Worried About A Market Crash? Consult The Big Money Index

And Consider These Stocks When It Does

They get cranky, roll over, fall out of bed, and hit their heads on the floor. It’s part of life, and most people don’t like when it happens.

But what if I told you there’s a tool that can alert you before markets roll-over?

It may sound too good to be true. But here I’ll introduce you to my favorite indicator that can do exactly that. I’ll show you how it works, what it’s saying now, and I’ll even show you examples of outlier stocks that weather the inevitable storms particularly well over the long-run.

The Big Money Index (BMI) is a great market timing indicator. It was developed by MAPsignals, a research firm dedicated to tracking Big Money investors in real-time. The idea is this: JPMorgan did a study estimating that 10% of all daily stock trading volume is due to fundamental discretionary traders. The lion’s share of trading is institutional.

If we can identify when huge investors are moving in and out of stocks in an unusual way, we can try and be ahead of the crowd. This way we can have a possible advantage and ride their coattails. We used our Wall Street experience of handling big stock orders to help us create this indicator. It’s our best guess of where the Big Money is heading on a daily basis.

When we add up all the daily buy and sell signals and smooth them out over a 25-day moving average, we get the Big Money Index.

Right now, it’s indicating higher prices for stocks. When it rises, like now, usually the market follows:

It looks like this:

MAPsignals.com

We’ve back-tested this indicator going back over 30 years. When overbought, (80% or more) markets crest shortly thereafter often preceding a market correction. These are rare occurrences: The BMI was overbought just 20% of the last 3 decades.

Rarer still is an oversold BMI: only 4% occurred the last 30 years. When the Big Money Index goes deeply oversold, that’s when history says stocks are bound to rise. Markets usually rocket higher weeks and months later.

Here are some recent examples of the Big Money Index accurately foreshadowing market peaks and troughs:

  • January 2018 peak
  • December 2018 trough
  • February 2020 peak
  • March 2020 trough
  • September 2020 peak
  • October 2020 Election volatility
  • November 2020 rally

If a deeply oversold Big Money Index is great for identifying buy opportunities, then how do we know when to side-step a market drop?

Below is the same BMI chart. Only we’ve added periods where the 10- day average was below 65%. That just basically means, the BMI was weakening. Here’s what we saw over the last three years:

When red comes, it generally lasts a while. This also corresponds to a falling then recovering index. When red starts, indexes usually fall. Red can only stop when Big Money buying lifts the average above 65%.

To summarize, when the BMI is falling, the S&P 500 is mostly flat:

From 2012, we see similar:

To avoid being left holding the bag when the next market drop comes, watch for a falling Big Money Index. Remember, Big Money means we’re trying to track institutional investors. They usually have an edge over everyone else. They tend to have the best market information out there. So, it’s best to watch them!

Now you know about the BMI. You know you can use it to potentially manage your risk. You know you should watch out for a falling BMI to alert you of danger ahead.

They say the best defense is a good offense. I told you I’d let you know which stocks to hold when that inevitable cranky stock market comes. To find them, I went back over the following periods of market turmoil:

Each of these drops was preceded by a falling Big Money Index. And each time the market troughed, I went and looked at which stocks came out with flying colors.

Market volatility is inevitable. But when it comes, we’ve found the best defense is owning outlier stocks. These stocks are the best of the best. They have growing sales, earnings, and profits. And they are also getting scooped up by Big Money investors.

Hidden in MAPsignals buy and sell signals are high-quality stocks that can offer opportunity when things get bumpy.

You’ll notice in the 6-year charts below, the green bars indicate Big Money buying when stocks have superior fundamentals. These are mother-outliers. All that green, we call the stairway to heaven. But even through periods of wicked volatility, these stocks do incredibly well over the long run.

Facebook Inc. (FB) rose 293% since 2015:

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

Mastercard Inc. (MA) rose 378% over the same period:

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

Nvidia Corp. (NVDA) rose an astounding 3,067% since 2015:

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

Compare those stocks with the SPY SPDR S&P 500 ETF which gained 129%.

These outlier stocks are ones I would want to own when the next market rough patch comes.

So, there you have it: a detailed playbook on how to forecast, avoid, and even defend against the next market crash. We all know it’s coming eventually, but now you can be armed with tools to help you through.

The next time markets get cranky, you just might already be out of sight avoiding it until happier days.

The Bottom Line

Trying to understand what the Big Money is doing is important. Currently the Big Money Index is pointing higher, which is near-term bullish. When it heads lower, I’ll be paying attention. I believe in looking for quality companies in times of turmoil.

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

Disclosure: the author holds no positions FB, MA, NVDA, & SPY at the time of publication.

Investment Research Disclaimer

https://mapsignals.com/contact/

Bears in Charge Ahead of AMD Report

Advanced Micro Devices Inc. (AMD) reports Q1 2021 earnings after Tuesday’s closing bell, with analysts expecting a profit of $0.44 per-share on $3.20 billion in revenue. If met, earnings-per-share (EPS) will mark a 240% profit increase compared to the same quarter in 2020. The stock sold off 6.5% in January after beating Q4 2020 estimates and has continued to underperform into the second quarter.

Posting Year-To-Date Loss

AMD and NVIDIA Corp. (NVDA) posted impressive 2020 returns in reaction to multiple missteps at Dow component Intel Corp. (INTC). INTC sentiment has improved substantially in 2021 but that didn’t stop NVDA from posting an all-time high just two weeks ago. Sadly, AMD has failed to match the performance of either rival, slumping to an 8% year-to-date loss while entering the third month of dead price action at the 200-day moving average.

Raymond James analyst Chris Caso outlined the bull case last week, noting “the stock’s pullback has been driven by improved sentiment that Intel will solve their manufacturing challenges, which will reverse AMD’s successes. We’re taking the other side of that view. Now that Intel has committed to internal manufacturing, we think it’s unlikely that Intel ever regains a transistor advantage vs. AMD, and the current roadmaps ensure an advantage for AMD/TSMC through at least 2024”.

Wall Street and Technical Outlook

Wall Street consensus matches this analyst’s view, with an ‘Overweight’ rating based upon 17 ‘Buy’, 4 ‘Overweight’, and 12 ‘Hold’ recommendations. However, three analysts now recommend that shareholders close positions and move to the sidelines. Price targets range from a low of $70 to a Street-high $120 while the stock closed Friday’s session more than $20 below the median $105 target. This low placement reflects skepticism about the chipmaker’s ability to compete with larger rivals.

AMD completed a breakout above the 2000 high in the 40s in July 2020 and entered a trend advance that lost steam in the 90s in September. It posted an all-time high at 99.23 in January 2021 and eased into an intermediate correction that reached the 200-day moving average in February. Price action has gone comatose while a monthly Stochastic sell cycle still hasn’t hit the oversold level. In turn, this tells us that bears remain in firm control of the ticker tape.

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.

Mixed Outlook Ahead of Intel Report

Dow component Intel Corp. (INTC) reports Q1 2021 earnings after Thursday’s closing bell, with analysts looking for a profit of $1.14 per-share on $17.97 billion in revenue. If met, earnings-per-share (EPS) will mark a 21% profit decline compared to the same quarter last year.  The stock gave back a 6.5% advance after beating Q4 2020 top and bottom line estimates in January but performed well into early April, posting a 15 month high.

Investing in Local Fabrication

Investors have forgiven the chip giant after 2020 missteps forced loyal customers to cut deals with competitors Advanced Micro Devices Inc. (AMD) and NVIDIA Inc. (NVDA). NVIDIA, in particular, is rolling out highly-competitive products at a lightning pace, ready to build even greater market share in coming years. Intel has shifted gears to meet the challenge, investing billions to become a major foundry supplier. That effort could pay off, given worldwide chip shortages this year.

Needham analyst Pat Gelsinger posted upbeat comments about the initiative in March, noting “With most of the world’s leading edge foundry capacity now concentrated in Asia, Intel also launched Intel Foundry Services (IFS) to address the industry’s capacity constraints and need for more geographically balanced manufacturing capacity, with manufacturing locations in the U.S. and Europe. Intel also announced it will be spending $20 billion to build two new fabs in Arizona, which will support its current products as well as its foundry customers.”

