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US Technical Analysis Report

Russell 3000 Gaining Upside Momentum, 2 Stocks Trading in the Positive Territory– RYAM, ONDS

Oct 08, 2021

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 for the most part of the week. It made a high of 2631.18 on Oct 07, 2021 and settled at 2614.30 with a week till date (WTD) gain of ~0.94 percent on Oct 07, 2021. Other major indices such as S&P 500 and NASDAQ Composite also showed positive movement for the week. On Oct 07, 2021, the S&P 500 index settled at 4,399.76 with a WTD gain of ~0.98 percent, while NASDAQ Composite Index settled at 14654.01 with a WTD gain of ~0.60 percent.

The market reacted positively over the ADP Non-Farm Employment Change data which has increased by 568,000 in September compared to August 2021. Also, the US weekly unemployment claims has decreased to 326,000 from 362,000 (revised level) in the prior week, which also provide boost to the overall US indices. 

Having understood the US market performance over the week, taking cues from major global news, and based on our 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 our recommendations based on generic insights, entry price, target prices, and stop-loss for Rayonier Advanced Materials Inc. (NYSE: RYAM) and Ondas Holdings Inc. (NASDAQ: ONDS) for the next 2-4 weeks’ duration:

Rayonier Advanced Materials Inc. 

Rayonier Advanced Materials Inc. (NYSE: RYAM) is a cellulose-based technology company headquartered in Florida, United States. The company provides cellulose specialties, a natural polymer used in the production of LCD displays, filters, fibers etc. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

RYAM's prices recently provide the symmetrical triangle breakout, and the prices are sustaining above the breakout point for the past two weeks, indicating an upward direction for the stock. Price has also moved up after a heavy consolidation which also supports the bullish stance. Now the next major resistance level for the stock appears at USD 8.89 and prices may test the level in the short-term (2-4 weeks). A further breakout above USD 8.89 backed by the volumes may extend buying in the stock to USD 9.87 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) is trading at ~54.42 levels and indicating a positive trend for the stock. The weekly volumes also seem supportive of an upside movement. The CMP is trading above the 50-period SMA and 21-period SMA, further supporting the upward direction.

Financial Summary

Summary of the Key Financial Metrics for the past four years for Rayonier Advanced Materials Inc. is as follows:

General Recommendation

As per the above-mentioned price action and technical indicators analysis, we can conclude that Rayonier Advanced Materials Inc., is looking technically well-placed on the chart, and we have a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite on 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 our recommendation is as follows:

Ondas Holdings Inc.

Ondas Holdings Inc. (Nasdaq: ONDS) is a developer of private licensed wireless data networks. The company is involved in designing, manufacturing, and supporting FullMAX, a company’s wireless radio systems for secure business-to-business networks. Noted below are the key price Indicators for the stock:

Price Action Analysis (on the Weekly Chart)

ONDS' prices are sustaining above a downward sloping trend breakout level for the past one week, indicating an upward direction for the stock. Price has recently started to move up after making a triple bottom pattern on the weekly chart, further supporting our positive stance. Now the next resistance level for the stock appears at USD 11.75 and it may test this level in the coming sessions. A further breakout above USD 11.75, backed by the volumes, may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) is trading at ~61.40 levels and indicating a positive trend for the stock. The sharp surge in weekly volumes also seem supportive of the upside movement. The CMP is above the 50-period SMA and 21-period SMA, further supporting the up move.

Financial Summary 

Summary of the Key Financial Metrics for the past four years for Ondas Holdings Inc. is as follows:

General Recommendation

As per the above-mentioned price action and technical indicators analysis, we can conclude that Ondas Holdings Inc. is looking technically well-placed on the chart, and we have a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investors’ 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 our 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.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and 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, and social and political instability risks etc.

Entry Price: For the given recommendation(s), Entry Price is assumed be at or above a certain level. However, a slight deviation on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated.

Note 1: Investors 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 where-in 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 where-in 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: 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. We suggest ~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. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 60% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 60% of the Target 1. 

The reference date for all price data, volumes, technical indicators, support, and resistance levels is Oct 07, 2021. 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 investors. Technical reports in general chart out metrics that may be assessed by investors 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-

Kalkine Equities LLC provides general information about companies and their securities. The information contained in the reports, including any recommendations regarding the value of or transactions in any securities, does not take into account any of your investment objectives, financial situation or needs. Kalkine Equities LLC is not registered as an investment adviser in the U.S. with either the federal or state government. Before you make a decision about whether to invest in any securities, you should take into account your own objectives, financial situation and needs and seek independent financial advice. All information in our reports represents our views as at the date of publication and may change without notice.

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