First Half Year (2024) report and commentary

Hello readers,

Perhaps it just looks like yesterday that 2024 started and we had a very strong 2023. Being an election year, no one expected 2024 to be on the same footing but so far the stock market rally has proved to be resilient as some analysts have noted that if January starts strong and the first half ends positively then historically there are strong chances that the momentum will prevail and market could advance further.

However, market rally is mostly buoyed by "The Magnificent 7" group of stocks, i.e., Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia and Telsa which since the start of 2023 have returned more than 50% and beating the remaining 493 S&P stocks. If we take a look at the equal weighted S&P 500 index (where each stock has the same weight) it is up just 27% since the start of 2023, thereby showing that the majority of investors are focused (and very rightly so) on just the "The Magnificent 7" group of stocks.

This concentration in a limited number of stocks could change at least for a short period of time. Take a look at Nvidia which was the leading stock among this group, as mentioned in our last 2-3 commentaries, Nvidia was due for a mild correction as last week it dropped by 2.4%, however, any significant drop by Nvidia will be welcome by anxious investors who would either missed Nvidia's latest run and would definitely add or initiate their positions at or around the key moving averages (20 Day EMA at 121.57 and 50 Day EMA at 109.46).

Besides Nvidia, there are signs that the Semiconductors as a group could pause or slowdown while capital rotation takes place and some other areas like Software, Computer services, Energy, Financials and Transportation could pick up while investors rebalance their portfolios. Software group seems poised to advance as AI wave could shift from Semiconductors to this group which has much to offer (e.g., software) based on the AI technology.

Stock Market Performance:

The Stock Market Performance for the last week and during the first quarter of 2024 is as follows:

Index Weekly Performance 1st Half 2024

S&P 500: -0.08% 14.48%

Dow Jones Ind: 0.08% 3.79%

Nasdaq Comp: 0.24% 18.13%

Russell 2000: 1.27% 1.09%

Both Dow and Russell 2000 (small caps) have underperformed S&P 500 and Nasdaq mainly because they do not have big players like Nvidia and other semis, but this could change going forward as note above.

Important Events next week:

Monday: Manufacturing PMI

Tuesday: Fed Chair Powell speaks, JOLTs Job openings.

Wednesday: Nonfarm employment, Initial Jobless Claims, Global Services PMI

Thursday: July 4, markets closed.

Friday: Nonfarm payrolls, Unemployment rate, Fed Monetary Policy report

Important Earnings this week:

Earnings season will kick-off on July 13, hence there are no major earning release.

Actionable Stocks:

Long-Term View: These stocks were mentioned for long-term holdings in our last commentaries:

MSFT:

Microsoft dropped by 1.30% last week as the stock consolidates near all-time highs. Being a long-term holding we think it is actionable at current prices or a very good buy at 50 days or 20 days moving averages in case of a pullback with the broader market and Nasdaq.

NVDA:

See our notes above. As Nvidia pauses, it could be times to rethink your strategy and take some money off the table to lock in some profits.

AAPL:

Apple broke out last month and in the long-term is likely to maintain its upward trend. With the newly revealed AI strategy last month, investors are willing to push it further in the month of July, which is traditionally a good month for Apple before taking a break from mid-August till October. Apple remains on our long-term buy list.

AVGO:

Same comments as for Nvidia, if you have profitable positions in Broadcom, then this is the time to book some profits and take some money off the table to protect against a possible drawdown along with the broader semi-conductor group.

Medium and Short Term Picks:

For these stocks we suggest that profits should be taken at 15-20% levels from the buying price or at least 25-50% of the position should be taken off the table to ensure profitable trades. For the rest of the holding, a further assessment will be required at that time to assess future potential.

NVO:

NVO also broke out to all-time highs before pulling back slightly. Remains our favorite in the Pharma sector because of its promising pipeline of medicines especially the weight losing drugs.

GOOGL:

As expected, and mentioned during the last commentaries, Google also staged a breakout but came down slightly with the drop in Nasdaq on Friday. The stock is actionable at its current price levels as our TR Weekly indicator also issued a buy signal.

AMZN:

Amazon has been on our list for last few weeks and as expected broke out from its consolidation to all-time highs. Looks like Amazon is facing some resistance around 200 level but remains our favorite for the medium term. It has its upcoming Prime day in July and typically the stock performs well during this period of the year.

NXT:

We mentioned NextTracker last week but unfortunately with all other solar stocks it came under pressure and dropped significantly as Investors worried about the possible Trump win and reversal of Biden administration's climate favoring policies. We are dropping it from out watchlist for the moment as Solar players all of a sudden have become less favorable.

Interesting New Stocks for Watchlist:

APP:

Applovin Corp mainly develops mobile app ecosystems and help app developers to market, monetize, analyze and publish their applications. APP has shown a 6800% change in EPS last quarter and is expected to continue its long-term trajectory from current price levels

NOW:

ServiceNow Inc. provides cloud computing services that automate digital workflows to automate the enterprise IT operations. NOW has cleared a trendline around 775 and is now eyeing its entry at 815.32. It enjoys a solid ROE of 35% and consecutive last four years of EPS growth.

ABR:

Looking for a high yield dividend player in the Real Estate area? ABR has a 12% dividend yield, and it is growing its dividend by 9% annually. However, the catch is that it is not a growth stock and could not provide a long-term capital appreciation (down 5.7% this year) but it could be an acceptable pick for folks who like to have monthly stream of dividend income.

ELF:

ELF Beauty is near its all-time high but actionable at current levels. It is highly ranked within the Cosmetics/Personal Care group and continuously favored by mutual funds over the last two years. So far it has increased by 46% in 2024 but with a breakout from the 221.83 levels could generate a quick 10-15% profit.

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Happy Trading and best regards,

Disclaimer:

The information provided here is for educational / learning purposes only and should not be taken as purchase or sell recommendations. Trading / Investing in Stocks and derivatives is highly risky and could result in a substantial or complete loss of invested capital.

Employees and Owners of MJ Software LLC are not registered Financial Advisors with FINRA or SEC and for any financial advice please consult a registered financial advisor.