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 its bullish momentum. The index made a high of 2207.890 during the week and settled at 2174.702 with a week-to-date (WTD) gain of ~4.67 percent on October 06, 2022. Other major indices such as S&P 500 and NASDAQ Composite also witnessed a bullish movement for the week. On October 06, 2022, the S&P 500 index settled at 3744.53 with a WTD gain of ~4.43 percent, while the NASDAQ Composite Index settled at 11073.311 with a WTD gain of ~4.71 percent.

The positive ADP Non-Farm Employment Change numbers released during the week supported the indices. However, an increase in the US Unemployment Insurance Weekly Claims numbers to 219,000 from 190,000 (revised level) in the prior limited the gains. 

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’s have a look at the two NYSE/ NASDAQ listed stocks to pick from the technical standpoint. Noted below recommendations are based on the entry price, target prices, and stop-loss for IDT Corporation (NYSE: IDT) and Village Farms International, Inc. (NASDAQ: VFF) for the next 2-4 weeks duration: 

IDT Corporation

IDT Corporation (NYSE: IDT) is a US-based telecommunication company engaged in the unified cloud, fintech and traditional communications services. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart) 

IDT’s prices broke a falling trendline by an upside and are sustaining above the breakout level, indicating the possibility of further upside movement. The trendline breakout is supported by an increase in the volumes, supporting a positive bias. Now the next major resistance level for the stock appears at USD 33.00, and prices may test this level in the short-term (2-4 weeks). A further movement above USD 33.00 may extend buying in the stock.

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, the leading indicator RSI (14-period) is moving in a positive zone and showing a reading of 68.67. The volumes seem supportive of the next upside movement. The prices are trading above the trend-following indicators 21-period and 50-period SMA, which may act as the support levesl in the near term.

General Recommendation

As per the above-mentioned price action and technical indicators analysis, IDT Corporation 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:

Village Farms International, Inc.

Village Farms International, Inc. (NASDAQ: VFF) is a North American greenhouse producer that operates in Cannabis-Canada, Cannabis-US, and Energy segments. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart)

VFF’s prices broke a downward sloping trendline by an upside and are sustaining above the breakout level from the past few trading sessions, indicating the possibility of an upside reversal hereon. The trendline breakout is supported by a sharp increase in the volumes, further supporting a positive bias. Now the next major resistance level for the stock appears at USD 2.85, and prices may test this level in the short-term (2-4 weeks). A further movement above USD 2.85 may extend buying in the stock.

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, the leading indicator RSI (14-period) is moving above the midpoint and shows a reading of 54.75. The volumes also seem supportive of the next upside movement. The prices are trading above the trend-following indicator 21-period SMA, which may act as a support level in the near term.

General Recommendation 

As per the above-mentioned price action and technical indicators analysis, Village Farms International, 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:

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:

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 a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

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. 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, currency, technical indicators, support, and resistance levels is October 06, 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 - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.