The markets ended lower as soft economic data affirmed a higher potential for the Federal Reserve’s interest rate hike, dampening investor enthusiasm. The S&P closed at a meager 0.79%, while the Dow closed at -1.18%. Consumer Services and Information Technology stocks still dominate YTD by sector performance, while Financials is still the worst-performing sector. With the threat of another rate hike near term, investors may not see price market participants returning fully until after the next Federal Reserve meeting.
|S&P 500 Energy||669.04||-0.30||2.47|
|S&P 500 Materials||513.11||4.10||1.62|
|S&P 500 Industrials||846.09||1.64||2.09|
|S&P 500 Consumer Discretionary||1142.93||13.82||1.31|
|S&P 500 Consumer Staples||790.06||0.81||-0.25|
|S&P 500 Health Care||1580.81||-1.08||0.71|
|S&P 500 Financials||541.30||-3.99||2.86|
|S&P 500 Information Tech||2612.33||19.66||-0.37|
|S&P 500 Communication Services||196.57||23.72||0.60|
|S&P 500 Utilities||353.91||-2.37||-1.34|
|S&P 500 Real Estate||233.52||-1.20||-1.45|
|S&P Dividend Aristocrats||764.08||1.52||0.68|
|Dow Jones Industrial Average||32237.53||-1.36||1.18|
Market Moving News
Market Earnings are still under pressure due to the effects of the bank crisis. – With tighter financial conditions and a slowing economy, markets are looking closely into the earnings season and scrutinizing balance sheets to understand better which companies have been hit hard by the slow growth and the impact of the recent banking crisis.
The government is looking at setting the EPA emission limit to boost EV sales. The Biden administration is proposing a stiffer automobile pollution limit that would require up to two-thirds of new vehicles sold in the US to be electric by 2032, a plan that would transform the US auto industry.
Calls for AI rules raised by US Senate leader Schumer with the recent surge in popularity of ChatGPT. – With concerns on education and national security rising, Senate Majority Leader Chuck Schumer said he had launched an effort to establish rules on artificial intelligence as programs like ChatGPT become widespread.
Week of April 17, 2023
Earnings Season continuous – Markets are on watch mode, for most companies are set to release their earnings this week. Notable companies like Goldman Sachs Group Inc., Bank of America, Morgan Stanley, etc., will release it this week. Investors are expected to look closely at their balance sheets to understand the impact of the last banking crisis, economic slowdown, and the high-interest rate environment.
Office Real-Estate seen as the next worry. – US banks see a growing concern on the office commercial real estate as property values have been falling and borrowers have been defaulting amid the rise in interest rates
Economic releases for the week. – Flash Services sector PMI, Manufacturing PMI, and unemployment claims are expected to be released this week, alongside Jobless claims data that will be released this Friday.
Top 10 Strongest Small-cap to Mega-Cap Stocks in the Communication Services Sector
With the communication sector being the top-performing sector year-to-date, let’s look at the top names in the sector and their potential for a trend-following play. We will focus only on the stock market cap (total dollar market value of a company’s outstanding shares of stock) that is at least $300 million and above to have a balance of growth, stability, and liquidity in the list.
Lions Gate Entertainment Corp (LGF.A)
Market Cap: $2.487 Billion
Lions Gate Entertainment Corp. is a motion picture and television studio with operations aligned with the STARZ premium subscription platform. Its segments include
- Motion Picture – develops and produces feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment, and television distribution of feature films produced and acquired, and global licensing of distribution rights to feature films produced and acquired.
- Television Production – produces and distributes television productions, including television series, mini-series, movies, and non-fiction programming.
- Media Networks – includes Starz Networks, premium subscription video services, and STARZPLAY International.
What’s the trend?
LGF.a shows prices are currently in a strong uptrend with LGF.a currently retesting its last resistance turned to support from its breakout. Investors should take note that RSI is showing a divergence that may lead to price exhaustion. Investors who are willing to buy into LGF.a can wait for the retest confirmation for a follow-through.
Cinemark Holdings (CNK)
Market Cap:$1.979 Billion
Cinemark Holdings, Inc. is a company that is mainly engaged in providing motion picture exhibitions. The company operates through two geographical segments:
U.S. markets – operates approximately 318 theatres and 4,399 screens.
International markets – operates 200 theatres and 1,448 screens across 15 countries.
