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2020 was a year of the “unprecedented”. Pandemic, Unemployment, market volatility, multi-baggers, income disparity, geopolitics etc. I am glad this year is coming to an end and wishing for a better and rather boring 2021.
In terms of trading and investing, what worked? – Almost anything related to Healthcare, Software, Innovation, Chemicals in the 1st 9 months of 2020. – Then came reflation and economic growth related flows in the last two months propelling banks and energy among other sectors. It’s exciting to note that these few months could be a potential turning point against a multi-year downtrend in the energy sector.
Going forward, which sectors are investors focusing on implicitly from recent flows and overall strength? I have done this analysis based on 1) where the stocks within each industry are relative to the overall market (i.e. their relative strength) and 2) to themselves (compared with 50 day volume weighted avg price).
Below is a table showing this for 5 major countries I follow: Japan, HK, China, India, US.
Note: Shaded sectors show an overlap across 2 timeframes in the same country.
One can amend or incline their portfolios in the market’s direction or choose to be a contrarian. Neither is wrong, I prefer the former.
Feel free to reach out for a discussion on companies in the listed sectors.
If one were to look at the WoW performance for major indices, it would be hard to imagine the volatility most investors went through last week.
My model shows massive deterioration in the setups for uptrending stocks. While we wait for the bull market to resume (SPX above 50dma, NDX above 50dma), here are few stocks that one can focus on once the index uptrend is re-established:
$ZM: Zoom needs no introduction. Here is how the chart is setting up. On the fundamental side, it’s really good to see the revenues going 2x in last 12 months and free cash flow 6x.
$CRWD: CrowdStrike Holdings, Inc. provides cloud-delivered solutions for next-generation endpoint protection in the United States, Australia, Germany, India, Romania, and the United Kingdom. It offers 11 cloud modules on its Falcon platform through a software as a service subscription-based model that covers various security markets, such as endpoint security, security and IT operations, and threat intelligence to deliver comprehensive breach protection even against today’s most sophisticated attacks. The company primarily sells its platform and cloud modules through its direct sales team. (Source: yahoo)
$NOW: ServiceNow, Inc. provides enterprise cloud computing solutions that defines, structures, consolidates, manages, and automates services for enterprises worldwide. The company offers information technology (IT) service management applications; and digital workflow products for customer service, human resources, security operations, integrated risk management, and other enterprise departments. It operates the Now platform that offers workflow automation, electronic service catalogs and portals, configuration management systems, data benchmarking, performance analytics, encryption, and collaboration and development tools. (Source: yahoo)
$NVDA: Nvidia is the leading designer of graphics processing units that enhance the experience on computing platforms. The firm’s chips are used in a variety of end markets, including high-end PCs for gaming, data centers, and automotive infotainment systems. In recent years, the firm has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm’s graphics processing units. (Source: Morningstar)
$ENPH: Enphase Energy Inc delivers energy management technology for the solar industry. The company designs, develops, manufactures and sells home energy solutions that connect solar generation, energy storage, and management on one intelligent platform. Its product and service portfolio consists of Enphase Microinverters, Enphase Envoy, Enphase Enlighten and Apps, Enphase Energy Services, and Enphase Storage System. Geographically, it derives a majority of revenue from the United States. (Source: Morningstar)
Fundamentals look good here. It looks choppy but certainly one to keep an eye on.
$PTON: Peloton Interactive, Inc. provides interactive fitness products in North America and internationally. It offers connected fitness products, such as the Peloton Bike and the Peloton Tread, which include touchscreen that streams live and on-demand classes. The company also provides connected fitness subscriptions for multiple household users, and access to all live and on-demand classes, as well as Peloton Digital app for connected fitness subscribers to provide access to its classes. (Source: Yahoo)
Charts sourced from stockcharts.com and financials from morningstar.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.