AAPL 165.84 0.5091% MSFT 400.96 0.461% GOOG 157.95 1.4321% GOOGL 156.28 1.4212% AMZN 177.23 1.4889% NVDA 795.18 4.3543% META 481.73 0.1372% TSLA 142.05 -3.4002% TSM 129.75 1.6053% LLY 731.33 0.6912% V 272.33 0.9452% AVGO 1224.46 1.6394% JPM 189.41 1.9429% UNH 491.23 -1.9755% NVO 125.26 2.0781% WMT 60.14 1.0247% LVMUY 168.89 0.4222% XOM 120.57 0.5756% LVMHF 851.89 0.4528% MA 456.75 0.2986%

US Technical Analysis Report

Russell 3000 Index at Record Highs, 2 Stocks with an Upside Potential– ALBO, ARLO

Jun 25, 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 made a new lifetime high of 2559.25 on June 24, 2021. The index closed at 2556.84 on June 24, 2021, with a decent week till date (WTD) gain of ~2.59 percent. Other major indices such as S&P 500 and NASDAQ Composite also showed bullish movement during the week. On June 24, 2021, the S&P 500 index settled at 4266.49 with a WTD gain of ~2.40 percent, while NASDAQ Composite Index settled at 14369.71 with a WTD a gain of ~2.42 percent.

A decrease in US weekly Unemployment Claims coupled with the record-high Flash Manufacturing PMI boosted the market sentiments. As per the data released by the US Bureau of Labor Statistics, US weekly unemployment claims decreased to 411,000 from 418,000 (revised level) in the prior week and acted as the catalyst for an upward direction. As per the data released by IHS Markit, the Flash U.S. Manufacturing PMI Index reached 62.6 in June compared to 62.1 in May and recorded series high. However, a decrease in Flash U.S. Services Business Activity Index at 64.8 in June compared to 70.4 in May limited the gains.

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 Albireo Pharma Inc (NASDAQ: ALBO) and Arlo Technologies Inc (NYSE: ARLO) for the next 2-4 weeks duration:

Albireo Pharma Inc 

Albireo Pharma Inc (NASDAQ: ALBO) is a specialty bio-pharmaceutical company engaged in the development and commercialization of bile acid modulators. These modulators are used in the treatment of gastrointestinal (GI) and orphan pediatric liver diseases. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

ALBO's price reversed from the lower levels after forming a Doji candlestick on the weekly chart. Prices broke a descending channel formation by an upside on June 14, 2021, and since then have been trading above the breakout level, supporting a positive stance.  Now the next major resistance level appears at USD 43.45, and prices may test that level in the short-term (2-4 weeks). A further breakout above USD 43.45 backed by volumes may extend buying in the stock till the next resistance level USD 45.55.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~56.67 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seems supportive of an upside movement. The CMP is above the 21-period and 50-period SMA, further providing support for an upward direction.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Albireo Pharma Inc is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Albireo Pharma 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:

Arlo Technologies Inc

Arlo Technologies Inc (NYSE: ARLO) is in the business of home automation system and wireless surveillance cameras. Its cloud-based platform provides insight, visibility, and connectivity to people. Noted below are the key price Indicators for the stock:

             

Price Action Analysis (on the Weekly Chart)

ARLO's prices are sustaining above an upward sloping trend line for more than a year, indicating overall an upside trend for the stock. Price has also broken above the downward sloping trendline by an upside on May 26, 2021, and since then have been trading above the breakout, further supporting a positive direction. Now the next major resistance level appears at USD 8.85, and prices may test the level in the coming sessions.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~55.40 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seems supportive of an upside movement. The CMP is above the 21-period and 50-period SMA, further providing support for an upward direction.

Financial Summary: 

Summary of the Key Financial Metrics for the past four years for Arlo Technologies Inc is as follows: 

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Arlo Technologies 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: Note 1: Investors can consider exiting from the stock if the Target Price 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 June 24, 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


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.