US Markets Round-Up

This week, the Russell 3000 index, an important benchmark of the US stock market across market capitalizations, started on a marginally positive note and traded sideways for the entire week. The index settled at 2653.98 with a week till date (WTD) gain of ~0.35 percent on September 16, 2021. Other major indices such as S&P 500 and NASDAQ Composite also showed marginal positive movement for the week. On September 16, 2021, the S&P 500 index settled at 4473.75 with a WTD gain of ~0.34 percent, while NASDAQ Composite Index settled at 15181.92 with a WTD gain of ~0.44 percent.

The market sentiments were supported by positive economic data released during the week such as CPI, retail sales, and core retail sales. As per the Bureau of Labor Statistics, the CPI in August increased 0.3 percent compared to 0.5 percent in July. The retail sales volumes were increased by 0.7 from the previous month and supported the indices. However, an increase in the US weekly unemployment claims to 332,000 from 312,000 (revised level) in the prior week, limited upside 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 Alliance Data Systems Corporation (NYSE: ADS) and REV Group Inc (NYSE: REVG) for the next 2-4 weeks duration:

Alliance Data Systems Corporation 

Alliance Data Systems Corporation (NYSE: ADS) is an IT services company engaged in data-driven marketing, loyalty and payment solutions for industries. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

ADS has recently broken a downward sloping trend line on the upside, indicating the possibility of an upside direction hereon. The trend line breakout is supported by a rise in the volumes, hereby higher market participation, further supporting a positive stance.  Now the next major resistance level for the stock appears at USD 116.70 and prices may test this level in the short-term (2-4 weeks). A further breakout above USD 116.70 backed by volumes may extend buying into the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) is trading at ~50.56 levels, indicating a positive trend for the stock. The weekly volumes also seem supportive of an upside movement. The CMP is above the 50-period SMA, further supporting an up move; however, the 21-period SMA is acting as the resistance level for the stock.

Financial Summary

Summary of the Key Financial Metrics for the past four years for Alliance Data Systems Corporation is as follows:

General Recommendation

As per the above-mentioned price action and technical indicators analysis, we can conclude that Alliance Data Systems Corporation 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:

REV Group Inc

REV Group Inc (NYSE: REVG) is a manufacturer, designer, and distributor of specialty vehicles. The company also deals in the related aftermarket parts and services for those specialty vehicles. Noted below are the key price Indicators for the stock:

Price Action Analysis (on the Weekly Chart)

REVG's prices are forming higher highs and higher lows formation on the chart, indicating an upward trend for the stock. Price has recently broken a major resistance level of USD 16.82 on the upside, backed by good volumes, further supporting a positive stance. Now the next resistance level for the stock appears at USD 21.00 and prices may test this level in the coming sessions. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI (14-period) is trading at ~56.66 levels, indicating a positive trend for the stock. The weekly volumes also seem supportive of an upside movement. The CMP is above the 50-period SMA and 21-period SMA, further supporting the up move.

Financial Summary 

Summary of the Key Financial Metrics for the past four years for REV Group Inc is as follows: 

General Recommendation

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