic events, check out our economic calendar.

Activision Blizzard Shares Rally On Stock Buyback And Dividend Hike

Activision Blizzard Video 05.02.21.

Activision Blizzard Reported Strong Q4 Results

Shares of Activision Blizzard are gaining about 10% in today’s trading session after the release of a strong Q4 earnings report.

Activision Blizzard reported revenue of $3.05 billion and GAAP earnings of $0.65 per share, beating analyst estimates on both earnings and revenue.

The company also increased its annual dividend from $0.41 per share to $0.47 per share. At the current stock price, Activision Blizzard yields 0.46%. It should be noted that game developers have never been considered as income stocks so Activision Blizzard’s dividend serves as an additional positive catalyst rather than a center of the bullish thesis.

Activision Blizzard has also announced a two-year stock repurchase program. The company can buy up to $4 billion of its common shares during this period, and the buyback program will likely provide additional support to the stock.

What’s Next For Activision Blizzard?

Activision Blizzard benefited from strong demand for its products during the pandemic. While the current virus containment measures are not as strict as the ones that were implemented in spring of 2020, demand for video games remains robust.

Call of Duty and World of Warcraft performed well in the fourth quarter of 2020, and the company believes that this momentum will be sustained in 2021. The company also noted that the first stage of regional testing for the mobile Diablo Immortal went well, and Blizzard planned further rounds of testing ahead of the launch planned for later this year.

Diablo is a very popular franchise, and the release of the mobile version will likely boost the company’s financial performance although Activision Blizzard did not include any material contribution from the title into its 2021 outlook.

Not surprisingly, analysts rushed to revise their forecasts after the release of Q4 results as solid financial performance, dividend hike and stock buyback are expected to serve as significant upside catalysts.

For a look at all of today’s economic events, check out our economic calendar.

3 Video Game Stocks Worth Playing

Video game stocks were big winners in the first half of 2020, benefiting from people looking to stay entertained while spending more time at home during the coronavirus pandemic. As infection numbers continue to rise in many parts of the world heading into winter, consumers will likely once again try their hand at gaming to ride out the holidays until COVID-19 vaccines arrive early next year.

“While we wait for a vaccine and eventual economic recovery to unfold, video games are an attractive place to be invested as they benefit from cyclical weakness and stay-at-home orders in the short term,” Deutsch Bank analyst Bryan Kraft told clients, per Business Insider.

Below, we take a look at three video game stocks and turn to technical analysis to identify possible trading opportunities.

Electronic Arts Inc.

With a market capitalization of $37.92 billion, Electronic Arts Inc. (EA) markets, publishes and distributes video games, content, and services for game consoles, PCs, mobile phones, and tablets. Some of the video game publisher’s well-known franchises include “Madden,” “FIFA,” “Battlefield,” “Apex Legends,” “Mass Effect,” “Dragon’s Age,” and “Need for Speed.” Over the holidays, the company plans to release highly-anticipated titles “Medal of Honor: Above & Beyond” and “Mass Effect Legendary Edition.”

Management said it expects third-quarter bookings of $2.35 billion while seeing full-year bookings reach $5.95 billion. From a charting perspective, the share price broke above a descending channel earlier this month. This may give rise to a retest of the 52-week high at $147.36.

Activision Blizzard, Inc.

Activision Blizzard, Inc. (ATVI) develops and distributes content and services on video game consoles, PCs, and mobile devices. The $63.58 billion video game maker owns an impressive franchise portfolio that houses “Call of Duty,” “World of Warcraft,” “Diablo,” “Hearthstone,” “Overwatch,” and “Candy Crush.” Upcoming games in the pipeline include “Overwatch 2” and “Diablo IV.”

The company forecasts full-year revenue of $7.7 billion and earnings of $2.61 per share. Meanwhile, analysts expect sales of $7.8 billion and earnings of $2.59 a share. ATVI shares have also broken out above a descending channel this month that places the bulls firmly in control. Look for upside momentum to push the price back toward its all-time high at $87.73.

Take-Two Interactive Software, Inc.

Take-Two Interactive Software, Inc. (TTWO) develops, publishes, and markets interactive entertainment solutions. The New York-based video game publisher behind franchise hits “Grand Theft Auto” and “NBA 2K” reported fiscal second-quarter net income of $99.3 million, or 86 cents per share. This compares to a net profit of $71.8 million, or 63 cents a share in the year-ago quarter.

Looking ahead, the company said it plans to release 93 games over the next five years, with 47 of those coming from existing franchises. Turning to the charts, the share price has consolidated near the August high over the past week, indicating the stock may continue trending upwards during the coming months.

For a look at today’s earnings schedule, check out our earnings calendar.

Activision-Blizzard Selloff Could Offer Buying Opportunity

Activision-Blizzard Inc. (ATVI) beat Q2 2020 earnings estimates by a country mile in an early August release, lifting the stock to an all-time high. The game maker booked a profit of $0.75 per-share while revenue rose an impressive 72.3% year-over year to $2.08 billion, much higher than $1.35 billion expectations. Sharply raised Q3 and fiscal year guidance also got bulls’ undivided attention, completing a blowout report that triggered a vertical breakout after a brief decline.

Activision-Blizzard Pandemic Beneficiary

The installed player base has grown 30% year-over-year so far in 2020 while individual play times have risen a phenomenal 70%, all as a result of pandemic shutdowns and virtual working spaces. Hit content titles that include Call of Duty are also driving growth, with that game’s play time rising eightfold this year. These tailwinds are likely to continue, with the N.Y. Times just releasing a survey that expects only 54% of workers to return to New York offices by July 2021.

