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 made a new lifetime high of ~2541.71 on June 10, 2021. Prices closed at 2535.75 on June 10, 2021, with a marginal week till date (WTD) gain of ~0.42 percent. Prices are sustaining above the resistance turned support level 2400 for the past 2 months, indicating the possibility of a further upward direction for the index. Other major indices S&P 500 and NASDAQ Composite also showed marginal upside movement during the week. On June 10, 2021, the S&P 500 settled at 4239.18 with a WTD gain of ~0.22 percent, while NASDAQ Composite Index settled at 14020.33 with WTD a gain of ~1.49 percent.

The CPI and Core CPI data released by the US Bureau of Labor Statistics supported the market sentiments. As per the data, the CPI in May on a seasonally adjusted basis increased 0.6 percent compared to 0.8 percent in April while the Core CPI rose 0.7 percent compared to 0.9 percent in April. The US weekly unemployment claims further declined to 376,000 from 385,000 in the prior week and acted as the catalyst for an upward 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 Comstock Resources Inc (NYSE: CRK) and Imax Corp (NYSE: IMAX) for the next 2-4 weeks duration:

Comstock Resources Inc 

Comstock Resources Inc (NYSE: CRK) is a US-based energy company. The company is engaged in the acquisition, exploration, production, and development of oil and natural gas in East Texas/North Louisiana and South Texas (United States). Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

CRK's price broke the symmetrical triangle pattern on the  upside on June 01, 2021, and has since then been hovering around the breakout level. The breakout is supported by the sharp rise in the volumes, thereby higher market participation supporting an upside movement. Now the next major resistance level appears at USD 7.56, and prices may test that level in the short-term (2-4 weeks). A further breakout above USD 7.56 backed by volumes may extend buying in the stock till the next resistance level USD 8.48.

 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~58.19 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seems supportive of an upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing support for an upward direction.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Comstock Resources Inc is as follows:

General Recommendation:

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

Imax Corp

IMAX Corporation (NYSE: IMAX) is an entertainment technology company. The company manufacture and design IMAX cameras and projections systems. The company is also into film production, development, post-production, and distribution to IMAX-affiliated theaters across the world. Noted below are the key price Indicators for the stock: 

Price Action Analysis (on the Weekly Chart)

IMAX's price broke the downward sloping trend line on the upside on January 06, 2021, and has since then been trading above the breakout level, indicating an upward direction for the stock. Prices are continuously taking support from the 21-period SMA, further indicating a positive stance.  Now the next major resistance level appears at USD 26.10, and prices may test that level in the short-term (2-4 weeks). A further breakout above USD 26.10 backed by volumes may extend buying in the stock till the next resistance level USD 27.70.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~62.63 levels and indicating a positive trend for the stock. The weekly volumes are showing an increasing trend and seems supportive of an upside movement. The CMP is above the 21-period and 50-period SMA with a positive crossover, further providing support for an upward direction.

Financial Summary: 

Summary of the Key Financial Metrics for the past four years for Imax Corp is as follows:

General Recommendation:

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

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 listed 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 recommendations provided in this report are 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.

Entry Price: For the given recommendation(s), Entry Price is assumed be at or above a certain level. However, a slight deviation on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated.

Note: 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 trend. 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.

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.

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.

Note: The reference date for all price data, volumes, technical indicators, support, and resistance levels is June 10, 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.