US Markets Round-Up

This week, the Russell 3000 index, an important benchmark of the US stock market across market capitalizations, started on a positive note; however, prices witnessed a downside movement in yesterday’s trading session. Prices settled at 2503.73 on June 03, 2021, with a marginal week till date (WTD) loss of ~0.31 percent. Prices are sustaining above the resistance turned support level 2400 since past 2 months, indicating the possibility of an upward direction for the index. Other major indices S&P 500 and NASDAQ Composite also showed marginal downside movement during the week. On June 03, 2021, the S&P 500 settled at 4192.85 with a WTD loss of ~0.27 percent, while NASDAQ Composite Index settled at 13614.51 with WTD a loss of ~0.98 percent.

As per the data released by the US Bureau of Labor Statistics, the US weekly unemployment claims further declined to 385,000 from 405,000 in the prior week and supported the indices. The improved Services PMI and Manufacturing PMI data released by the Institute for Supply Management restricted a major downside correction in the indices.

Having understood the US market performance over the week, taking cues from major global news, and based on our technical analysis of the Russell 3000 index for the upcoming week, now let us have a look at the two NYSE listed stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Piedmont Office Realty Trust Inc (NYSE: PDM) and Oceaneering International Inc (NYSE: OII) for the next 2-4 weeks duration: 

Piedmont Office Realty Trust Inc 

Piedmont Office Realty Trust, Inc. (NYSE: PDM) is a US-based real estate investment trust (REIT). The company’s business segment includes development, acquisition, re-development, management, and ownership of the commercial real estate properties located across the Eastern United States. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

PDM's stock price broke a downward sloping trend line by an upside at USD 18.92 level on June 01, 2021, indicating an upward direction for the stock. Prices also broke a major resistance level of USD 19.03 with the rise in the volumes, further supporting an upside movement. Now the next major resistance level appears at USD 23.55, and prices may test that level in the short-term (2-4 weeks).

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~65.18 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seems supportive of an upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing support for an upward direction.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Piedmont Office Realty Trust Inc is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Piedmont Office Realty Trust Inc is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite on upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:

Oceaneering International Inc

Oceaneering International Inc. (NYSE: OII) is an oil field provider of engineered products and services mainly to the offshore oil and gas industry. The company’s business segment includes remotely operated vehicles (ROV), deep-water intervention, manned diving services, etc. Noted below are the key price Indicators for the stock:

Price Action Analysis (on the Weekly Chart)

OII's price broke a rising channel pattern by an upside on June 03, 2021, indicating an upward direction for the stock. Prices also broke a major resistance level of USD 16.00 with the rise in the volumes, thereby higher market participation supporting an upside movement. Now the next major resistance level appears at USD 21.30, and prices may test that level in the short-term (2-4 weeks).

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~70.14 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seems supportive of an upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing support for an upward direction.

Financial Summary: 

Summary of the Key Financial Metrics for the past four years for Oceaneering International Inc is as follows: 

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Oceaneering International Inc is looking technically well-placed on the chart and considering the stock prices are trading near its 52-week high, we have a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the Russel 3000 Index and listed stocks’ prices.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, and social and political instability risks etc.

Entry Price: For the given recommendation(s), Entry Price is assumed be at or above a certain level. However, a slight deviation on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated.

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point.

Note: The reference date for all price data, volumes, technical indicators, support, and resistance levels is June 03, 2021. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.