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 entire week. The index has broken a psychological resistance level of 2700 during the week and settled at 2705.77 with a week till date (WTD) gain of ~1.79 percent on October 21, 2021. Other major indices such as S&P 500 and NASDAQ Composite also showed bullish movement for the week. On October 21, 2021, the S&P 500 index settled at 4549.78 with a WTD gain of ~1.75 percent, while NASDAQ Composite Index settled at 15215.70 with a WTD gain of ~2.14 percent.

The market sentiments were boosted by the improvement in the NAHB housing market index and the existing home sales number. A further decrease in the US weekly initial jobless claims figure to 290,000, from 296,000 (revised level) in the prior week, acted as the catalyst for the upside direction. 

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 Victorias Secret & Co. (NYSE: VSCO) and Gatos Silver Inc (NYSE: GATO) for the next 2-4 weeks duration:

Victorias Secret & Co. 

Victorias Secret & Co. (NYSE: VSCO) is a retailer of women's personal care products, beauty products, intimate and other apparel through two brands, Victoria's Secret and PINK. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart) 

VSCO has recently broken a descending channel formation on the upside, indicating the possibility of an upside direction hereon. Now the next major resistance level for the stock appears at USD 64.50 and prices may test this level in the short-term (2-4 weeks). A further breakout above USD 64.5, backed by volumes, may extend buying in the stock.

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, RSI (14-period) is trading at ~53.57 levels, indicating a positive trend for the stock. The daily volumes also seem supportive of the upside movement. The CMP is above the 21-period SMA, further supporting the up-move; however, the 50-period SMA is above the CMP, and may act as a resistance level for the stock.

Financial Summary

Summary of the Key Financial Metrics for the past two years for Victorias Secret & Co. is as follows:

General Recommendation

As per the above-mentioned price action and technical indicators analysis, we can conclude that Victorias Secret & Co. 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 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:

Gatos Silver Inc

Gatos Silver Inc (NYSE: GATO) is a metals and mining company that deals in precious metals exploration, production, and development. Noted below are the key price Indicators for the stock:

Price Action Analysis (on the Weekly Chart)

GATO has started to recover from the lower levels after the formation of a Bullish Engulfing (bullish reversal) candlestick pattern on the weekly chart, indicating the possibility of an upside trend reversal. Price is also sustaining above a downward sloping trend line, further supporting a positive bias. Now the next resistance level for the stock appears at USD 15.25 and it may test this level in the coming sessions. A further breakout above USD 15.25, backed by volumes, may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) is recovering from lower levels and trading at ~48.86 levels, indicating a positive trend for the stock. The weekly volumes also seem supportive of the upside movement. However, the CMP is below the trend following indicators 50-period SMA and 21-period SMA and may act as resistance levels for the stock.

Financial Summary 

Summary of the Key Financial Metrics for the past four years for Gatos Silver Inc is as follows:

General Recommendation

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