Wall Street and Technical Outlook

Wall Street sentiment remains mixed despite share gains, with a consensus ‘Hold’ rating based upon 15 ‘Buy’, 1 ‘Overweight’, 15 ‘Hold’, and 2 ‘Underweight’ recommendations. More importantly, 8 analysts still recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $40 to a Street-high $90 while the stock is set to open Thursday’s session about $6 below the median $70 target. This low placement could support rapid upside in reaction to a strong report.

Intel topped out in the upper 50s in 2018 and eased into a complex pattern, ahead of a 2020 rally and failed breakout during the pandemic decline. Steep declines have posted four lows in the mid-40s in the last three years, draining bullish sentiment and shareholder patience. The stock rallied within a point of 2020’s multiyear high this month but accumulation-distribution has failed to recover, setting off a bearish divergence that raises odds for another steep downturn.

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.

NVIDIA at Cusp of Major Breakout

NVIDIA Inc. (NVDA) is testing February’s all-time high after raising Q1 2021 revenue estimates above consensus during Monday’s Analyst Day, predicting “good visibility” and “another strong year”. In addition to rising Data Center income, the company raised estimates for a new industrial-scale cryptocurrency mining product from $50 million to $150 million, highlighting intense demand for digital assets. It topped off the bullish guidance by insisting that demand will “exceed supply for much of this year”.

Cutting Edge Product Line

The graphics giant announced a flurry of new high tech computing products at the event, including BlueField-3, a next generation data processing unit that “delivers the equivalent data center services of up to 300 CPU cores”, and the NVIDIA DRIVE Atlan system-on-a-chip for autonomous vehicles. The company also revealed a host of partnerships and collaborations for Arm computing, AI-capable supercomputers, and AI-on-5G solutions.

Cowen analyst Matthew Ramsay raised his target to $675 on Tuesday, noting “NVIDIA’s Analyst Day discussed its expanding accelerated compute portfolio, as well as a broadening set of business models to extract value in gaming, autos and datacenter. The announcement of the Project Grace CPU was the surprise of the day given the ARM acquisition is still under review. An $8B auto funnel and Q1 pre-announcement were also positives.”

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating after 2020’s outstanding 122% return, based upon 26 ‘Buy’, 5 ‘Overweight’, 5 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $380 to a Street-high $800 while the stock is set to open Tuesday’s session about $55 below the median $662 target. New highs are likely between now and the May earnings release, given this modest placement.

NVIDIA broke out above 2018 resistance in the 290s in May 2020 and took off in a powerful trend advance that topped out near 600 in September. November and February 2021 breakout attempts failed while downturns have held rectangular support near 460. The stock traded within 80 cents of range resistance on Monday while accumulation readings have lifted to new highs, setting the stage for a breakout that could reach 800 in the next two to three 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. 

NVIDIA Tests All-Time High After Rosy Revenue Outlook

 

Shares in NVIDIA Corporation (NVDA) gained over 5% Monday after the Santa Clara chipmaker said that its sales for the current quarter sit ahead of previous forecasts. The upward revision comes after its total fourth quarter (Q4) revenues grew by 61%.

Although management did not provide a specific figure, it now expects Q1 revenue to come in above its earlier estimate of between $5.19- and $5.41 billion. “While our fiscal 2022 first quarter is not yet complete, Q1 total revenue is tracking above the $5.30 billion outlook provided during our fiscal year-end earnings call,” Nvidia’s CFO Colette Kress said in a statement cited by CNBC. Meanwhile, analysts expect sales during the period to reach $5.32 billion.

Earlier in the day, Chief Executive Jensen Huang told investors at the annual GTC developers conference that the company was launching its first data-center CPU that uses artificial intelligence. The new chip that powers computer servers is likely to intensify competition with key rival Intel Corp. (INTC), which controls over 90% of the CPU data-center market.

Through Monday’s close, NVIDIA stock has a market value of $377 billion, offers a small 0.11% dividend yield, and trades 131.36% higher over the past twelve months. By comparison, the industry’s largest exchange-traded fund (ETF) – the iShares PHLX Semiconductor ETF (SOXX) – has gained 103.13% over the same period.

Wall Street View

In late February, Raymond James analyst Chris Caso raised the investment firm’s price target on Nvidia to $700 from $600 while reiterating his Outperform rating. Caso pointed to “strong” revenue in the company’s gaming segment for the upgrade.

Coverage elsewhere on Wall Street also remains overwhelmingly favorable. The stock receives 26 ‘Buy’ ratings, 5 ‘Overweight’ ratings, 5 ‘Hold’ ratings, 1 ‘Underweight’ rating, and 1 ‘Sell’ rating. Twelve-month price targets range from $380 to $800, with the median target pegged at $660. Look for additional upgrades in the coming weeks as analysts revise revenue forecasts.

Technical Outlook and Trading Tactics

NVIDIA shares have oscillated within a 130-point range since early September. More recently, the price has rallied from the closely-watched 200-day simple moving average (SMA), with the stock closing just below its all-time high (ATH) at $614.90 in Monday’s trading session. Yesterday’s move on above-average volume indicates the involvement of larger market players, which may see the stock breakout into price discovery in the near future.

Active traders who position for such a move should use a fast period moving average as a trailing stop to capitalize on the bullish momentum. To use this technique, remain in the trade until the stock closes beneath the indicator.

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

Bitcoin Mining Adds to Existing Shortage in Semiconductor Market, Chip Prices Surge

Bitcoin is now a trillion-dollar market thanks to an impressive rally that propelled the oldest cryptocurrency to a fresh all-time high at over $61,000. While market participants enjoy the bullish run, some industries are suffering because of the inflated price of chips.

Everyone is talking about how Bitcoin mining affects the environment due to the huge demand for electricity and the giant carbon footprint. What few people know is that crypto mining impacts the costs of chips, which have been recently booming in price.

Chip Shortages Affecting Entire Industries

Chips are indispensable in so many devices and industries – think about laptops, smartphones, TVs, or cars. The semiconductor industry has already been struggling with supply chain disruptions caused by the COVID-19 pandemic, the winter storm in Texas, and fires at factory sites. But Bitcoin mining is putting even more pressure on the chip market, creating an additional shortage and boosting the price of chips.

The profitability of mining depends on the cryptocurrency’s price, which has rallied for the last few months, surging well above the 2017 peak. The huge competition among miners is prompting an increasing demand for advanced chips. This results in a price boom for chips and thus affects the other industries relying on semiconductors.

CW Chung, head of research at Nomura in Seoul, told Financial Times:

“Added demand from cryptocurrency miners is coming when the chip industry is dealing with simultaneous crises — from supply constraints to a structural shortage of high-end chips. The squeeze should last through the end of the year.”

The problem is so severe that Toyota and Volkswagen – the world’s two biggest carmakers by the number of vehicles manufactured – were forced to cut production due to the shortage of chips. Elsewhere, smartphone makers have no choice but to delay the launches of new devices.

Chung explained that crypto demand might have a great impact on the chip market. For example, during the last Bitcoin rally, demand from miners represented a tenth of the entire sales of TSMC – the third-largest chipmaker in the world.

Nvidia Makes Sure New Chip Is Not Miner-Friendly

The situation is affecting the gaming industry as well, forcing Nvidia to program one of its new chips – GeForce RTX 3060 – to reduce mining efficiency by 50% when it spots mining activity.

Elsewhere, chipmaker Advanced Micro Devices (AMD) told PC Gamer that it had no plans to restrict its graphic cards from being implemented for crypto mining. The truth is that AMD might have no choice at all, as all its drivers are open source.

It’s The Risk-On Market Sentiment Taking Gold Fractionally Lower

Currently, the dollar is down 0.17% and fixed at 91.77. The 10-year note also declined from the highs witnessed last week and is currently fixed at 1.679%. Bitcoin futures are currently trading down by 5.13% and fixed at $55,910. It seems that the dollar, Bitcoin, and 10-year notes, which have been the primary reasons that the precious metals downside pressure, have subsided at least for the moment.

Rather it seems to be portfolio balancing as market participants moved back into the tech-heavy NASDAQ composite with specific companies rebounding after trading under pressure for the last two weeks. The NASDAQ composite showed gains head and shoulders above the S&P 500 as well as the Dow, gaining 1.26% in trading today. The composite index is currently at 13,374.94, up approximately 160 points.

Tesla, for example, is currently up to $22.84 and fixed at $677.50 per share. Amazon is up to $44 and is currently fixed at $3119. Shopify is up to $35.72 and fixed at $1156.98, And Nvidia is up to $13.28 and fixed at $526.94.

Another reason cited for today’s decline in precious metals was Turkey. Both their currency and equities markets tumbled after President Erdogan fired the head of their central bank. MarketWatch reported that “Turkey’s currency and stocks collapsed after the abrupt termination of its central bank head, a move that led investors to take a cautious stance toward risky assets on Monday.”

gold 2 march 22

In an article penned by Steve Goldstein, he quoted Phoenix Kalen, a strategist at the French bank Societe Generale, “With Naci Agbal’s removal from the CBRT, Turkey loses one of its last remaining anchors of institutional credibility. During his short tenure, Agbal had succeeded where various predecessors had not – in cultivating trust in the central bank’s inflation-targeting framework, in restoring monetary policy independence, in encouraging international investors to re-engage with the crisis-prone Turkish narrative, in driving an 18.0% rally in the lira against the dollar, and most crucially – in arresting and even reversing the damaging trend of dollarization in the economy.”

gold march 22

Market sentiment shifting towards equities and the issues reported in Turkey have been the primary causes taking gold fractionally lower, with the most active April 2021 Comex contract down $2.90 and fixed at $1738.80. However, silver is experiencing a much sharper decline, currently down 1.77%, taking the most active May 2021 Comex contract to $25.85 an ounce, after factoring in today’s decline of $0.47.

silver march 22

Government spending has already allocated four trillion last year, in addition to the most recent aid package costing $1.9 trillion. Now the Biden administration is considering adding an additional $3 trillion worth of debt as it looks at two additional recovery packages. The $3 trillion would be spent to improve infrastructure, climate change, and reducing economic inequities, according to the New York Times. CNBC reported that “The White House is going to propose splitting the mammoth initiative into two bills, though Republican support for either plank could be hard to secure as Biden aims to increase taxes on corporations and the wealthiest Americans.”

For more information on our service, simply use this link.

Wishing you, as always, good trading and good health,

Gary S. Wagner

US Stock Markets Daily Recap: That’s Why You Buy the Dips

Days like Tuesday (Mar. 9) are why you buy the dips. It was nothing short of a reverse rotation from what we’ve seen as of late. Bond yields moved lower; tech stocks popped.

That’s why I called BUY on the Nasdaq.

Inflation fears and the acceleration of bond yields are still a concern. But it looks as if things are stabilizing, at least for one day. The lesson here, though, is to be bold, a little contrarian, and block out the noise.

Unless you’ve been living under a rock, you know that recent sessions have been characterized by accelerating bond yields driving a rotation out of high growth tech stocks into value and cyclical stocks that would benefit the most from an economic recovery. The Nasdaq touched correction territory twice in the last week and gave up its gains for the year.

But imagine if you bought the dip as I recommended.

The Nasdaq on Tuesday (Mar. 9) popped 3.7% for its best day since November. Cathie Wood’s Ark Innovation ETF (ARKK) surged more than 10% for its best day ever after tanking by over 30%. Semiconductors also rallied 6%.

Other tech/growth names had themselves a day too: Tesla (TSLA) +20%, Nvidia (NVDA) +8%, Adobe (ADBE) +4.3%, Amazon +3.8%, Apple (AAPL) +4.1%, and Facebook (FB) +4.1%.

In keeping with the theme of buying the dip, do you also know what happened a year ago yesterday to the date? The Dow tanked 7.8%!

There’s no way to time the market correctly. If you bought the Dow mirroring SPDR DJIA ETF (DIA) last March 9, you’d have still seen two weeks of pain until the bottom. However, you’d have also seen a gain of almost 36% if you bought that dip and held on until now.

Look, I get there are concerns and fears right now. The speed at which bond yields have risen is concerning, and the fact that another $1.9 trillion is about to be pumped into a reopening economy makes inflation a foregone conclusion. But let’s have a little perspective here.

Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%.

So is the downturn overblown and already finished?

Time will tell. I think that we could still see some volatile movements over the next few weeks as bond yields stabilize and the market figures itself out. While I maintain that I do not foresee a crash like what we saw last March and feel that the wheels remain in motion for an excellent 2021, Mr. Market has to figure itself out.

A correction of some sort is still very possible. I mean, the Nasdaq’s already hit correction territory twice in the last week and is still about 3-4% away from returning to one. But don’t fret. Corrections are healthy and normal market behavior. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).

Most importantly, a correction right now would be an excellent buying opportunity. Just look at the Nasdaq Tuesday (Mar. 9).

It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.

You can never time the market.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

 Nasdaq- That’s Why I Called BUY

Figure 1- Nasdaq Composite Index $COMP

For the second time in a week, the Nasdaq hit correction territory and rocketed out of it. It saw its best day since November and proved once again that with the Nasdaq, you always follow the RSI. There could be more uncertainty over the next few weeks as both the bond market and equity market figure themselves out. However, the Nasdaq declines were very buyable, as I predicted.

If you bought the dip before Tuesday’s (Mar. 9) session, good on you. Be a little bit bold and fearless right now. Take Ark Funds guru Cathie Wood, for example. Many old school investors scoffed at her comments on Monday (Mar. 8) after she practically doubled down on her bullishness for her funds and the market as a whole. After crushing 2020, her Ark Innovation Fund (ARKK) tanked over 30%. Many called her the face of a bubble. Many laughed at her.

Tuesday, March 9, ARKK saw its best day in history.

I’m not saying that we’re out of the woods with tech. All I’m saying is don’t try to time the market, don’t get scared and have perspective.

The Nasdaq is once again roughly flat for the year, its RSI is closer to oversold than overbought, and we’re still below the 50-day moving average, near a 2-month low, and right around support at 13000.

It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.

I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

Mike Wilson , chief investment officer at Morgan Stanley, had this to say about recent tech slides- “I don’t think this is the end of the bull market or the end of tech stocks per se, but it was an adjustment that was very necessary.”

I like the levels we’re at, and despite the possibility of more “adjustments” in the short-run, it’s a good time to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.

For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.

For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

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

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

NVIDIA Trading Lower Despite Strong Quarter

NVIDIA Inc. (NVDA) is trading lower by more than 3% in Thursday’s pre-market despite beating Q4 2020 earnings estimates by a wide margin. The company posted a profit of $3.10 per-share during the quarter, $1.12 better than expectations, while revenue surged a healthy 61.1% year-over-year to $5.0 billion, $180 million higher than consensus. Q1 2021 revenue guidance was raised during the presentation, from $4.53 billion to a range between $5.19 and $5.4 billion.

Record Revenues

Q4 Data Center revenue posted a new record at $4.19 billion, up 97% compared the same quarter last year. $6.70 billion full-year revenue for the division posted a record as well, up 125%. Q4 Gaming revenue grew 10% compared to the prior quarter and 67% year-over-year, posting records of $2.50 billion for the quarter and $4.76 billion full-year.  Automotive results were less spectacular, with full-year revenue down 23% to $536 million.

Cowen analyst Matthew Ramsay raised his target to $665 after the report, noting “NVIDIA printed a strong beat/raise despite supply constraints. Valuation warrants scrutiny, but being underwhelmed that gaming is the larger relative source of AprilQ upside is a nitpick in our view. We note DC guidance still materially beat consensus. NVIDIA remains the industry’s best open-ended AI-driven growth story. Visibility to auto revenue growth is next catalyst. Outperform; PT to $665.”

Wall Street and Technical Outlook

Wall Street consensus hasn’t changed much in the last three months, with an ‘Overweight’ rating based upon 25 ‘Buy’, 5 ‘Overweight’, 7 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $370 to a Street-high $700 while the stock is set to open Thursday’s session more than $50 below the median $613 target. Clearly, there’s a major disconnect between analysts’ enthusiastic targets and investor perceptions of value.

The stock broke out above the 2018 high at 292.76 in May 2020, and entered a momentum-fueled advance, underpinned by management missteps at Intel Corp. (INTC). The uptick topped out at 589.07 in September, giving way to a triangular trading range that yielded a breakout and all-time high at 614.90 on Feb. 16. It bounced after a pullback to triangle support ahead of the news, setting the weekly low at 535.58 as the bullish line-in-the-sand.

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

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

Why Shares Of NVIDIA Are Under Pressure Ahead Of The Earnings Report?

