Weekly Commentary October 27 2023

Hello,

I am resuming the Weekly commentary (hopefully a mid-week commentary will also be rolled out as well). These regular updates will comment on the latest market situation and our picks (both actionable stocks and under watch). These will be free (for the first year) for all donors/customers who have contributed towards the donation / purchase of my Stocks Analysis Software:

A Red October:

So far it is a red October and is likely to end this way. The S&P 500 closed in correction territory on Friday to end a dreadful week for stocks.

The S&P 500 fell 0.5%, putting the large-cap index 10% below a recent high of 4,588.96. The Nasdaq Composite, which entered its own correction on Wednesday, gained 0.4% on the day. It still fell 2.6% on the week. Both the S&P 500 and Nasdaq are on track for their worst October since 2018.The Dow Jones Industrial Average hit its lowest closing value since March 28, dropping 367 points, or 1.1%.

Most terrible was the Russell 2000 Index which fell by 1.3%. It has been the most dismal Index in 2023 with a 9.45% drop on YoY (year-to-year) basis and a 6.95% drop on YTD (year-to-date) basis. In fact, it hit its lowest level since 2020. The VIX (Volatility Index) also closed above 20 but it is still not showing signs of extreme fears in the market.

Several analysists are of view that the current distribution wave will continue but as Tom Bowley (EarningBeats.com) notes that the next week is historically the best week of year based on data dated back to 1950. Therefore, history is on our side and considering the fact that it is month end and the beginning of a traditionally strong stock market period (Holidays, Year-end holidays, Santa rally, New year, Consumer spending etc.), we could expect a near-term bounce in equities . No guarantees, but we should be ready to take advantage of it in case markets stage a reversal.

In the coming week FED decision on interest rates (most likely the current base rate will not be changed) and Apple earnings on tap. These two events could trigger a directional move. Geopolitical events such as Middle East crisis could also impact market sentiments. Therefore, investors/traders should remain nimble in their choices while selecting stocks.

Keeping above in perspective, we found following stocks interesting:

Actionable Stocks:

1. MSFT. The Tech giant has been impressive in its Cloud business and recent earnings report. TR (Trend Recognition Indicator) shows a good entry point with a very tight stop loss at 312 (less than 6%). The stock is still above its 50 days Moving Average line and showing resilience while market dropped.

2. ON: ON semi is reporting earnings before open on Tuesday. Although this is a long-term leader (in terms of fundamentals and earnings history), so far last 3 months have seen a return of -18.21%, even though it is up 33.91% on YTD basis. Risk taking investors could take a position before earnings on Monday (suggested a 1/2 position only), although buying a stock just before earnings is a double-edge sword and could be risky. An alternate strategy could be to let earnings play out and if stocks gap up then wait till the stock tries to fill the gap (towards the upper end of it).

In the longer run, ON is a leader which could prove to be a good buy at current prices. Last 5 years have also seen relatively much better performance against the S&P 500 during the months of November and December.

3. TW: TradeWeb, shares of the electronic bond trading firms moved out of a base on 22% EPS gain and 14% sales revenue gain. Looks actionable at current levels.

4. TNK: Teekay Tankers is an energy industry player which has shown strong gains after recent earnings (in line with both top and bottom-line estimates). It looks actionable at current levels.

Stocks under watch:

1. FTI - Another energy play, this stock made a strong move on high volume on Thursday and could continue its upward movement with Market support.

2. NVO - NVO Nordisk is a Danish Pharma company has two promising weight loss products (Ozempic and Wegovy). The Company is expected to thrive on their future sales. It is on our watchlist and is a buy at the expected levels of 85-87 (gap closure on its last earning reports).

3. DECK - Deckers Outdoor beat both on top and bottom lines (revenue and earnings) causing a jump out of its current base. Stock has good fundamentals but after its gap up it is likely to consolidate and test the gap at 545 at that price it could be a good buy. Keep under your radar !!!

Note: In future, you’ll be receiving these emails through my business email: support@analyzestocks.net

Best regards,

Ghulam Sabri

MJ Software LLC

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.

I am not a registered Financial Advisor with FINRA or SEC and for any financial advice please consult a registered financial advisor.