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 and continued the momentum. The index made a high of 2259.867 during the week and settled at 2255.725 with a week-to-date (WTD) gain of ~2.15 percent on July 07, 2022. Other major indices such as S&P 500 and NASDAQ Composite witnessed bullish momentum for the week. On July 07, 2022, the S&P 500 index settled at 3902.62 with a WTD gain of ~2.02 percent, and the NASDAQ Composite Index settled at 11621.346 with a WTD gain of ~4.44 percent.

The indices witnessed upside movement despite the release of negative economic data during the week such as ISM Services PMI and Initial Jobless Claims. As per the U.S. Department of Labor, the initial jobless claims numbers increased to 235,000 from 231,000 (unrevised level) in the prior week.

Having understood the US market performance over the week, taking cues from major global news, and based on technical analysis of the Russell 3000 index for the upcoming week, now let us have a look at the two NYSE/ NASDAQ listed stock picks from the technical standpoint. Noted below are recommendations based on generic insights, entry price, target prices, and stop-loss for Valens Semiconductor Ltd (NYSE: VLN) and ClearPoint Neuro, Inc. (NASDAQ: CLPT) for the next 2-4 weeks duration: 

Valens Semiconductor Ltd 

Valens Semiconductor Ltd (NYSE: VLN) is a leading supplier of semiconductor products for the professional audio video and automotive industries. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

VLN’s prices started to move upside after forming a positive divergence with RSI (14-period) at the lower levels and recently broke a downward sloping trend line by the upside, indicating the possibility of an upside movement. Now the next major resistance level for the stock appears at USD 4.35 and prices may test this level in the short-term (2-4 weeks). A further movement above USD 4.35 backed by volumes may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the leading indicator RSI (14-period) is recovering from lower levels and showing a reading of 39.11. However, the prices are trading below the trend-following indicator 21-period SMA and 50-period SMA, which may act as the resistance levels for the stock.

General Recommendation

As per the above-mentioned price action and technical indicators analysis, Valens Semiconductor Ltd is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decision should be made depending on an individual’s 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 recommendation is as follows:

ClearPoint Neuro, Inc. 

ClearPoint Neuro, Inc. (NASDAQ: CLPT) is a neurology company that provides pinpoint treatment of neurological disorders. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

CLPT has given a falling trendline breakout on June 23, 2022 and since then trading above the breakout level, indicating the possibility of further upside movement. Now the next major resistance level for the stock appears at USD 16.50 and prices may test this level in the short-term (2-4 weeks). A further movement above USD 16.50 backed by volumes may extend buying in the stock. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the leading indicator RSI (14-period) is showing a reading of 60.59, indicating a positive momentum build-up at the current levels. Prices are trading above the trend-following indicator 21-period SMA and 50-period SMA, further supporting an up move.

General Recommendation

As per the above-mentioned price action and technical indicators analysis, ClearPoint Neuro, Inc. is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decision should be made depending on an individual’s 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 recommendation is as follows:

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

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 Russell 3000 Index and stocks’ prices:

Investment Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the 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, social and political instability risks etc.

Note 1: Individuals can consider exiting from the stock if the Target Price or Stop loss mentioned as per the technical analysis has been achieved and subject to the factors discussed above. 

Note 2: 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.

Technical Indicators Defined: -

Support: A level at which 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 at which 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: In general, 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. This report is based on ~60% Stop Loss of the Target 1 from the entry point. 

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. Individuals can Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Individuals 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. 

The reference date for all price data, volumes, technical indicators, support, and resistance levels is July 07, 2022. 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 individuals. Technical reports in general chart out metrics that may be assessed by individuals 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.