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 its momentum. The index made a high of 2253.27 during the week and settled at 2208.84 with a week-to-date (WTD) gain of ~1.72 percent on October 27, 2022. Other major indices, such as S&P 500 and NASDAQ Composite, witnessed a mixed movement for the week. On October 27, 2022, the S&P 500 index settled at 3807.29 with a WTD gain of ~1.45 percent, while the NASDAQ Composite Index settled at 10792.68 with a WTD loss of ~0.62 percent.

As per the advance estimate released by the Bureau of Economic Analysis, the US GDP increased at an annual rate of 2.6% in the Q3 of 2022 against a 0.6% decline in Q2 of 2022, which supported the indices. However, an increase in the US Unemployment Insurance Weekly Claims numbers to 217,000 from 214,000 (unrevised level) in the prior week limited the gains in the indices. 

Having understood the US market performance over the week, taking cues from major global news, and based on technical analysis of the Russell 3000 index for the upcoming week, now let’s have a look at the two NYSE/ NASDAQ listed stocks to pick from the technical standpoint. Noted below recommendations are based on the entry price, target prices, and stop-loss for WEX Inc. (NYSE: WEX) and Gulf Island Fabrication, Inc. (NASDAQ: GIFI) for the next 2-4 weeks duration: 

WEX Inc.

WEX Inc. (NYSE: WEX) is a technology service provider in the financials space. Its operating segments include fleet solutions, health, employee benefits solutions, and travel & corporate solutions. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

WEX’s prices started to move upside after taking support from the horizontal trendline, indicating the possibility of upside movement. The trendline breakout is supported by increased volumes, supporting a positive bias. Now the next major resistance level for the stock appears at USD 185.00, and prices may test this level in the short-term (2-4 weeks). A further movement above USD 185.00 may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the leading indicator RSI (14-period) is moving in a positive zone and showing a reading of 52.32. The volumes seem supportive of the next upside movement. The prices are trading above the trend-following indicators 21-period and 50-period SMA, which may act as the support levels in the near term.

General Recommendation 

As per the above-mentioned price action and technical indicators analysis, WEX Inc. is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decision should be made depending on an individual’s 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 recommendation is as follows:

Gulf Island Fabrication, Inc.

Gulf Island Fabrication, Inc. (NASDAQ: GIFI) is a fabricator of complex steel structures and modules. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

GIFI’s prices broke a downward sloping trendline by an upside and are sustaining above the breakout level from the past few weeks, indicating the possibility of an upside reversal hereon. The trendline breakout is supported by the increase in the volumes, further supporting a positive bias. Now the next major resistance level for the stock appears at USD 5.35, and prices may test this level in the short-term (2-4 weeks). A further movement above USD 5.35 may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, the leading indicator RSI (14-period) is moving above the midpoint and shows a reading of 64.58. The volumes also seem supportive of the next upside movement. The prices are trading above the trend-following indicator 21-period SMA, which may act as a support level in the near term.

General Recommendation 

As per the above-mentioned price action and technical indicators analysis, Gulf Island Fabrication, Inc. is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decision should be made depending on an individual’s 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 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 stocks’ prices: