At a glance:

• All three US major indices continued their bull run, smashing all-time highs in late December’s Santa Claus rally.
• Electric-vehicle (EV) stocks continued to top traders’ favourites due to their volatility and the industry’s promising future.
• Vaccination has started in countries like the UK, US and Singapore, further bolstering sentiment.
• Momentum for technology stocks is likely to sustain into the new year.

Here are December’s top 10 traded US stocks on Phillip’s Online Electronic Mart System (POEMS), based on gross market value traded.

All three US major indices – Dow Jones, S&P 500 and Nasdaq Composite – made their new all-time highs in December. The Dow hit its 30,588 all-time high on 29 December 2020. S&P 500 traded above 3,700 while Nasdaq Composite marched closer to the 13,000 mark.

Even though stocks rebounded strongly in November and December from their earlier pandemic selldown, their performance still paled in comparison with tech stocks. Tech stocks remained investors’ and traders’ preferred plays.

In this issue, we have included technical charts for all the top 10 counters. These are based on 4-hourly time frames over 30/40 days. The charts are for your information only and support and resistance levels discussed are solely based on our dealers’ views. The technical charts should not be constituted as buy or sell recommendations and investors/traders are advised to do their own due diligence before making any trade.

Starting from the 10th position:

10th: QuantumScape Corp. (NYSE: QS)

QuantumScape was the only newbie in the month’s top 10. Its share price surged more than 4-fold from its month low of US$28.63 on 2 December. It reached US$132.73 on 22 December, before giving up nearly 25% in the last week of the year as investors took profits. Still, the stock has surged 57% from its IPO price of US$23.50 on 27 November. Listed via a reverse takeover of Kensington Capital, the company is backed by Volkswagen and Bill Gates.

Batteries have always been the pain point in the development of EVs due to its long charging time and low capacity. QuantumScape is developing the next generation of batteries: the solid-state battery. This is supposed to double the energy density of current lithium-ion batteries and bring charging time below 15 minutes. QuantumScape is hopeful its battery will go into production in 2024.¹

Technical analysis:

Status: Technical Sell

Resistance region: US$75 (50-period exponential moving average or EMA)

Support region: US$50.95 (Fibonacci retracement 78.60%)

Price may move towards its moving average before continuing its downtrend.

9th: Xpeng Inc. (NYSE: XPEV)

After an exciting month in November, Xpeng slipped to the 9th spot in December. Its share price continued its downtrend after reaching a high of US$74.49 on 25 November. It retreated nearly 50% to its month low of US$37.50 on 29 December. The stock is currently trading slightly above US$40.

On 9 December, the company announced a secondary offering of 48m shares priced at US$45 to raise US$2.16bn.² Its share price dropped after this due to dilution fears. However, most analysts maintain their optimistic outlook on the company for 2021, expecting Xpeng to deliver more EVs in the Chinese market.

Technical analysis:

Status: Technical Sell

Resistance region: US$45-46 (upper downtrend channel)

Support region: US$35-36 (lower downtrend channel)

Downtrend channel has formed.

8th: Palantir Technologies Inc. (NYSE: PLTR)

Data analytics company, Palantir, slipped one spot to No. 8. Though its share price moved sideways in December, the range was wide. It went as low as US$21.15 and as high as US$31.24, about a 30% swing. The stock remains very volatile, giving ample opportunities to traders.

Its share price was hammered on 2 December when Morgan Stanley downgraded the stock to underweight from neutral with a lower price target of US$17. In the following two weeks, it rebounded 30%, after winning an FDA contract worth US$44mn. The company also reaffirmed its US$111mn contract with the US army.³ However, its share price soon lost steam, falling back to US$24 towards the end of the month.

Technical analysis:

Status: Technical Sell

Resistance region: US$27.50 (downtrend line)

Support region: US$21.50 (slightly above previous low on 2 December 2020)

Possible short-term downtrend formation.

7th: Alibaba Group Holding Ltd. (NYSE: BABA)

November’s top 3 stock, Alibaba, dropped to the seventh spot in the month. Its share price was supported at around US$250 from end-November, before taking a hit right before Christmas. On Christmas Eve, it slipped to US$211.23, by about 18% within a day. It has since recouped some of its losses.