Needham analyst Laura Martin pounded the tables on Wednesday, stating, “We believe that lock-downs have accelerated several media trends and Activision-Blizzard is among the biggest beneficiaries. We raise our ATVI estimates for FY20 and FY21 and discuss recent trends in viewing and play times across the video game industry that benefits the stock. We are most excited about ATVI’s leadership position in eSports and we remain optimistic about eSports betting as a long-term revenue driver. We reiterate our Buy rating and $102 PT.”

Wall Street And Technical Outlook

Wall Street has been steadfastly bullish about Activision-Blizzard’s long-term outlook, with a ‘Strong Buy’ rating based upon 22 ‘Buy’ and just 1 ‘Hold’ recommendation. A single analyst is recommending that shareholders sell their positions at this time. Price targets currently range from a low of $65 to a street-high $106 while the stock is now trading $15 below the median $94, perfectly placed for higher prices.

However, Activision-Blizzard isn’t well-positioned to be bought right now because it just failed the breakout above the 2018 high in the mid-80s. Selling pressure is picking up, targeting the 200-day EMA near 70. That level could offer a low risk buying opportunity, for three reasons. First, the stock will no longer be technically overbought. Second, the company should post strong quarterly results well into 2021. Third and most importantly, next-generation video game consoles set for release in coming months should add another significant tailwind.

Activision Blizzard Trading Lower Despite Blowout Quarter

Activision Blizzard Inc. (ATVI) sold off after blowing away top and bottom line Q2 2020 estimates last week, but recovered quickly, posting an all-time high at 87.73 in the following session. The video game manufacturer booked a profit of $0.75 per-share while revenue grew an astounding 72.3% year-over-year to $2.08 billion. The company issued upside guidance for fiscal year 2020, raising estimates to $2.46 per-share on $7.625 billion in revenue.

Activision Blizzard Benefiting From COVID-19 Pandemic

Strong 2020 tailwinds predict even higher stock prices in coming months. For starters, COVID-19 shutdowns across the globe have encouraged many gamers to buy new consoles and titles, even though the next generation of Xbox and PlayStation devices is scheduled for release in the fourth quarter. Those releases mark a second notable tailwind, focusing attention on the video gaming industry after several years of mixed results.

Needham analyst Laura Martin raised their Activision Blizzard target to $90 in July, noting the following supportive factors: a) live sports and films/cinemas being dark, b) COVID-19 lock downs generating higher in-game revenue, c) eSports as a key upside driver while ATVI just launched its second pro league, d) cultural bias against video games is ebbing as parents now understand the highly social aspect e) social distancing is valuable during COVID-19.

Wall Street And Technical Outlook

Wall Street consensus on Activision Blizzard is highly bullish, with a ‘Strong Buy’ rating, based upon 21 ‘Buy”, 2 ‘Hold’ and 1 ‘Sell’ recommendation. Price targets currently range from a low of $65 to a street-high $106 while the stock opened Tuesday’s U.S. session $11 below the median $92 target. This placement should support even higher prices but overbought technical readings could delay further upside until Q3 performance trends become more transparent.

The stock sold off from 85 to 40 between December 2018 and February 2019 and spent the next 18 months completing the 45-point round trip into the prior high. A minor breakout to new highs is now fading quickly, with selling pressure reinforcing resistance in the mid-80s. Even so, accumulation readings have already broken out to all-time highs, predicting that price will soon follow, potentially supporting a rapid advance into triple digits.

U.S. Stocks To Watch Today

General Motors

General Motors is set to provide its earnings report today before the market open. Analysts expect that the company will report revenue of $31.37 billion and profit of $0.34 per share.

The main intrigue is how the company plans to deal with the current crisis. The coronavirus containment measures dealt a heavy blow to the auto industry, and it’s not surprising that General Motors shares lost more than 40% of their value since the beginning of this year.

Recent reports suggest that General Motors wants to raise an additional $2 billion via a loan to boost its liquidity, but this has not yet been confirmed by the company. In all likelihood, General Motors will provide an update on liquidity measures during the upcoming earnings call.

The sales guidance is also of outmost importance as traders and investors try to guesstimate how much actual damage was done during the recent months and whether the company can mitigate this damage via increased sales after the end of virus containment measures.

Shopify

Shopify is one of the stocks that rallied due to the pandemic as consumers switched to online shopping options as brick-and-mortar stores were unavailable.

The company will provide its quarterly report today before the market open. The analyst consensus calls for revenue of $443 million and loss of $0.17 per share.

In all likelihood, the market will ignore the profitability metric and focus on the top line growth. However, the expectations are high as Shopify shares are up more than 70% year-to-date and have reached their all-time highs during the most recent trading session.

In case Shopify results fail to meet expectations, I’d expect a rapid sell-off as the stock’s valuation implies flawless execution.

Activision Blizzard

Activision Blizzard provided its quarterly results yesterday after the market close. The company reported revenue of $1.79 billion and profit of $0.65 per share, beating analyst estimates.

Activision Blizzard benefited from stay-at-home orders and success of the new Call of Duty which was released in March. As the lockdowns continued in April, the positive business environment remained intact.

The company expects that the strong momentum will continue and raises the outlook for revenue and earnings per share for the full year.

Before the earnings report, Activision Blizzard shares were up about 15% year-to-date. The market has positively reacted to the news, and the stock gained ground during the after-hours trading session. This trend may continue in the regular trading session.