Level: Intermediate
Trade Advice: Beginner
Indices:
All of the major indices dropped on Friday, but the market was still up across the board. Here is a breakdown of each major index:
- S&P 500: +1.39% to end at 2,067.56
- Nasdaq: +2.20% to end at 4,791.63
- Dow Jones: +1.15% to end at 17,828.24
SPDR Sector Performances (%):
- Energy (XLE): -1.14%
- Utilities (XLU): -0.22%
- Materials (XLB): +1.00%
- Technology* (XLK): +2.15%
- Industrials (XLI): +1.61%
- Healthcare* (XLV): +1.30%
- Financials* (XLF): +1.20%
- Consumer Staples (XLP): +0.45%
- Consumer Discretionary (XLY): +1.91%
*Currently the club is mainly tracking the technology, healthcare, and finance sectors.
Notable Stock Performances from this week:
Facebook seems to finally be rebounding in the right direction, after dropping sharply in late October. It started the week at $73.59 and ended at $77.70! We expect it to continue its rise.
Alibaba continued its crazy roller coaster trend this past week. It began the week at $111.96. At this point it was very bullish, like weeks past, and it peaked at $115.000 on Tuesday! But, it then declined sharply on Friday to end at $111.64. After peaking at $119.15 and declining to $114.15, Alibaba has refused to overcome the resistance of around $114. I recommend buying it this Monday morning, when it is low, and to sell it around mid-week when it should be at its highest, as evidenced by the trend seen in recent weeks.
Sony has steadily climbed in price the past month, after it announced plans to jump 70% in revenue over a 3 year period. Analysts have claimed that this led to shareholder hype and interest, leading to Sony at its highest value in the past year at $21.99.
Google has been on a roller coast this past week. It began the week at $542.47. On Monday it dropped to $538.91, before picking back up again on Tuesday where it ended up at $541.08. But, that isn’t the whole story. Throughout Tuesday, Google started out by peaking at its weekly high of $543.50, before declining to 541.15 within 30 min. Within an hour, it had picked back up to $543.16, before sharply declining to $538.96 at 3:00 pm. Finally, it ended at 541.08 after hours. Wednesday and Thursday saw Google hovering around the resistance level of $541, which it failed to decisively break. To end the week, Google finally broke this level by ending at $541.83. Personally, I believe this sets up Google in a prime position to have a fairly large gain next week. I would recommend buying this stock, as it is at a one month low, but take note that it is also primed for either a modest loss or a stellar gain (I explain WHY down below in my predictions for next week).
Apple hit a new all time high of $118.93 on Friday. Apple has been incredibly bullish in the past 43 days. On October 16, the price per share of Apple was $96.26. On Friday, it closed at $118.93. Although it is too late to capitalize on this gain, investing in Apple for the long run may not be a bad idea. Apple has always been seen as a popular “forever” share, a share you can purchase and never worry about as it will almost always go up. However, if you are looking for a more short term investment, Apple may still gain this next week if it manages to break the resistance level of about $119.
Evaluation of last week’s predictions:
The prediction of increased volatility in Facebook stock was correct, as FB’s one week volatility jumped to 1.85% for this week (according to FINVIZ). It did this in a bullish manner, with FB stock increasing 1.03% over the course of the week. Facebook ended up at $77.70, up from $73.59 where it started on Monday.
We correctly predicted last week that energy would retrace slightly. The energy sector so far this week has gone down 1.14%. However, our prediction consisted of two parts. We predicted that in the long run, the energy sector will increase. So, now we must analyze it in the coming weeks, to see if our long term prediction was correct.
Our president, Michael, correctly predicted that it was a ripe time to purchase the Disney stock. This week, Disney made gains of $2.58. Anyone who bought the stock on Monday would have made a 2.88% gain. However, note that Michael used LEAPS to act on this prediction, meaning that the bullish prediction was again a long term one. Therefore, the finance club will continue analyzing this prediction in the upcoming weeks.
Finally, last week we predicted that it would also be a great time to buy shares in Goldman Sachs. Our prediction has failed, at least in the short term. This past week, Goldman Sachs could not break the ceiling of about $190. It ended at $188.41, which is down about $2 from $190.14, where it began on Monday. We will still continue to keep an eye on Goldman Sachs, as it may break resistance in the coming week, which would result in a major gain.
Aabhash’s Predictions:
Facebook stock will continue to rise next, as it finally broke the resistance level of about $75 on Wednesday. This break led to Facebook ending at a one month high. Normally, breaking resistance means that the share price will most likely increase, so the stock should continue to rise in the coming week.
Take a look at FINVIZ’s quote for Koss Corporation, a headphone equipment retailer. For approximately 9 months, its stock [NASDAQ: KOSS] has been forming the bullish wedge down pattern while at the same time facing disappointing fundamentals. The result was lots of confusion among investors in the months of September and October, thus maintaining the pattern. In November the wedge down pattern was finally confirmed by a break upward. The proximal cause of this break upward was a legal insider buy (more on legal insider trading in the future) by the CEO. However, this bullish trend, only based on a technical pattern, will not continue for long. Now that the bullish force of a wedge down pattern is gone, investors will begin to act solely on the bearish fundamentals, which will drive the stock over the course of the next month.
Google is primed for a modest move in either direction. The fate of our prediction will be known on Monday. If Google can manage to decisively break the resistance level of ~$542, it will most likely skyrocket through the week. If not, Google will most likely flounder in a roller coaster trend, much like it did last week. So, keep an eye out for Google because its performance early in the week could dictate whether or not you can make money off of it.
Apple recently climbed to record highs, and ended the week at $118.93. Apple was bullish all week, peaking over $119 on 3 different days! But, there seems to be a resistance around $119 that the stock simply can’t overcome. I believe Apple will definitely break this ceiling in the near future. As of now, Apple is in a similar situation in regards to Google. Both stocks are primed to have stellar gains, but it all depends on whether or not they can break their respective resistance levels. I recommend keeping an eye on Apple to see if it breaks $119 by Monday. If Apple hits $120+ by Tuesday, you should probably buy it.
Market Blog Quote of the Week:
“Half of the investors trading your ‘hot stock’ are trying to get rid of it”.
-Charles Wheelan
Happy Trading Everyone!
*Any losses incurred as a result of recommendations made by either the President, Vice President, or Secretary are not the legal liability of the RHS Finance Club. By using our recommendations, you have waived the right to take any legal action against Rocklin High School, its Finance Club, or the Rocklin Unified School District for any monetary losses incurred on your part. Invest at your own risk, and with the mindset that you may lose money.