Closelook at US Stock Markets - Post 03

NASDAQ and NASDAQ 100 are still firmly in consolidation mode. We were expecting a bounce to start from around the 50DMA.

Author

Thomas Look
August 17, 2023

Photo by Alice Pasqual / Unsplash

NASDAQ and NASDAQ 100 are still firmly in consolidation mode. We were expecting a bounce to start from around the 50DMA.

Some bounce took place, but so far, bull power has been very weak, and the market has firmly cut through the 50 DMA with the bears to be in control again since yesterday.

Now what?

Given this, we still expect a test of the lower channel, which provides support. We expect the support to hold. So far, we have not seen any positive divergences at the index level, which would justify adding to our long positions in hypergrowth stocks at a larger scale.

Market moving events

(1) We have penciled 14700 on the NASDAQ 100 as a potential buying zone.

(2) We have penciled the NVIDIA earnings report as a potential catalyst up or down for the market (23 August).

(3) The market may want to wait for JP's speech in Jackson Hole, the PCE inflation readings at the end of August, and a clearer picture of inflation. Current nowcast readings for August are CPI - 0.79, Core CPI - 0.38, PCE - 0.62, Core PCE - 0.35, Updated 15 August 2023. This is too high to be in the comfort zone.

Individual stocks:

We have entered an initial position in Nvidia, a bit above 400 USD.

We very much like the earnings provided by NU Holdings and will add on weakness.

New to our favorite list:

We like Novo Nordisk and have initiated an initial position. We see a super cycle, and markets still need to fully grasp the potential of NVO drugs.

We like Vertiv Holdings, a true beneficiary of the AI-craze, and have initiated an initial position. VRT is a leading thermal management solutions provider and profits from the exponential growth of high-density AI-related tools and applications in data centers. Heat management and density will become big problems in upgrading existing data centers with, e.g., GPUs, etc., for AI.

We like Cava - the Mediterranean restaurant chain (the new Chipotle on steroids?) but have yet to conclude our analysis. The ordinary American diet is such an unhealthy disaster. With just a little brain wax, they should be successful.