AAPL 169.38 -1.9167% MSFT 414.58 0.2273% GOOG 156.0 -0.2111% GOOGL 154.4 -0.297% AMZN 183.32 -0.1634% NVDA 874.15 1.6442% META 499.76 -0.094% TSLA 157.11 -2.7062% TSM 139.8 -0.2426% LLY 746.74 -0.5368% V 271.35 0.0258% AVGO 1329.06 1.4016% JPM 180.8 -1.1428% UNH 468.89 5.2196% NVO 123.45 -0.3632% WMT 59.84 -0.1502% LVMUY 172.32 3.093% XOM 118.62 -0.8857% LVMHF 855.05 1.58% MA 459.82 0.0065%

US Technical Analysis Report

As Russell 3000 Consolidates Above the 2,700 Mark, One Stock Trading in Buy Zone – VST

Nov 26, 2021

US Market Round-Up

This week, the Russell 3000 index, an important benchmark of the US stock market across market capitalizations, started on a marginally negative note and after that traded sideways for most of the week. The index settled at 2,773.75 with a marginal week till date (WTD) loss of ~0.14 per cent on November 24, 2021. Other major indices such as S&P 500 and NASDAQ Composite showed mixed movement for the week. On November 24, 2021, the S&P 500 index settled at 4,701.46 with a WTD gain of ~0.07 per cent, while NASDAQ Composite Index settled at 15,845.226 with a WTD loss of ~1.32 per cent.

The market reacted negatively despite positive economic data during the week, such as Flash US Manufacturing PMI, GDP 3rd Quarter 2021 (Second Estimate), and Initial Jobless Claims. As per the US Bureau of Labor Statistics, the US weekly initial jobless claims numbers further declined to 199,000 from 270,000 (revised level) in the prior week. They registered the lowest level since November 15, 1969.

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 one NYSE/ NASDAQ listed stock pick from the technical standpoint. Noted below is our recommendation based on generic insights, entry price, target prices, and stop-loss for Vistra Corp (NYSE: VST) for the next 2-4 weeks duration:

Vistra Corp 

Vistra Corp (NYSE: VST) is a holding company engaged in the integrated retail and electric power generation business primarily in the US. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

VST has broken a crucial resistance level of USD 19.60 on the upside on October 13, 2021, and since then has been hovering around the breakout level, indicating an upward direction for the stock. Prices are also sustaining above the long-term upward sloping trend line, further supporting a positive direction. The next significant resistance level for the stock appears at USD 24.20, and prices may test this level in the short-term (2-4 weeks). A further breakout above USD 24.20 backed by volumes may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~59.71 levels, indicating a positive stock trend. The weekly volumes also seem supportive of an upside movement. In addition, 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 Vistra Corp is as follows:

General Recommendation:

As per the above-mentioned price action and the analysis of technical indicators, we can conclude that Vistra Corp is looking well-placed on the chart, and we have a 'Buy' rating on the stock. Investment decisions should be made depending on the investors' appetite for upside potential, risks, and previous holdings. This recommendation is purely based on technical analysis, and this report has not considered fundamental analysis. 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. The upcoming week's major global economic events are noted below 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 a short investment duration. The investment recommendation provided in this report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors that could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks, etc.

Entry Price: For the given recommendation(s), the Entry Price is assumed to be at or above a certain level. However, a slight deviation in the 'Entry Price' can be considered depending upon the upside potential expected and taking into consideration the Target 1 and trailing stop-loss levels indicated. For example: - An Investor can consider entering the stock at or above a certain range (3%-5%) from the Entry Levels recommended depending upon the potential upside expected and difference from the Target 1 and Trailing-Stop Loss Levels indicated for the stock.

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 trends. 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 November 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 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.