Weekly Review U Stocks - 3rd Nov 2023
Here is the weekly review figures and charts that I do every week. It is useful only for those interested in trading or those who hold multiple shares and based on performance would like to keep re-balancing as we go. As I have disclosed earlier I do hold a number of U stocks. This is the reason I include a number of other U Stocks in my analysis. In my figures, I also have performances of U stocks for 2021 and 2022 - for those interested in looking at longer term view.
.
.
Please note that all my analysis are from a trading perspective looking at short-term view.
.,
.
There are no new additions this week, so my stock list contain 28 stocks.
.
.
Last Week I wrote a separate paragraph on bottoming
.
What are the chances of bottoming here?:
- Mixed opinion by analysts, some feel we continue to drop or crash, but many now believe we may bottom, possibly even this week.
- Reasons we may bottom, mainly due to divergence and support:
- This whole rally started from levels at 4110/4140 - which is where we are now. So many feel we are testing back the support and could reverse from here
- Divergence between VIX and SP 500 around higher/lower marks
- Divergence between Smart money and SP 500 - Smart money making higher low, SP 500 lower low
- Signs that 10 year may be topping
- Signs that Dollar Index may be topping
- Divergence between Fear and Greed and SP 500 - Fear and Greed made higher low when SP 500 made lower low
- Fear and Greed Sentiment Indicator at 24 - Extreme Fear - many times we bottom after reaching Extreme Fear
- My feel - Probability wise I feel we may be bottoming. But the way markets play where anything can happen, we should not assume it, rather wait for it to play out that way. At this stage I am playing for this bottom to happen in next week or two but will adjust as it evolves
.
Guess what - I was lucky with my predictions and most came true
.
- SP 500 gained roughly 6% this week to move from 4117 to 4358
- It made a low of 4103
- 10 Year Yield peaked around 5
- Dollar Index looks like topping
- We have got out of Extreme Fear
How are we going in 2023 - General Markets
- SP 500 looks to have reversed from its downtrend, gaining around 240 points for the week - 5 straight green days
- Yesterday technicals were pointing to a red, but economic data - Non-Farm Payroll - came to the rescue
- We broke a key resistance of 4300 this week. Next key number is 4450
- If we go down 4300, or worst case a rebound back from 4200/4350. There could be a possible retest of 200 week moving average a bit down
- Volatility Index VIX is below 15 after reaching 23 - a bullish sign
- Sentiment Indicator is at 42, still on Fear - trying to get to 50 Neutral
- A very good week. What was most heartening that Russell 2000 - Small Caps - made the biggest gain for the week with over 7% - its very good for risk, resource assets
- Seasonally they say we bottom in October. If seasonality is to play, we may have bottomed in October - again - as last year
.
What may happen next week - General Markets:
- US markets had a very good week. It may be difficult to maintain same momentum. May be sideways/backtest before the next up run
- With the big rise we had this week, looks most likely that short squeeze has already happened. So now a new chapter will start with a clean state.
- Some signs in crack of economy - Banks, Housing in US, China, Inflation and now Wars suddenly gripped fears in minds of many
- Next week - Jobs data, Housing etc, not significant data as last week. Maybe some Earning reports may give direction. But mainly Technicals.
.
.
Personally: My situation is slightly different to last week. 20% U stocks, 55% Li, 10% rest short play, 25% cash. So bought 15% more Li stocks and 5% rest from my cash position which reduced from 40 to 25%. U stocks I am not buying at this stage as not seeing signs that it is ready for another 30/40% rise, looks like in consolidation phase, so wait for that. My gut feel is that Li sector may be bottoming, hence adding positions there.
As I have been writing in last few weeks I was playing very big one Li stock. I had cautioned that its market cap is high, is volatile etc but I had a gut feel something inside is going on and even though market cap was very high, I kept on playing it. Some industry leaders buying that stock. I am still holding, playing with small on the side. It gained marginally around 8% this week after 70% last week.
Last week I wrote that I had bought a number of smaller LI stocks, especially those playing around AZS Andover. Playing with moderate holdings and following a theory I have mentioned a few times in my previous posts. These stocks are in Stage 1 - Potential/Hype. Sometimes Stage 1 can give gains between 100 to 300% - so can be very lucrative play. But a big caution. The success rate in Li sector is less that 5%, even lower. So roughly 1 out of 50 stocks will get to Stage 2. In recent times only AZS/WC8 have made to Stage 2 in big way. In last 18 months or so, around 90 stocks have gone through Stage 1, making big gains, but after results, retreating back to original position. So big drops. So I try to get out before results. If results are good, I may buy back, may be buyer, but that would be a possible Stage 2 play.
Above is just my thoughts, I can be completely wrong, so please dyor.
.
.
Stock/Sector specific Info:
- We are still playing 4.6 to 5.9 zone. We are now playing in this zone for over 6 weeks. touching 4.6 once and 5.8 twice - just shows that it is key trading level and how important is to get over 5.9, as well as hold 4.6.
- U stocks gained 3% for this week
- Most of the big stocks held up well, so although we didn't see next leg up, but holding the level for now
- U future gained $1 to reach $74 - very bullish but not enough to send U stocks to new high - may be need at least 80
- On Friday US U stocks declined, so a possible soft open on Monday. Very unusual US U stocks declining when markets were going up.
- A lot of gain has happened in the sector, so a bit of consolidation, profit taking may be happening after the monster move. My gut feel is the vertical rise that we saw recently may be difficult to emulate, so it may be choppy, slow grind - there will be moments of euphoria which may be sold, but steady increase possible, subject to general markets as well - if they crash, then who knows. One of the reasons I am holding back on adding more U is because of general markets
.
.
Here is the Figures for the Week:
.
.
(20min delay)