NVIDIA Video 24.02.21.

NVIDIA Stock Moves Lower Amid Broader Pressure On Tech Stocks

Shares of NVIDIA have declined from the $600 level to the $560 level in just three trading sessions ahead of the company’s earnings report. NVIDIA is set to provide its quarterly results today, after market close.

Analysts expect that NVIDIA will report revenue of $4.8 billion and earnings of $2.81 per share. NVIDIA has a history of beating earnings estimates so the market will likely demand a strong report.

The stock has recently found itself under pressure amid broader sell-off in the tech space which was triggered by the rapid increase in U.S. Treasury yields.

NVIDIA was among the main beneficiaries of the digital shift that happened during the pandemic, but rising yields have pushed some traders to take money out of high-flying tech stocks and put them into cyclical stocks.

What’s Next For NVIDIA?

Trading action has been mostly calm after the recent earnings report. This time, traders will likely focus on the company’s forecast for future growth. The stock is currently trading at forward P/E of more than 50 which indicates that the market expects strong growth from the company.

If these expectations are not met, shares of NVIDIA may find themselves under strong pressure. The previous year was very successful for the stock, and it is still trading near all-time highs despite the recent pullback so many traders will be ready to take some profits off the table in case of a disappointing earnings report.

At the same time, recent trading action indicated that the market was still ready to support high-flying tech stocks on pullback despite rising yields. The appetite for risk remains high, so a strong report could easily push NVIDIA shares to all-time high levels which are located near the $615 level.

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

US Stock Market Daily Recap: Shortest Stock Correction Ever

It was an overdue plummet- at least that’s what I thought at the start of the day. The Dow was down 360 points at one point, and the Nasdaq was down 3%.

But by the end of the day, Jay Powell played the role of Fed Chair and investor therapist and eased the fears of the masses.

The Dow closed up, the S&P snapped a 5-day losing streak, and the Nasdaq only closed down a half of a percent!

You really can’t make this up.

The day started gloomily with more fears from rising bond yields.

Sure, the rising bonds signal a return to normal. But they also signal inflation and rate hikes from the Fed.

But Powell said “not so fast” and eased market fears.

“Once we get this pandemic under control, we could be getting through this much more quickly than we had feared, and that would be terrific, but the job is not done,” Powell said .

He also alluded to the Fed maintaining its commitment to buy at least $120 billion a month in U.S. Treasuries and agency mortgage-backed securities until “substantial further progress is made with the recovery.

While the slowdown (I’d stop short of calling it a “downturn”) we’ve seen lately, namely with the Nasdaq, poses some desirable buying opportunities, there still could be some short-term pressure on stocks. That correction I’ve been calling for weeks may have potentially started, despite the sharp reversal we saw today.

Yes, we may see more green this week. But while I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.

Bank of America also echoed this statement and said, “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

With more earnings on tap for this week with Nvidia (NVDA) on Wednesday (Feb. 24) and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25), buckle up.

The rest of this week could get very interesting.

Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

A correction could also be an excellent buying opportunity for what could be a great second half of the year.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

 Nasdaq- To Buy or Not to Buy?

Figure 1- Nasdaq Composite Index $COMP

What a difference a few weeks can make!

Before, I was talking about the Nasdaq’s RSI and to watch out if it exceeds 70.

Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted by 4.5% since February 12 and is trending towards oversold levels! I hate to say I’m excited about this recent decline, but I am. This has been long overdue, and I’m sort of disappointed it didn’t end the day lower.

Now THAT would’ve been a legit buying opportunity.

While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony. Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?

Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after today, I feel more confident in the Nasdaq as a SHORT-TERM BUY.

But remember. The RSI is king for the Nasdaq . If it pops over 70 again, that makes it a SELL in my book.

Why?

Because the Nasdaq is trading in a precise pattern.

In the past few months, when the Nasdaq has exceeded 70, it has consistently sold off.

  • December 9- exceeded an RSI of 70 and briefly pulled back.
  • January 4- exceeded a 70 RSI just before the new year and declined 1.47%.
  • January 11- declined by 1.45% after exceeding a 70 RSI.
  • Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.

I like that the Nasdaq is below the 13500-level, and especially that it’s below its 50-day moving average now. I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.

But the pullback hasn’t been enough.

Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.

For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

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

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

U.S. Market Wrap and Forecast for Tuesday

Weak price action targeted big tech stocks on Monday, dropping Nasdaq-100 to a three-week low. SP-500 posted smaller losses while the Russell-2000 retraced Friday’s trading range, with the outperformance consistent with positive seasonality.  The WTI crude oil contract surged above 61 after Brazil’s strongman installed an army general to run Petróleo Brasileiro S.A. (PBR), one of the world’s largest oil and gas multinationals. That stock fell more than 20%.

Tesla Breaks Down

Tesla Inc. (TSLA) broke support near 780, completed a double top breakdown, and closed below the 50-day EMA for the first time since November. Dow component Apple Inc. (AAPL) fell nearly 3%, dropping into negative 2021 returns. Boeing Co. (BA) initially shook off the 777 grounding, squeezing short sellers after dropping more than 9%, but still closed in the red. Royal Caribbean Group (RCL) acted like a momentum play despite a billion dollar loss, surging to a 52-week high.

Gold had a strong session while Bitcoin faltered, lifting the yellow metal to the highest high in a week. Bonds slumped at 11-month lows while the 10-year Treasury note lifted above 1.3%, renewing anxiety about surging inflation. Kohl’s Corp. (KSS) rose over 6% as activist shareholders tried to take over the boardroom, just ahead of department store earnings that should confirm miserable conditions in America’s shopping malls.

Homebuilders on Tap

Tuesday’s Home Depot Inc. (HD) earnings will set the tone for mega-caps, with the housing boom likely to translate into a strong quarter. NVIDIA Inc. (NVDA) volatility is surging ahead of its Q4 release later this week. Bears could have the final say, given sell-the-news reactions after other chip reports in the last month. Square Inc. (SQ) could also generate fireworks after its report, with the stock glued to an all-time high after massive upside in the last 11-months

Home Depot will provide just one metric in a week chock-full of housing catalysts.  Home price data will also be released in Tuesday’s pre-market, followed by mortgage applications, January new home sales, and Lowe’s Cos. Inc. (LOW) earnings on Wednesday. Existing home sales wraps up the data flood, telling market players to keep close watch on SPDR S&P Homebuilder’s ETF (XHB), which is trading at an all-time high.

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

US Stock Market Daily Recap: The Yield Harbinger for Stocks

That correction I’ve been calling for weeks could have potentially started.

While I don’t foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of Q1 could happen.

Bank of America also echoed this statement and said last week that “We expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and as good as it gets’ earnings revisions.”

But rather than looking at the past, let’s take a look at what’s on tap this week to get you ready for what could potentially be a volatile week ahead.

This coming week, be on the lookout for the January leading indicator index, durable goods orders, and personal income and spending.

On Tuesday, we will also receive the February Consumer Confidence Index; on Wednesday, the Census Bureau will release upcoming home sales. On Friday, the University of Michigan will release its Consumer Sentiment Index.

Of course, as we’ve seen in weeks past, jobless claims from the previous week will be announced on Thursday too. After outperforming the last few weeks, the jobless claims announced last Thursday (Feb. 18) grossly underperformed and reached their worst levels in nearly a month.

Earnings season has been outstanding but is winding down now. Be on the lookout this week for earnings from Royal Caribbean (RCL) on Monday (Feb. 22), Square (SQ) on Tuesday (Feb. 23), Nvidia (NVDA) on Wednesday (Feb. 24), and Virgin Galactic (SPCE) and Moderna (MRNA) on Thursday (Feb. 25).

We have the makings of a volatile week, and as I mentioned before, a possible correction.

Look. Don’t panic. We have a very market-friendly monetary policy, and corrections are more common than most realize. Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in a year.

While it won’t happen for sure, I feel like it’s inevitable because of how much we have surged over the last few months.

A correction could also be an excellent buying opportunity for what could be a great second half of the year.

My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.

With that said, to sum it up:

While there is long-term optimism, there are short-term concerns. A short-term correction between now and the end of Q1 2021 is possible. I don’t think that a decline above ~20%, leading to a bear market, will happen.

Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck.

Will the Russell 2000 Overheat Again?

