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; however, all its earlier gains were erased in the previous trading session and the index settled at 2326.38 with a week-to-date (WTD) loss of ~2.14 percent on June 09, 2022. Other major indices such as S&P 500 and NASDAQ Composite also showed bearish movement for the week. On June 09, 2022, the S&P 500 index settled at 4017.82 with a WTD loss of ~2.21 percent and the NASDAQ Composite Index settled at 11754.226 with a WTD loss of ~2.15 percent.

The market sentiments turned negative after the release of the US initial jobless claims numbers which increased to 229,000 from 202,000 (revised level) in the prior week.

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 CarMax Inc. (NYSE: KMX) and Chico's FAS, Inc. (NYSE: CHS) for the next 2-4 weeks duration:

CarMax Inc 

CarMax, Inc. (NYSE: KMX) is a used vehicle retailer that operates in two reportable segments: CarMax Sales Operations and CarMax Auto Finance (CAF). Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

KMX has broken a falling wedge pattern by the upside on May 25, 2022 and since then has been trading above the breakout level, indicating the possibility of further upside movement in the stock prices. Now the next major resistance level for the stock appears at USD 115.00 and prices may test this level in the short-term (2-4 weeks). A further movement above USD 115.00 may extend buying in the stock. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the leading indicator RSI (14-period) is recovering from the lower levels and showing a reading of 45.76. However, prices are trading below the trend-following indicator 21-period SMA and 50-period SMA which may act as the resistance levels for the stock.

General Recommendation

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

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Chico's FAS, Inc.

Chico’s FAS, Inc. (NYSE: CHS) is a specialty retailer that deals in women’s private branded clothing, intimates, and complementary accessories. Noted below are the key price Indicators for the stock: 

Price Action Analysis (on the Weekly Chart)

CHS has recently broken a falling wedge pattern by the upside on June 08, 2022 and is trading above the breakout level, indicating the possibility of upside movement in the stock prices. The recent upside movement in the stock is backed by volumes as well, further supporting the positive bias.Now the next major resistance level for the stock appears at USD 6.60 and prices may test this level in the short-term (2-4 weeks). A further movement above USD 6.60 may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the leading indicator RSI (14-period) is showing a reading of 56.61, indicating a positive momentum build-up at the current levels. Prices are trading above the trend-following indicator 21-period SMA and 50-period SMA, further supporting an up-move.

General Recommendation

As per the above-mentioned price action and technical indicators analysis, we can conclude Chico's FAS, 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:

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

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