US Markets Round-Up

This week, the Russell 3000 index, an important benchmark of the US stock market across market capitalizations, started on a sharp bearish note and continued the momentum. It made a low of 2098.72 during the week and settled at 2113.70 with a week-to-date (WTD) loss of ~6.38 percent on June 16, 2022. Other major indices such as S&P 500 and NASDAQ Composite also showed bearish movement for the week. On June 16, 2022, the S&P 500 index settled at 3666.77 with a WTD loss of ~6.00 percent, while NASDAQ Composite Index settled at 10646.099 with a WTD loss of ~6.12 percent.

The market sentiments were impacted adversely due to the release of negative economic data during the week such as Retail Sales and Philly Fed Manufacturing Index. Notably, the Federal Reserve increased the interest rate by 75 bps in the latest policy meeting to tackle the inflation which is soared to a 40-year high.

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 SIGA Technologies Inc. (NASDAQ: SIGA) for the next 2-4 weeks duration:  

SIGA Technologies Inc. 

SIGA Technologies Inc. (NASDAQ: SIGA) is a pharmaceutical company that deals in TPOXX, an oral antiviral drug for the treatment of variola virus which causes smallpox. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Daily Chart) 

SIGA broke a crucial resistance level of USD 9.23 by the upside on May 19, 2022, and since then trading above the breakout level. Prices recently again started to move upward after taking the support from the resistance turned support level USD 9.23, indicating the possibility of an upside direction hereon. Now the next major resistance level for the stock appears at USD 13.50 and prices may test this level in the short-term (2-4 weeks). A further movement above USD 13.50 may extend buying in the stock.

Technical Indicators Analysis (On the Daily Chart)

On the daily chart, RSI (14-period) is showing a reading of 56.10, indicating a positive momentum build-up at the current levels. The volumes also seem supportive of an upside movement. Prices are trading above the trend-following indicators 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 that SIGA 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 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:

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.

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 recommendation provided in this report is 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.

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?