The fourth quarter of 2020 was a total disaster for Alibaba. Its fintech arm, Ant Group’s IPO was abruptly called off a day before its debut. This was followed by a bill passed by the US Congress at the beginning of December that may force Chinese companies to delist from the US if they do not comply with US accounting rules.⁴ Also on Christmas Eve came news that the Chinese government was launching an investigation into Alibaba’s monopolistic practices, although Alibaba had already been fined RMB500,000 for violating China’s anti-monopoly law on 14 December 2020.⁵

Technical analysis:

Status: Technical Sell

Resistance region: US$250 (downtrend line)

Support region: US$211 (previous low on 1 December 2020)

Possible short-term downtrend formation.

6th: Moderna Inc. (NASDAQ: MRNA)

December was a bitter-sweet month for Moderna investors. Its share price continued its momentum to hit an all-time high of US$178.50 on 1 December. However, if you bought the shares in the first week of December on the back of vaccine euphoria, it would have been a bitter month for you. Its share price skated all the way down to US$110, about a 40% decline.

US drug maker Merck has taken profit and divested its equity investment in Moderna, after the stock hit its all-time high.⁶ On 11 December, the FDA also authorised the first emergency use of the vaccine developed by Pfizer-BioNTech.⁷ This triggered Moderna’s further downtrend, even though its vaccine was approved a week later on 18 December.

Technical analysis:

Status: Technical Sell

Resistance region: US$108 (50-period exponential moving average or EMA/downtrend line)

Short-term downtrend has formed. Moving average has crossed down to confirm short-term downtrend.

5th: Crowdstrike Holdings Inc. (NASDAQ: CRWD)

After a hiatus from the top 10 list in November, cybersecurity firm, Crowdstrike, squeezed back to the top 5 in December. December was a strong month for the company, with its share price trending up relentlessly to a record US$225.75 on 24 December.

Following the company’s reported loss per share of US$0.11 in 3Q20, which was 8.4% smaller than consensus loss estimate⁸ , numerous analysts raised their revenue estimates. Recent hacks into multiple US federal agencies have brought cybersecurity to the fore again.

Crowdstrike has leadership position in its corner of the cloud-security market. With its aggressive expansion of cloud-computing capabilities, its revenue is poised to grow faster than the broader industry. Analysts’ consensus estimates reflect this. While increasing their loss per share estimates for next year due to investment costs, they have also raised their revenue forecasts.

Technical analysis:

Status: Technical Buy

Resistance region: US$227 (recent high)

Support region: US$197-200 (trendline and 50-period EMA)

Uptrend intact.

4th: Apple Inc. (NASDAQ: AAPL)

After tumbling to the last spot last month, the world’s most valuable company moved up to the fourth place in December. It was a good month for Apple after a few sluggish months. Its share price made another record of US$136.69 on 28 December.

This was after it announced a few positive developments. On 10 December, Apple said it was making progress in developing its own cellular modem for use in the iPhone. This is a move to lessen its reliance on Qualcomm for smartphone chips. Then on 21 December, Apple revealed that it would start producing a self-driving electric car with a ‘next level’ battery technology. According to Reuters, Apple’s battery design could radically reduce battery costs and increase their range⁹. This will put it in a strong competitive position in the market trending towards EV. Following its announcements, Apple’s share price shot up more than 8%. Investors were obviously pleased with this diversification from traditional iPhones.

Technical analysis:

Status: Technical Buy

Resistance region: US$138 (recent high)

Support region: US$128-130 (trendline and 50-period EMA)

Uptrend intact.

3rd: Square Inc. (NYSE: SQ)

Square continued to charge ahead, smashing a record of US$241.58 on 22 December. It moved up one rank from fourth position to third.

Though Square’s bread-and-butter customers are small businesses which have been hardest hit by COVID-19, it benefited from a recent upsurge in the price of bitcoin. Square’s CashApp is its platform for bitcoin buying and trading, apart from peer-to-peer payments. The record surge in the price of bitcoin is expected to increase user engagement among its CashApp users who buy and sell the cryptocurrency.

