Weekly Commentary - December 10, 2023

Hello everyone,

Weekly and Monthly Wrap up:

The Stock Market rally is continuing to push market higher although its momentum has slowed down last week. S&P 500 was up by +0.21% and touched another new high for 2023 and is just within 5% of its all-time high. Similarly Nasdaq 100 is also getting close to its highs set in early 2022. Nasdaq Composite was up by +0.69% last week and on YTD basis is up by 37.62%. Small stocks index Russell 2000 was up 1.02% for the week but in last 1 month, it is up by 9.97% this improving the market breadth and reinforcing our belief that the rally is broad based and just not limited to the magnificent seven stocks.

Going forward however, there are a few caution indicators. Historically, second week of December is typically the weakest period of otherwise a bullish overall month. On top of this there are monthly Options and Future contracts expiring on the coming Friday on December 15th. This makes it tricky for the market to continue its advance smoothly and thus a pullback is expected. Typically as Christmas holidays get closer, market resumes its advance in a fashion known as the "Santa rally". Is it going to happen this year too? No guarantees but if history is a guide then there are higher probabilities of happening it late in the month and then continuing in the month of January.

Performance of recently mentioned stocks:

Following stocks were mentioned during the last two months. As said earlier, the rally has slowed down and making a slow grind upwards for the time being. Energy sector continues to lag although Chevron (a preferred stock for dividend income) has stabilized and performing well in line with our expectations:

Stock 5 Days Perf 1 Month Perf

MSFT -0.227% 2.88%

NVO -3.90% -8.36%

NVDA 1.55% 1.99%

TW -4.91% -2.45%

TNK -6.63% -8.53%

META 2.27% 3.94%

GE -1.51% 5.99%

ROST -0.05% 7.57%

COST 1.55% 1.99%

CVX -0.26% 1.43%

Technology sector and has gain seems to resume its bullish mojo and subgroups like Software and Semiconductors are also performing. In fact Semiconductors have outperformed major indices by generating an overall return of 60% this year (as shown by the SMH - Vanveck Semiconductor ETF). By far the best industry group is "Travel and Tourism" this year which has generated a 82% return by DJUSTT (Dow Jones US Travel & Tourism industry sub-group).

Actionable Stocks:

With holidays season around the corner, several stocks are showing on our screens or setting up buy ranges as per the TR (Trend recognition) indicator. However, we also need to be very careful in our selection as short-term profit-taking could kick in any time. Some of the stocks worthwhile to mention are:

AAPL:

Apple is trying to set a new all-time high besides several quarters of negative revenue growth. This shows that investors have confidence in its moat and the value of its high margin products and services.

NVDA:

Nvidia is trying to consolidate although currently under pressure due to rival products being offered by Intel and AMD for AI applications. In any case, it remains a long-term leader and is interesting to watch.

MSFT:

Microsoft is consolidating and is expected to continue its ride on AI front. It is challenging Apple as the most valuable company and remains a favorite among many top mutual fund managers.

REVG:

REV Group Inc is engaged in designing, manufacturing, and distributing specialty vehicles and related aftermarket parts and services. Please keep it in on your radar as earning announcement is due this week.

NET:

As mentioned in last week commentary, Cloudflare is an enterprise computer software partner of Amazon and Microsoft and has broken out of a consolidation. Although last week was not very promising but it is actionable at current levels due to a very strong TR Indicator signal. A further pullback to EMA 9 weekly line at 70 is more desirable.

DT:

Dynatrace offers a unified observability and security platform for dynamic, hybrid, multi-cloud environments. It is eying its recent highs set at 55.87 in July and price action is favorable for a long position.

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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.

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