The company plays mainstream films from many genres, such as animated films, comedies, family films, dramas, horror, and action films in two-dimensional (2D) and three-dimensional (3D).
Is it trending?
CNK recently broke out of its $14.00 resistance and is on its way to its next resistance at $19.74. RSI is currently showing that it is overbought with no signs of exhaustion. Investors willing to buy into CNK may wait for retracement near the support or when moving averages catch up and get tested.
Meta Platforms (META)
Market Cap: $574,24 Billion
Meta Platforms, Inc. is a Tech company that creates technologies that facilitate social connections, community building, and business growth. Its products allow sharing information and interacting with friends and family using various devices such as smartphones, computers, wearables, and VR headsets. The company has two business segments:
- Family of Apps (FoA) comprises social apps and services such as Facebook, Instagram, Messenger, and WhatsApp.
- Reality Labs (RL) comprises consumer hardware, software, and content related to virtual and augmented reality.
Facebook allows people to communicate, discover new things, and share content, while Instagram is a platform for self-expression, shopping, and private messaging. Meta’s RL products include Meta Quest VR devices, content, and software available through the Meta Quest Store that also offer a variety of social experiences.
Is it Trending?
Meta shows prices are steadily trending and is on its way toward its next resistance at $237.39. RSI is currently overbought and is showing a bearish divergence which could be a chance for other investors to buy in once a correction and entry signal appears. Investors can wait for a retest of the price gap low (low produced when prices jumped and created a gap)or when moving averages catch up and get retested.
Integral Ad Science Holding Corp (IAS)
Market Cap: $2.39 Billion
Integral Ad Science Holding Corp. is a global digital advertising verification company. The Company offers services in:
- Advertising verification
- Contextual targeting services
Its platform uses cloud-based technology to deliver independent measurement and verification of digital advertising across all devices, channels, and formats, including desktop, connected TV (CTV), social, display, mobile, video and provide actionable insights.
Its Company’s Quality Impressions metric is designed to verify if digital ads are served to a real person rather than a bot, viewable on-screen, and appear in a brand-safe and suitable environment in the correct geography.
Is it trending?
Prices have been steadily rising for IAS and are continuously moving up with its trend. However, investors should note that prices are currently overbought and may signal the exhaustion of the stock. Investors willing to buy into IAS may wait for a correction in price or a retest into the moving averages.
Roblox Corp (RBLX)
Market Cap: $25.61 Billion
Roblox Corporation is a technology company that operates a human co-experience platform or Roblox Platform. It helps users interact with each other to explore and develop user-generated and 3D experiences. The Roblox Platform is a live service that allows users to socialize and play with others for free. Its platform uses user-generated content that draws inspiration from entertainment, gaming, social media, and toys.
Users signing up for Roblox allows creating a user avatar or a Roblox identity that they can freely use to immerse themselves in experiences on Roblox and can acquire experience-specific enhancements or avatar items. The platform allows users to use their avatars in the marketplace using virtual currency (Robux).
Any user can be a developer or creator on the Company’s platform using Roblox’s studio of software tools. Users can purchase Robux as one-time or monthly subscriptions through mobile payments, credit cards, or prepaid cards.
Is it trending?
RBLX shows it is currently on its way to testing its $53.75 resistance and is steadily moving up without any signs of exhaustion or overbought signal. Investors willing to buy into RBLX may wait for prices to test the trendline and moving averages to catch up and confirm solid support. With prices nearing last August’s high, investors must be cautious of any potential selloff once prices reach that resistance.
Rumble Inc. (RUM)
Market Cap: $3.595 Billion
Rumble Inc. is a full-service video technology provider that offers original content videos, customizable video players, and a library of advertisements for use with its video players. Its video-sharing platform is designed to help creators distribute, manage, and monetize their content through brands, publishers, and directly to their subscribers and followers using connections built within their platform.
It has two core businesses, Video and Cloud. Its video business consists of three core products:
- Rumble – a free-to-use video-sharing platform where users can watch, like, share, comment, and upload videos.
- Locals – a platform for users and content creators to build their brands and sell exclusive content.
- RAC – advertising marketplace designed to help facilitate transactions for advertisers in its platforms.
In addition to its video business, it is also developing Rumble Cloud, a new infrastructure as a service (IaaS) business.