Square’s share price came under pressure towards the end of the month when its CEO sold 100,000 shares in the company¹⁰. However, with the big story of bitcoin shattering record after record, Square’s strength may just persist into the New Year.

Technical analysis:

Status: Technical Buy

Resistance region: US$243 (recent high)

Support region: US$215 (trendline)

Uptrend is intact. Higher highs and higher low formation.

Price supported by near-term trendline.

2nd: Nio Inc. (NYSE: NIO)

After a brief stint as the top traded stock in November, Nio dropped to No. 2. December was a volatile month for this Chinese EV maker whose share price went from a high of US$55.38 on 23 November to US$40. It has been trading sideways at US$40 since due to profit-taking and increased competition in the market.

Investors piled into Nio ahead of its annual Nio Day on 9 January 2021. In its fourth year, Nio Day are when the company previews its upcoming products and technologies. In this year’s Nio Day, the company released its first sedan with self-driving technology features that the company claims to surpass Tesla¹¹. The event spurts another buying frenzy into Nio which caused the share price to shot up more than 13% and record high of US$66.99 during the first day of trading following the event over the weekend.

Technical analysis:

Status: Technical Buy

Resistance region: US$57 (recent high)

Support region: US$43-45 (trendline)

Short-term uptrend intact.

1st: Tesla Motors Inc. (NASDAQ: TSLA)

Tesla, oh Tesla! This highly revered stock has reclaimed its throne!

The month was volatile for the electric car maker, though. After breaking above US$600, its shares were hit by Apple’s announcement of its entry into the EV market, losing 7%. However, the world’s most valuable automaker soon got a boost from its inclusion in the S&P 500 index on 21 December. Its share price popped a further 12% to sail past US$700.

With a market cap of around US$669bn on 31 December, Tesla is the fifth-largest company by market cap on the S&P 500. This was more than the nine largest automakers combined!¹² Its addition to the index is the largest ever and sparked a buying spree by institutional investors whose index funds track the holdings of the S&P 500. Index funds snapped up more than US$80bn worth of Tesla’s shares before the start of trading on 21 December.¹³

With nothing short of an unbelievable year for Tesla in 2020, the next question is, can the stock sustain its performance in 2021? Especially as valuations are sky-high at 318x forward P/E!

Technical analysis:

Status: Technical Buy

Support region: US$700 (20-period EMA)

Strong uptrend. Price supported by both 20 and 50 exponential moving averages.

Possible overbought situation on the Relative Strength Index (RSI). Possible retracement.

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Reference:
1. https://www.theverge.com/2020/12/8/22158573/quantumscape-solid-state-battery-ev-range-charge-vw
2. https://seekingalpha.com/news/3642791-xpeng-prices-upsized-2_2b-offering-45-ads-sharesminus-3
3. https://www.reuters.com/article/us-palantir-tech-fda-idUSKBN28H2TH
4. https://www.cnbc.com/2020/12/02/bill-forcing-chinese-firms-to-meet-us-accounting-standards-passes-congress-.html?&qsearchterm=alibaba
5. https://www.cnbc.com/2020/12/24/alibabas-us-traded-shares-fall-amid-reports-of-probe-by-china.html?&qsearchterm=alibaba
6. https://www.cnbc.com/video/2020/12/02/drugmaker-merck-sells-stake-in-moderna.html?&qsearchterm=moderna
7. https://www.fda.gov/emergency-preparedness-and-response/coronavirus-disease-2019-covid-19/pfizer-biontech-covid-19-vaccine
8. https://finance.yahoo.com/news/analysts-upgrading-crowdstrike-holdings-inc-064844855.html
9. https://www.reuters.com/article/us-apple-autos-exclusive-idUSKBN28V2PY
10. https://finance.yahoo.com/news/square-inc-sq-president-ceo-231502625.html
11. https://www.cnbc.com/2021/01/09/nio-releases-its-first-sedan-to-compete-with-tesla-in-china.html
12. https://www.cnbc.com/2020/12/14/tesla-valuation-more-than-nine-largest-carmakers-combined-why.html
13. https://www.nbcnews.com/business/markets/wall-street-braces-trading-surge-tesla-joins-s-p-500-n1251717

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