Figure 1- iShares Russell 2000 ETF (IWM)

The Russell 2000 popped on Friday (Feb. 19) after seeing a bit of a pullback since February 9. Between February 9 and the close on February 18, the Russell 2000 lagged behind the other indices after significantly overheating. I switched my call to a SELL then on the 9th, and it promptly declined by 3.40% before Friday’s session.

I foresaw the pullback but cautiously saw a rally and switched to a HOLD call before it popped over 2% on Friday (Feb. 19).

I do love small-caps for 2021, and I liked the decline before Friday. However, I feel like the index needs a minimum decline of 5% from its highs before switching it to a BUY.

As tracked by the iShares Russell 2000 ETF (IWM) , small-cap stocks have been on a rampage since November.

Since the market’s close on October 30, the IWM has gained nearly 47.56% and more than doubled ETFs’ returns tracking the larger indices. If you thought that the Nasdaq was red hot and frothy, you have no idea about the Russell 2000.

Not to mention, year-to-date, it’s already up a staggering 16.38%.

It pains me not to recommend you to BUY the Russell just yet. I love this index’s outlook for 2021. Aggressive stimulus, friendly policies, and a reopening world could bode well for small-caps. Consumer spending, especially for small-caps, could be very pent-up as well.

But we just need to hold on and wait for it to cool down just a little bit more for a better entry point.

HOLD. If and when there is a deeper pullback, BUY for the long-term recovery.

For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

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

Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Three Top Earnings Plays This Week

Major indices sold off this week one year ago when a Kirkland, Washington nursing home reported the first non-travel related COVID cases in the United States. The rest is history, with major benchmarks crashing to multiyear lows, ahead of a relentless recovery underpinned by massive government stimulus programs. Those greenbacks continue to guide price action in 2021, with banks and recovery plays outperforming while pandemic beneficiaries falter.

The next act of this real-life soap opera comes in Monday’s pre-market, when Royal Caribbean Group (RCL) is likely to report another quarter of staggering losses.   Dow component Home Depot Inc. (HD) heads the week’s blue chip earnings schedule on Tuesday while rival Lowe’s Cos. Inc. (LOW) follows on Wednesday. Hot rocket NVIDIA Inc. (NVDA) also reports mid-week, with investors confident the stock will trade above 1,000 in coming years.

Royal Caribbean

Royal Caribbean is expected to report a Q4 2020 loss of $4.99 per-share after posting a $1.42 profit in the same quarter last year. That was also the last quarter the cruise operator made money or had a full fleet sailing around the world. RCL has gone to the capital markets several times since then, attempt to stay afloat, which takes on special meaning in this case. As with other battered leisure segments, the company is counting on vaccines to get them back in business.

Home Depot

Wall Street analysts are looking for Home Depot to earn $2.37 per share on $27.1 billion in Q4 2020 revenue. The stock cleared February 2020 resistance in May and posted an all-time high at 292.95 in August. It failed an October breakout attempt and has traded in a narrow range since that time, working off 2020’s outsized share gains. With the pandemic receding, the retailer could trade higher on a booming housing market and the strengthening U.S. economic outlook.

NVIDIA

NVIDIA is expected to report another strong quarter on Wednesday, with analysts predicting a Q4 2020 profit of $1.98 per-share on $4.82 billion in revenue. The stock just nosed above the September peak at 589.07 but a breakout will require a buy-the-news reaction after the report. That isn’t a sure thing after Advanced Micro Devices Inc. (AMD), the other beneficiary of Intel Corp. (INTC) missteps, sold off in January despite beating top and bottom line estimates.

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

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

Earnings to Watch Next Week: Palo Alto Networks, Home Depot, Nvidia and Salesforce in Focus

Earnings Calendar For The Week Of February 22

Monday (February 22)

IN THE SPOTLIGHT: PALO ALTO NETWORKS

The Santa Clara, California-based cybersecurity company is expected to report a profit of $1.43 per share in the fiscal second quarter, which represents year-over-year growth of over 20% from $1.19 per share seen in the same quarter a year ago.

The global cybersecurity leader would post year-over-year revenue growth of over 20% to $985.681 million.

“A rapidly growing Next-Gen Security platform plus a stable core network security business remains the equation for durable 20%+ billings growth heading into the FQ2 print. More clarity into the dual growth engines should drive further multiple expansion, with our SoTP valuation yielding a $515 price target,” noted Keith Weiss, equity analyst at Morgan Stanley.

Palo Alto Networks offers a disruptive platform, well-positioned to address the evolving threat landscape. We believe Palo Alto Networks will continue to differentiate itself from its peers as it proves out a broader TAM around a NextGen Security Platform (and executing to that opportunity). With the strong billings base and the continued drive towards higher operating margins, we remain confident in the durability of our FCF estimates. Currently trading at 22x CY22e FCF vs. our model which looks for 18% FCF CAGR from CY21-26e and terminal 23x CY26e FCF, we continue to see attractive risk/reward in PANW shares.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 22

Ticker Company EPS Forecast
DPH Dechra Pharma £32.57
BNZL Bunzl £71.65
DISCB Discovery Communications Discb $0.72
DISCA Discovery Communications $0.71
GHC Graham $8.87
DISCK Discovery Communications Disck $0.72
KBR KBR $0.49
DORM Dorman Products $0.92
KFY Korn Ferry International $0.51
CTB Cooper Tire Rubber $0.92
THRM Gentherm $0.65
DISH Dish Network $0.78
BZLFY Bunzl plc $0.13
CDNS Cadence Design Systems $0.74
PANW Palo Alto Networks $1.43
SBAC SBA Communications $0.52
RSG Republic Services $0.81
WMB Williams Companies $0.30
O Realty Ome $0.35
SID Companhia Siderurgica Nacional $0.11
OKE ONEOK $0.74
IR Ingersoll Rand $0.45
EXR Extra Space Storage $0.91
TREX Trex $0.36
FIVN Five9 $0.23
NDSN Nordson $1.06
FANG Diamondback Energy $0.82
LSI LIFE STORAGE $0.54
XEC Cimarex Energy $0.68
AL Air Lease $0.75
PSB PS Business Parks $0.80
SBRA Sabra Health Care Reit $0.18
CNNE Cannae -$0.09
NHI National Health Investors $1.01
AWR American States Water $0.47
BCC Boise Cascade $0.99
HTA Healthcare Of America $0.11
RIG Transocean -$0.18
MRO Marathon Oil -$0.20
CVI CVR Energy -$0.72
GDOT Green Dot $0.18
WRI Weingarten Realty Investors $0.10
ACC American Campus Communities $0.09
OXY Occidental Petroleum -$0.58
ICAD Icade €2.33
PPERY PT Bank Mandiri Persero TBK $0.09
MGEE Mge Energy $0.51
CCU Compania Cervecerias Unidas $238.63
TPL Texas Pacific Land $4.66
SHCAY Sharp ADR $0.08
BKRKY Bank Rakyat $0.13
PKX Posco $1.52
WF Woori Bank $0.75
GPFOY Financiero Inbursa ADR $0.13
OSH Oak Street Health -$0.25
YALA Yalla $0.12
KHOLY Koc Holdings AS $0.20
DM Dominion Midstream Partners -$0.06
AU Anglogold Ashanti $1.85
CRI Carters $2.74
AVST Avast Holdings £0.12

 

Tuesday (February 23)

IN THE SPOTLIGHT: HOME DEPOT

The U.S. largest home improvement retailer is expected to report a profit of $2.61 per share in the fourth quarter, which represents year-over-year growth of over 14% from $2.28 per share seen in the same quarter a year ago. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of 3.60%.

The Cobb County, Georgia-based company’s revenue would surge more than 18% to $30.45 billion.

Home Depot has witnessed continued strong demand for home-improvement projects as customers spent more time at home during the coronavirus pandemic. The company has been gaining from the high-demand environment, driven by investments in its business. This coupled with broad-based strength across stores and geographies has been boosting comparable sales (comps) performance,” noted analysts at Zacks Equity Research.