Is it trending?
Prices on RUM aren’t showing any signs of a strong trend, even with it being one of the companies from our generated list. It’s moving in a small rising channel without indicating a potential breakout. Investors willing to buy into RUM may wait for a retest on the lower channel or moving average or wait for a breakout and confirmation before buying in.
World Wrestling Entertainment Inc (WWE)
Market Cap:$ 7.79 Billion
World Wrestling Entertainment, Inc. (WWE) is an integrated entertainment and media company engaged in producing and distributing content through various channels. This includes content rights agreements for its flagship programs. Its segments include:
- Media – produces and monetizes long-form and short-form video content across various platforms, including broadcast and pay television and streaming, as well as digital and social media.
- Live Events – provides ongoing content for the company’s media platforms. This includes ticket sales and sales of travel packages associated with the Company’s global live events.
- Consumer Products – engages in merchandising WWE branded products, such as toys, video games, and apparel, through direct-to-consumer sales and licensing arrangements.
Is it trending?
WWE is one of the strong trending stocks with a continuous upward slow. Previous retests on its moving averages have proven to be strong support. Prices are currently overbought with its move from $90.00-$100.00 due to its M&A deal with UFC. Investors should note that this deal heavily influences price increase momentum and should keep tabs on the deal status to understand the risks and potential growth of WWE.
Roku Inc. (ROKU)
Market Cap: $8.65 Billion
Roku, Inc. is a television (TV) streaming platform in the United States, Mexico, and Canada that sells digital advertising and related services. This includes demand-side platforms and content distribution services. The company operates in two segments:
- Platform: Sells digital advertising to advertisers directly or through advertising agencies and content publishers for their media and entertainment promotions via various campaign tools.
- Devices: Sells most of its devices in the United States through retailers, distributors, and the Company’s Website.
Is it trending?
Prices are currently consolidating after their recovery from their $38.04 low. RSI is showing a contraction in momentum, and prices are following suit. This is a common indication of a potential breakout/breakdown. Investors willing to buy into ROKU can wait for the price a breakout, and confirmation to mitigate risks, as prices may go either way.
Warner Brothers Discovery (WBD)
Market Cap: $33.49 Billion
Warner Bros. Discovery, Inc. is a global media and entertainment company that operates through three segments:
- Studios – produces and releases feature films for initial exhibition in theaters, production, and initial licensing of television programs to third parties. It also includes networks/DTC services, distribution of its films and TV programs (via a third party, streaming services, and home entertainment market), related consumer products and themed experience licensing, and interactive gaming.
- DTC consists of its premium pay-TV and streaming services, including Warner Bros. Pictures Group, Warner Bros. Television Group, Discovery Channel, discovery+, DC, HBO, HBO Max, and CNN.
- Networks – consists of domestic and international television networks.
Is it trending?
Prices are currently consolidating in a small range between $13.40 and $16.05. RSI also moves in a tight range, indicating a potential price breakout and momentum. Investors willing to buy into WBD can wait for a retest of the range low and wait for a bounce or wait for moving averages to catch up and test the prices.
Cars.com Inc. (CARS)
Market Cap:$1.31 Billion
Cars.com Inc. is an automotive marketplace platform that connects car shoppers with sellers. The Company provides shoppers with data, resources, and digital tools to allow buyers to make informed buying decisions and seamlessly connect with automotive retailers.
The company sells marketplace subscription advertising to dealer customers through its marketplace product. This allows its dealer customers to showcase their available new and used vehicle inventory to its audience. The company also utilizes social media platforms to sell cars by launching multiple solutions for dealers and OEMs to connect with in-market car shoppers.
Is it Trending?
CARS just broke out again from its $19.09 resistance and is poised to retest it. With recent months showing an uptrend, this may be a chance for investors to buy into CARS when prices continue to break out from the last breakout high or when the price retests current support and establishes a solid resistance-turned-support line. Investors must also be wary of prices currently showing divergence, which could lead to a failed breakout.
As the old saying goes, “The trend is your friend.” Investing in trending companies is one of the popular ways investors can make the most out of the stock return, as it ensures that you are getting into companies that most investors are also bullish in. This helps provide a small margin of safety into the investment as the main sentiment on the stock is already bullish. However, investors should always do their due diligence to ensure the risk is understood and mitigated.