Weekly Commentary - May 26, 2024

Hello readers,

We are glad to resume our weekly commentary highlighting the current Stock Market action and some latest picks based on our trading methodology.

"Sell in May and come back in November" is an old adage in Stock Market. While Stock Market is touching its record highs there is always a chance of short-term pull back and/or consolidation before the market rally resumes its journey.

On Friday, for the most part major indices recovered some of the steep losses registered on Thursday, the stock market rally seems still strong and could be pushed higher by the optimistic investors and traders. Dow lost 2.33% last week and closed at 39,069.59 (52 weeks: 18.06%), S&P 500 was up by 0.03% (52 weeks: 26.14%) while Nasdaq Composite was up by 1.41% (52 weeks: 30.40%). Nasdaq in general has been buoyed by Technology sector mainly due to the Nvidia strength and investors' love for the AI (Artificial Intelligence) stocks as a whole.

Actionable Stocks:

Long-Term View:

Some actionable stocks with a long-term buy and hold view are:

MSFT:

Although Microsoft is near its record high levels but it is actionable at current levels and expected to continue its long term growth pattern. It has already taken over Apple as the most valuable company in the world and is expected to perform well in days ahead.

NVDA:

NVDA: Riding on the wave of AI (Artificial Intelligence), Nvidia has been a darling of Wall Street Investors who have pushed its price higher by 560% during the last two years. The Company's investor presentation also expect that for every dollar data centers and corporations are investing in Nvidia computing and networking products, a 50% annual return is expected. Nvidia has also announced a 10:1 stock split in July which will make it easier for the smaller investors to buy more shares (although at the end of the day it really does not matter because stock price will also be reduced), therefore, Nvidia is likely to continue reasonable returns in near future (Wall Street's average 12-month target price is $1,169 which is 12% higher than its current price).

However, our TR Indicator suggests that Nvidia is in a highly overbought territory and a likely profit-taking could trigger and bring the stock price down to somewhat lower levels. Ideally, Nvidia will find support at EMA 18 (currently 830) or EMA 30 (currently 743 - a level not likely to be tested soon). Therefore, waiting for a better buy point is suggested.

AAPL:

Our long time favorite Apple has again shown strength and bounced back from its support at lower Bollinger Band (164). It looks like that it could fill the gap at 180 before attempting again to test its all-time high at 199. For long term holding, Apple still is a good buy and June-August traditionally are good months for Apple when compared with S&P 500 (although traditionally it underperforms the S&P 500 during the month of September).

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.

AMD:

Although AMD dropped by 20% during last 2 1/2 months, but it seems to have large potential in gaming and industrial business applications of its chips including the AI driven Data Centers growth. Actionable at current levels with a suggested Stop Loss around 149.

EBAY:

Ebay has seen positive action and is in a buy zone at the moment. Suggested Stop Loss 8% from the buying levels. Ebay's technical indicators point towards a continuation of the current trend.

MGNI

Magnite Inc. provides sell-side advertising platform enabling publishers to monetize across all auction types and formats. Last week the company found a great catalyst and ad partner - Netflix who will move from Microsoft's technology to several other partners including the Magnite. Although Magnite was up 13.6% on Friday but technical indicators point towards further positive action. Stop Loss around 10.87 while targeting a quick 20% profit level.

Website:

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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.