“Amid the pandemic, customers have been blending the physical and digital elements of the shopping experience more than ever before making the company’s interconnected One Home Depot strategy the most relevant. Its interconnected retail strategy and underlying technology infrastructure have helped consistently boost web traffic in the past six months. Additionally, it has been benefiting from enhanced delivery and fulfilment options to provide a robust interconnected experience. Gains from these efforts are likely to have aided the company’s sales and earnings performance in the fiscal fourth quarter.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 23

Ticker Company EPS Forecast
UTG Unite Group £45.10
HSBA HSBC Holdings £0.01
CROX Crocs $0.82
ARNC Arconic Inc $0.35
CBRL Cracker Barrel Old Country Store $0.75
WLK Westlake Chemical $0.74
MDT Medtronic $1.15
SPR Spirit AeroSystems -$0.83
FE FirstEnergy $0.47
BCO Brinks $0.98
HD Home Depot $2.61
BNS Scotiabank $1.24
BMO Bank Of Montreal USA $1.69
CBRE CBRE Group Inc $0.94
LDOS Leidos $1.61
BLD TopBuild Corp $1.95
NXST Nexstar Broadcasting $6.99
TRI Thomson Reuters USA $0.46
M Macy’s $0.05
AWI Armstrong World Industries $0.67
RLGY Realogy $0.57
ETRN Equitrans Midstream Corp $0.34
LGIH LGI Homes $4.05
SATS EchoStar -$0.03
GMAB Genmab A/S kr7.68
XNCR Xencor -$0.38
ARNA Arena Pharmaceuticals -$1.84
EC Ecopetrol $0.22
HSBC HSBC $0.08
TX Ternium $1.02
COG Cabot Oil Gas $0.21
CBD Companhia Brasileira De Distrib $0.46
FLS Flowserve $0.53
PXD Pioneer Natural Resources $0.69
INFN Infinera $0.02
MTG MGIC Investment $0.40
XP XP Inc $1.05
SQ Square $0.24
INTU Intuit $0.99
CSGP CoStar $2.42
VRSK Verisk Analytics $1.30
PODD Insulet -$0.04
HEI Heico $0.48
MASI Masimo $0.85
EQH AXA Equitable Holdings Inc $1.21
CHE Chemed $5.13
TOL Toll Brothers $0.47
WES Western Gas Partners $0.59
HALO Halozyme Therapeutics $0.53
INSP Inspire Medical Systems Inc -$0.46
JAZZ Jazz Pharmaceuticals $4.24
Y Alleghany $5.04
RRC Range Resources $0.05
EPRT Essential Properties Realty Trust Inc $0.16
MTDR Matador Resources $0.12
CHX ChampionX Corp $0.04
MATX Matson $1.36
APLE Apple Hospitality -$0.14
ATRC AtriCure -$0.28
PEB Pebblebrook Hotel -$0.90
DAR Darling Ingredients $0.42
MRTX Mirati Therapeutics -$2.28
ALLK Allakos -$0.85
JBGS JBG SMITH Properties $0.29
IHG Intercontinental Hotels $0.94
VERX Vertex Inc. Cl A $0.07
JYSK Jyske Bank kr8.46
VIV Telefonica Brasil $0.15
CXO Concho Resources $1.18
MNTA Momenta Pharmaceuticals -$0.50
IHG Intercontinental £0.97
VJBA Vestjysk Bank kr0.08
FMS Fresenius Medical Care $0.74

 

Wednesday (February 24)

IN THE SPOTLIGHT: NVIDIA

The Santa Clara, California- based multinational technology company is expected to report a profit of $2.80 per share in the fiscal fourth quarter, which represents year-over-year growth of over 48% from $1.89 per share seen in the same quarter a year ago.

The company, which designs graphics processing units for the gaming and professional markets, as well as system on a chip unit for the mobile computing and automotive market, forecasts revenue of $4.8 billion.

NVIDIA‘s fiscal fourth-quarter performance is likely to have benefited from growth across all of its business segments except the Automotive and Professional Visualization units. NVIDIA is also anticipated to have benefited from strength in its data-centre business on the growing adoption of cloud-based solutions amid the coronavirus crisis-induced work-from-home wave. Increase in Hyperscale demand and growing adoption in the inference market are likely to have been tailwinds during the to-be-reported quarter,” noted analysts at Zacks Equity Research.

“Additionally, the pandemic-induced remote-working wave is likely to have bolstered sales of graphic chips utilized in desktops and laptops. This, in turn, is anticipated to have aided the quarterly performance. Nonetheless, disruptions in retail channel sales due to lockdown and social-distancing measures implemented by governments across the world to contain the spread of coronavirus might have partially offset the benefit of solid demand for the remote-working and online-learning hardware infrastructure.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 24

Ticker Company EPS Forecast
RY Royal Bank Of Canada $1.78
TCP TC Pipelines $0.99
RGEN Repligen $0.31
ENBL Enable Midstream Partners $0.11
LOW Lowe’s Companies $1.20
LIVN LivaNova PLC $0.66
HZNP Horizon Pharma $1.05
IONS Ionis Pharmaceuticals $0.26
CLH Clean Harbors $0.39
VER VEREIT $0.19
IRM Iron Mountain $0.31
WEX WEX $1.46
AVA Avista $0.79
SBGI Sinclair $5.07
ITRI Itron $0.34
SIX Swiss Exchange -$0.89
WYND Wyndham Destinations Inc $0.49
PNW Pinnacle West Capital $0.04
VRT Veritas Pharma $0.33
HFC HollyFrontier -$0.71
ODP Office Depot $0.95
TJX TJX Companies $0.61
OSTK Overstock $0.17
EXC Exelon $0.69
ETR Entergy $0.67
TRN Trinity Industries $0.15
IBP Installed Building Products $1.23
EV Eaton Vance $0.89
UTHR United Therapeutics $2.95
ORA Ormat Technologies $0.37
WTRG Essential Utilities Inc $0.45
VAC Marriottacations Worldwide $0.03
SJI South Jersey Industries $0.54
STN Stantec USA $0.33
STAA STAAR Surgical $0.08
ACAD Acadia Pharmaceuticals -$0.47
PDCE PDC Energy $0.85
APA Apache -$0.10
ANSS Ansys $2.54
PSA Public Storage $1.93
KW Kennedy Wilson $0.07
EPR EPR Properties -$0.32
UNVR Univar Solutions Inc $0.24
DDD 3D Systems $0.09
ADPT Adeptus Health -$0.29
RVLV Revolve $0.11
LB L Brands $2.90
GEF Greif $0.54
FTI FMC Technologies $0.15
ESI Itt Educational Services $0.28
MMSI Merit Medical Systems $0.43
NOVA Nova Mentis Life Science Corp -$0.36
CHDN Churchill Downs -$0.39
AGI Alamos Gold $0.13
CW Curtiss-Wright $2.33
RCII Rent-A-Center $1.00
DOOR Masonite International $1.14
RDN Radian $0.63
FNF Fidelity National Financial $1.32
AMED Amedisys $1.46
AWK American Water Works $0.80
NVDA Nvidia $2.80
NTAP NetApp $1.01
PTVE Pactiv Evergreen $0.25
UFPI Universal Forest Products $0.71
TNDM Tandem Diabetes Care $0.12
BKNG Booking Holdings Inc -$3.85
GBT BMTC Group -$0.95
PAC Grupo Aeroportuario Del Pacifico $0.67
CIB Bancolombia $0.17
PBR Petroleo Brasileiro Petrobras $0.15
GGB Gerdau $0.07
ASR Grupo Aeroportuario Del Sureste $14.83
UGP Ultrapar Participacoes $0.05
TS Tenaris $0.00
LYG Lloyds Banking $0.02
DY Dycom Industries $0.05
WB Weibo $0.72
SRPT Sarepta Therapeutics -$1.99
SSYS Stratasys -$0.10
KOF Coca Cola Femsa Sab De Cv $0.60
MIDD Middleby $1.40
CLGX CoreLogic $1.06

 

Thursday (February 25)

IN THE SPOTLIGHT: SALESFORCE.COM

The San Francisco, California-based global cloud computing company is expected to report a profit of $0.75 in the fourth quarter, which represents year-over-year growth of about 14% from $0.66 per share seen in the same quarter a year ago.

The company, which develops CRM solutions and provides business software on a subscription basis, would post revenue growth of 17% to nearly $5.7 billion.

“While Salesforce remains one of our best secularly positioned names given enterprise IT spend prioritized towards digital transformation, we see current valuation reflective of long-term share gains and achieving management’s target for $50 billion revenue in CY25,” said Keith Weiss, equity analyst at Morgan Stanley.

