Weekly Commentary - November 17, 2023

Hello,

Weekly Wrap up:

Recession ? What recession ??? Where ???

We have been hearing different pundits predicting a recession for well over a year now, but as far as Markets are concerned they seem give no attention to these media talks. The market rally had another strong week, supported by tame inflation reports and falling Treasury yields. This has been mentioned earlier as well in our last three weeks commentaries that this is high time for the year and the market is expected to turn corners and surprise bears.

The monthly options expiration on last Friday also could not deter the rally (although it was a choppy trading day). Oil prices further fell during the week. The S&P 500 index was up by 2.24%, Nasdaq Composite advanced by 2.37%, Nasdaq 100 advanced by 2% , while smaller Stocks Index Russell 2000 was a winner last week with a 5.43% increase.

The Nasdaq 100 Equal Weight Index which is a measure for Market breadth for Tech stocks was up by 3% for the week showing a broader leadership besides just the magnificent seven stocks. Semiconductors are at an all-time high depicting strong actions by leaders like Nvidia (NVDA) and TSM (Taiwan Semiconductor). Nvidia is back again to its all-time highs with earnings announcement scheduled for Nov 21). This means market is expecting a strong report from Nvidia in this quarter as well. Software group is also back on track with Microsoft and other components like Service Now (NOW) and Palo Alto Group (PANW) performing well recently.

A key observation is on XLI (Industrial sector) which is showing strength during the recent rally. A historical analysis shows that Industrial sector (GE, Boeing etc.) loves the fourth quarter generally. So, there is an element of seasonality as well behind this sector's overall strong performance.

Recent Performance:

Performance of some of the stocks mentioned in last two weeks is as follows:

Stock 5 Days Perf 15 Days Perf

MSFT 0.05% 6.18%

NVO 0.20% 0.46%

NVDA 1.95% 13.31%

TW 0.18% 2.06%

TNK -4.91% -1.98%

META 1.87% 7.77%

INSW -2.17% -6.20%

NVO 0.20% 0.46%

GE 3.89% 11.27%

NVDA 1.95% 13.31%

COST 0.01% 3.81%

CVX 1.05% -2.89%

Energy remains a laggard group as Oil prices are under pressure and have touched their four months low on Friday. But it looks like that CVX is consolidating at these levels and could be a favorite for bottom pickers targeting a high dividend yield. ON Semi being a long-term holding has recovered some of the losses incurred after its earnings.

GE (General Electric) hit a long-term high on Friday on orders Boeing (GE is a major Aircraft engine supplier for Boeing) received during the recent Air show in Dubai.

NOV remains our favorite for long-term growth as it is trying to push through $100 barrier. It is expected to keep its upward trajectory as it has promising pipeline of medicines like "Ozempic" and "Wegovy" in its arsenal.

Actionable Stocks:

With holidays season around the corner, several stocks are showing on our screens or setting up buy ranges as per the TR indicator. However, we also need to be nimble in our selection as short-term profit taking could kick in any time (although not expected to derail this strong rally). Some of the stocks worthwhile to mention are:

MSFT:

Microsoft stock continue to be in an actionable range showing a strong price action. It is challenging Apple to take throne of the world's most valuable company in terms of market capitalization.

GE:

AS mentioned last week, the old industrial powerhouse is surging again and is expected to continue its growth in near future.

NVO:

Novo Nordisk. As discussed above, remains our favorite due to strong product line.

NVDA:

Nvidia is still actionable (please see the discussion above for more details).

ROSS:

Ross Stores is another retailer which is in actionable range and likely to move ahead with a seasonality push on its back.

URBN:

Urban Outfitters is a top performing fashion apparel retailers with earnings announcement due on Nov 21. The stock seem to be in a good position to make an entry (post earnings recommended) considering its recent price action and a cup with handled formed. It is also expected that its adjusted profit will more than double in the upcoming report. A tight stop loss around 34.56 is recommended.

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