“At CRM‘s current scale and market cap, an increasing focus on FCF and earnings is necessary for further price appreciation, in our view. However, the recent large ($27 billion) and dilutive acquisition of Slack makes margin expansion in the near to medium term less likely. We look for greater clarity and confidence into revenue growth and margin framework at CRM in order to get more constructive.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 25

Ticker Company EPS Forecast
AMRN Amarin -$0.02
SHEN Shenandoah Telecommunications $0.85
NTLA Intellia Therapeutics Inc -$0.61
ITCI Intra Cellular Therapies -$0.86
SHOO Steven Madden $0.21
PLUG Plug Power -$0.07
AGIO Agios Pharmaceuticals -$1.31
DPZ Dominos Pizza $3.88
INSM Insmed -$0.67
MRNA Moderna Inc -$0.34
PCG PG&E $0.21
EME EMCOR $1.44
NLSN Nielsen $0.46
NRG NRG Energy $0.45
BCRX BioCryst Pharmaceuticals -$0.24
TREE LendingTree -$1.00
AES AES $0.43
DCI Donaldson $0.51
TD Toronto-Dominion Bank $1.16
WWW Wolverine World Wide $0.17
AMT American Tower $1.25
CCOI Cogent Communications $0.21
OGE OGE Energy $0.29
SRE Sempra Energy $1.58
SJM J.M. Smucker $2.17
SAFM Sanderson Farms -$0.66
ROCK Gibraltar Industries $0.63
CWT California Water Service $0.26
W Wayfair Inc. $0.82
SEAS SeaWorld Entertainment -$0.71
CNP CenterPoint Energy $0.19
PZZA Papa John’s International $0.48
STWD Starwood Property $0.49
EVOP EVO Payments Inc $0.21
DOC Physicians Realty $0.08
CLNY Colony Financial -$0.58
LI Li Auto -$0.24
NTES NetEase $2.82
PLAN Progressive Planet -$0.10
CLF Cliffs Natural Resources $0.20
EXLS ExlService $1.07
KDP Keurig Dr Pepper $0.40
PWR Quanta Services $1.00
FSS Federal Signal $0.41
FCN FTI Consulting $1.17
GIL Gildan Activewear USA $0.21
CWH Camping World Holdings $0.18
PCRX Pacira $0.81
NCLH Norwegian Cruise Line -$2.17
TFX Teleflex $3.05
FLIR FLIR Systems $0.62
VIPS Vipshop $3.13
IOVA Iovance Biotherapeutics -$0.44
IRTC iRhythm Tech -$0.29
MNST Monster Beverage $0.55
REGI Renewable Energy $0.68
XLRN Acceleron Pharma -$0.59
AAON AAON $0.29
DRNA Dicerna Pharmaceuticals -$0.08
PVG Pretium Resources $0.25
LPSN LivePerson $0.01
SWI Solarwinds $0.25
EIX Edison International $1.20
VGR Vector $0.18
BMRN BioMarin Pharmaceutical -$0.17
EOG EOG Resources $0.37
RKT Rocket Cos. Inc. $0.88
VICR Vicor $0.19
SFM Sprouts Farmers Market $0.39
ETSY ETSY Inc $0.57
PTCT PTC Therapeutics -$0.92
SEM Select Medical $0.36
EGO Eldorado Gold USA $0.33
SWN Southwestern Energy $0.14
ACHC Acadia Healthcare $0.68
UHS Universal Health Services $2.79
MTZ MasTec $1.67
ERIE Erie Indemnity $1.09
BVN Compania De Minas Buenaventura $0.22
FTCH Farfetch -$0.13
WDAY Workday $0.55
VMW VMware $2.05
HPQ HP $0.66
CRM Salesforce.com $0.75
MED Medifast $2.38
OUT Outfront Media -$0.04
PRAH PRA Health Sciences Inc $1.47
LHCG LHC $1.39
RLJ RLJ Lodging -$0.64
STOR STORE Capital Corp $0.21
ICUI ICU Medical $1.51
CUBE CubeSmart $0.20
ENDP Endo International Ordinary Shares $0.46
LYV Live Nation Entertainment -$2.25
ALTR ALTAIR ENGINEERING $0.00
AMH American Homes 4 Rent $0.06
CABO Cable One Inc $11.60
ADT ADT $0.30
RUN Sunrun Inc $0.07
CZR Caesars Entertainment -$1.94
HHC Howard Hughes -$0.70
PK Park Hotels & Resorts Inc -$0.90
FOXF Fox Factory $0.78
ADSK Autodesk $1.07
CWK Cushman & Wakefield plc $0.35
FSLR First Solar $1.25
NUVA NuVasive $0.56
ENV Envestnet $0.65
INT World Fuel Services $0.23
FIX Comfort Systems USA $0.84
NKTR Nektar Therapeutics -$0.67
BIG Big Lots $2.50
AY Atlantica Yield $0.16
PDCO Patterson Companies $0.51
KWR Quaker Chemical $1.52
AEBZY Anadolu Efes ADR $0.01
SWX Southwest Gas $1.57
AEP American Electric Power $0.78
ARRY Array Technologies Inc $0.05
ALXO Alx Oncology Holdings Inc. -$0.36
ACIW ACI Worldwide $0.49
VIST Vista Oil Gas -$0.08
BUD Anheuser-Busch $0.89
BAYRY Bayer AG PK $0.38
CM Canadian Imperial Bank Of Commerce USA $2.19
SRCL Stericycle $0.63
BBY Best Buy $3.45
ABEV Ambev $0.05
NNI Nelnet $5.78
AGO Assured Guaranty $0.57
BRFS BRF $0.08
TEF Telefonica $0.23
VALE Vale $0.91
NGLOY Anglo American ADR $0.62

 

Friday (February 26)

Ticker Company EPS Forecast
CNK Cinemark -$1.46
IEP Icahn Enterprises -$0.47
EVRG Evergy Inc $0.22
LSXMK Liberty Media SiriusXM C $0.15
PNM PNM Resources $0.15
AMCX AMC Networks $0.49
VST Victory Square Tech $0.64
BLDR Builders Firstsource $0.90
FL Foot Locker $1.29
FLR Fluor New $0.22
RHP Ryman Hospitality Properties -$1.90
STRA Strayer Education $1.48
LAMR Lamar Advertising $0.78
MGLN Magellan Health -$0.30
GRFS Grifolsbarcelona $0.22
PEG Public Service $0.65
For a look at all of today’s economic events, check out our economic calendar.

U.S. Market Wrap and Forecast for Tuesday

Major benchmarks popped up to new highs at the start of Monday’s U.S. session but conviction was low, yielding a slow motion downtick that got bought over the noon hour. SP-500 Volatility Index (VIX) gained about 2% despite higher equity prices, signaling nervousness about the endless uptick. Even so, the U.S. government is about to send citizens another barrel of greenbacks, just in time to reload slumping Robinhood accounts.

No Love For FAANG Stocks

Amazon.com Inc. (AMZN) failed a symmetrical triangle breakout last week and is consolidating near the February low, about to enter the eighth month of dead sideways action. There’s a lot of ‘dead’ money hanging around big tech stocks these days, with more aggressive capital rotating into fintech, EV plays, and SPACs. The GameStop ‘event’ hasn’t helped traditional buying interest, unnerving many risk-adverse bulls.

Other tech stocks gained ground on Monday, lifting shares of NVIDIA Corp. (NVDA), International Business Machines Corp. (IBM), and Advanced Micro Devices Inc. (AMD). However, PHLX Semiconductor Index (SOX) looks like its grinding through a corrective pattern that could roll over and test the January low at any time. Twitter Inc. (TWTR), General Motors Co. (GM), and Walt Disney Co. (DIS) posted strong upside as well, which is more bearish than bullish headed into their mid-week reports.

Looking Ahead to Mid-Week

Partisan politics could control price action through mid-week, with an impeachment trial and its foregone conclusion feeling like a waste of time during stimulus negotiations. In addition, the rally is getting ‘long in the tooth’, raising odds for a multiweek reversal that ‘sticks’. The Nasdaq-100 index tested or crossed the 200-day EMA five times in 2019 but just once in 2020 and it’s now been 10 months since that instrument shook out weak hands.

This week’s economic calendar is light as a feather, with the CPI report on Wednesday and UMich Sentiment on Friday. Neither is likely to move bond or equity markets, allowing macro influences to control the ticker tape. The upcoming holiday weekend in the United States could impact trading later in thes week, with a well-documented positive bias likely to support higher prices. Even so, a contrarian would say that clear blue skies foretell ominous dark clouds.

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

Stock Pick Update: Jan. 6 – Jan. 12, 2021

In the last five trading days (December 30 – January 5) the broad stock market has fluctuated following its record-breaking run-up. The S&P 500 index has reached new record high of 3,769.90 on Monday before retracing most of its December advances.

The S&P 500 has lost 0.25% between December 30 open and January 5 close. In the same period of time our five long and five short stock picks have lost 0.29%. So stock picks basically followed the broad stock market’s performance last week. Our long stock picks have gained 0.46%, but short stock picks have resulted in a loss of 1.04%.

There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

Our last week’s portfolio result:

Long Picks (December 30 open – January 5 close % change): NVDA (+3.19%), INTC (+3.05%), ABBV (+1.32%), VRTX (-2.73%), FB (-2.51%)
Short Picks (December 30 open – January 5 close % change): DUK (-0.19%), SO (-0.53%), MPC (+2.88%), VLO (+3.07%), SPG (-0.05%)

Average long result: +0.46%, average short result: -1.04%
Total profit (average): -0.29%

Stock Pick Update performance chart since Nov 18, 2020:

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, January 6 – Tuesday, January 12 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (January 6) and sold or bought back on the closing of the next Tuesday’s trading session (January 12).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .

Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:

  • buys: 2 x Materials, 2 x Energy, 1 x Technology
  • sells: 2 x Real Estate, 2 x Utilities, 1 x Industrials

Buy Candidates

ECL Ecolab, Inc. – Materials

  • Stock remains above the support level of $212.50
  • Possible breakout above short-term consolidation
  • The resistance level is at $220-225

CE Celanese Corp. – Materials

  • Possible breakout above month-long downward trend line
  • The support level is at $125.00 and the resistance level is at $137.50

KMI Kinder Morgan Inc. – Energy

  • Stock broke above the downward trend line – uptrend continuation play
  • The support level is at $13.40 and resistance level is at $15, among others

Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Materials and Energy sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today .

Thank you.

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

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

 

Stock Pick Update: Dec. 30 – Jan. 5, 2021

In the last five trading days (December 23 – December 29) the broad stock market has extended its record-breaking run-up. The S&P 500 index reached new record high of 3,756.12 on Tuesday following the recent stimulus news.

The S&P 500 has gained 0.91% between December 23 open and December 29 close. In the same period of time our five long and five short stock picks have lost 0.07%. Stock picks were relatively weaker than the broad stock market last week. Our long stock picks have lost 0.30% and short stock picks have resulted in a gain of 0.16%.

There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

Our last week’s portfolio result:

Long Picks (December 23 open – December 29 close % change): CRM (-4.32%), NVDA (-2.36%), PSX (0.00%), FANG (+4.72%), SPGI (+0.47%)
Short Picks (December 23 open – December 29 close % change): SO (+0.10%), AES (+0.73%), WY (-1.27%), ARE (-0.88%), CL (+0.52%)

Average long result: -0.30%, average short result: +0.16%
Total profit (average): -0.07%

Stock Pick Update performance chart since Nov 18, 2020:

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, December 30 – Tuesday, January 5 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (December 30) and sold or bought back on the closing of the next Tuesday’s trading session (January 5).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .

Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:

  • buys: 2 x Technology, 2 x Health Care, 1 x Communication Services
  • sells: 2 x Utilities, 2 x Energy, 1 x Real Estate

Buy Candidates

NVDA NVIDIA Corp. – Technology

  • Stock trades along medium-term upward trend line
  • Possible breakout above short-term consolidation
  • The support level is at $490-500 and resistance level is at $550, among others

INTC Intel Corp. – Technology

  • Stock retraced most of its recent declines
  • Possible breakout above medium-term downward trend line
  • The support level is at $47 and the nearest important resistance level is at $52

ABBV AbbVie Inc. – Health Care

  • Stock broke above short-term downward trend line – uptrend continuation play
  • The support level is at $100-102 and resistance level is at $106-108

Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Technology and Health Care sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today .

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

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Stock Pick Update: Dec. 23 – Dec. 29, 2020

In the last five trading days (December 16 – December 22) the broad stock market has extended its short-term consolidation following record-breaking run-up. The S&P 500 index reached new record high of 3,726.70 on Friday, before retracing most of last week’s advances.

The S&P 500 has lost 0.24% between December 16 open and December 22 close. In the same period of time our five long and five short stock picks have lost 0.04%. Stock picks were relatively slightly stronger than the broad stock market last week. Our long stock picks have lost 3.94%, however short stock picks have resulted in a gain of 3.86%. Short stock picks’ performance outpaced the benchmark return on the downside, but the whole portfolio followed broad stock market very closely.

There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

Our last week’s portfolio result:

Long Picks (December 16 open – December 22 close % change): XOM (-5.74%), COP (-8.91%), WFC (-2.29%), BK (+0.02%), FB (-2.79%)
Short Picks (December 16 open – December 22 close % change): DUK (-3.10%), EVRG (-4.03%), SPG (-5.23%), CBRE (-5.37%), KO (-1.57%)

Average long result: -3.94%, average short result: +3.86%
Total profit (average): -0.24%

Stock Pick Update performance chart since Nov 18, 2020:

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, December 23 – Tuesday, December 29 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (December 23) and sold or bought back on the closing of the next Tuesday’s trading session (December 29).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .

Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:

  • buys: 2 x Technology, 2 x Energy, 1 x Financials
  • sells: 2 x Utilities, 2 x Real Estate, 1 x Consumer Staples

Buy Candidates

CRM Salesforce.com, Inc. – Technology

  • Stock remains above its short-term upward trend line
  • Uptrend continuation play
  • The support level is at $220 and resistance level is at $240-250 (short-term target profit level)

NVDA NVIDIA Corp. – Technology

  • Stock trades above medium-term upward trend line
  • Possible breakout above short-term consolidation
  • The support level is at $490-500 and resistance level is at $550

PSX Phillips 66 – Energy

  • Possible short-term bull flag pattern – uptrend continuation play
  • The support level is at $60 and resistance level is at $70

Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Technology and Energy sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today .

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

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

 

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Excitement Builds Ahead Of NVIDIA Report

NVIDIA Inc. (NVDA) reports Q3 2020 earnings after the close of Wednesday’s U.S. session, with analysts expecting a profit of $1.92 per-share on $4.42 billion in revenue. If met, earnings-per-share (EPS) will mark an 8% profit increase, compared to the same quarter in 2019. The stock closed unchanged after beating Q2 top and bottom line estimates in August but hit an all-time high less than two-weeks later.

NVIDIA Unveils Data Processing Units (DPUs)

The graphics powerhouse has benefited from rollout delays and weak management at Intel Corp. (INTC), taking market share in key semiconductor channels. The company unveiled a new class of processors called Data Processing Units (DPU) at an industry conference during the quarter, characterized as a “an innovative data-center-on a chip that is optimized to offload critical networking, storage, and security tasks from CPUs.”

Needham analyst Rajvindra Gill pounded the tables on the chip set recently, declaring “by offloading tasks to the DPU, the server CPU is optimized and doubles in performance. This leads to a dramatic acceleration in performance, a reduction in the infrastructure, which ultimately leads to lower total cost of ownership for the end customer” He sees major applications in AI in coming years, stating “we believe NVIDIA is at the forefront of this trend”.

Wall Street And Technical Outlook

Wall Street consensus is highly bullish, even though new coverage has been sparse during the quarter. It’s now rated as a ‘Strong Buy’, based upon 26 ‘Buy’, 4 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $400 to a Street-high $700 while the stock opened Wednesday’s session about $55 below the median $585 target. There should be plenty of room for upside if NVIDIA beats earnings expectations after the close.

The stock broke out above the 2018 high at 292 in May and entered a trend advance that posted an all-time high at 589 on Sept. 2. Price action then eased into a triangular trading range, with support around the 50-day moving average. Buying interest has remained strong throughout the correction but long-term relative strength readings have flipped into sell cycles, predicting sub-par performance into 2021. That won’t be surprising, given the 126% year-to-date return.

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