At a glance:
- All three US major indices were volatile in January, closing slightly lower except for NASDAQ Composite.
- Electric-vehicle (EV) stocks remained traders’ top favourites due to their volatility and the industry’s promising future.
- Tech stocks likely to sustain their momentum as NASDAQ Composite has been outperforming the other two indices.
Here are January’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 mid-January before closing lower towards the end of the month. The Dow stayed above 31,000 points most of the time, before dipping below 30,000. S&P 500 hit an all-time high of 3,860 while NASDAQ Composite traded comfortably above 13,000.
As the earnings season kicked off, we are expecting more market volatility. Reddit social- media users have been taking on Wall Street by short-squeezing hedge funds. We expect the tug-of-war between the amateur investors and hedge funds to fuel trading volumes further.
We have again 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. 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: Bionano Genomics (NASDAQ: BNGO)
From a low of US$0.50 on 1 December 2020, Bionano’s share price spiked over 2,100% to US$11.05 on 29 January 2021. It bulldozed its way into our top 10 traded list for the first time. The genomics company specialises in cytogenomics, which is the detection of genetic disorders by analysing differences in chromosomes.1
With ARK Invest hyping up the genomics sector, investors are jumping on the bandwagon in attempts to identify the next big thing. However, do note that with its declining revenue growth and rising costs, Bionano must dip into its cash reserves to sustain its operations.
The company had already raised funds twice in January. Further share issues are expected as it tries to take advantage of its record-high share price to beef up its cash position.
Technical Analysis:
Status: Technical Buy
Support: around US$11.20 (20-period moving average).
Resistance: around US$13.80 (previous high)
20-period moving average holding nicely as a support for uptrend.
9th: Li Auto Inc (NASDAQ: LI)
Li Auto dropped a spot to the ninth position in January. In a pool of increasingly overvalued EV stocks, Li Auto traded at around 11x consensus 2021 revenue vs. Nio’s 18.5x and Xpeng’s 19x projected 2021 revenue respectively.2
Li Auto’s lower valuation could be attributed to its narrower profit margins. A ramp-up of its manufacturing capacity should improve its profitability via economies of scale.
Li Auto sells hybrid vehicles that can be powered by gasoline. This lowers its dependence on EV-charging infrastructure, which is an advantage in China where commuting distances can be long.
Technical Analysis:
Status: Neutral
Support: around US$26.50 (recent low)
Resistance: around US$37.10 (recent triple top)
Appears to be range-bound. Possible short-term downtrend as 20-period MA crosses below 50-period MA. 20-period MA may be acting as immediate resistance.
8th: GameStop Corporation (NYSE: GME)
GameStop was the surprise addition to January’s top list. The stock was embroiled in a tug-of-war between social-media investors and hedge funds. It is now a symbol of the “uprising” against Wall Street elites.
When Reddit discovered that GameStop had over 140% short-selling interest, its community banded together to buy and hold its shares to trigger a short-squeeze. This led to massive losses of over US$5bn for short-sellers.3
GameStop’s share price has catapulted over 1,700% since the start of the year. The episode has highlighted to regulators the pitfalls of naked short-selling above stocks’ free floats.
Technical Analysis:
Status: Technical Sell
Support: around US$17 (previous low)
Resistance: US$110-120 (50-period moving average)
Technical analysis inconclusive due to the volatility of the counter.
7th: XPeng Inc (NYSE: XPEV)
Xpeng climbed two ranks to the 7th spot in January. The Chinese EV maker delivered 6,015 vehicles in January, up 470% year-on-year.
In January, Xpeng also launched a new version of its operating system, the Xmart OS 2.5.0, for its P7 sedan. The new OS adds over 40 new functions and now offers over 200 optimised features to users.4
The company has begun its overseas foray with the export of its G3 SUV to Norway. Norway has the largest EV fleet per capita in the world.5
Technical Analysis:
Status: Neutral
Support: around US$40.60 (previous low)
Resistance: around US$49 (20-period moving average)
Possible short-term downtrend formation (20-period MA crossing below 50-period MA).
6th: Alibaba Group Holding Ltd (NYSE: BABA)
2020 was a roller coaster year for Alibaba. The conglomerate managed to start 2021 in 6th position. Share price rallied about 15% in January as investors were optimistic about quarterly earnings on the back of its 11.11 sales and fast-growing cloud-computing division.6
However, Chinese regulators are cracking down on the tech giant with an anti-monopolistic investigation into its restrictions on merchants. They have also halted Ant’s IPO to prevent excessive lending to consumers.
The regulatory headwinds have dampened its share price but also provided buying opportunities for investors who continue to believe in the company’s business fundamentals.
Technical Analysis:
Status: Technical Buy
Support: around US$257 (50-period moving average)
Resistance: around US$270 (recent high)
Possible uptrend continuation. 50-period shown to be good support.
5th: Square Inc (NYSE: SQ)
Square tumbled to the fifth spot in January after its share price appeared to be heading towards a downtrend at the beginning of the year. Nevertheless, Robinhood’s recent woes surrounding buying restrictions over controversial stocks was a boon for Square.
More users have switched to Square’s Cash App – a platform that allows users to trade stocks – from the Robinhood backlash than to Stash, Fidelity or any other platform.7
Fears over Square’s exposure to small businesses and restaurants during the pandemic have been overshadowed by the growth of its Cash App. Besides stock-trading, Cash App allows users to transact digital cryptocurrencies. Bitcoin transactions accounted for US$1.63bn of Square’s net revenue in its September quarter.8
Technical Analysis:
Status: Neutral
Support: around US$226 (20-period moving average)
Resistance: around US$245 (recent double-top)
Appears to be range-bound as moving averages are criss-crossing.
4th: Palantir Technologies Inc (NYSE: PLTR)
Palantir surged from No. 8 last month to No. 4 in January. The data-analytics firm’s share price was muted in the first half of the month but inched its way up just before its Demo Day on 26 January.
Share price rose 18% to an all-time high of US$44 after the company’s product demonstrations. However, the joy was short-lived, with its price plunging soon after to close at US$35.55 on the last trading day of January.9
Technical Analysis:
Status: Technical Buy
Support: around US$31.50 (50-period moving average)
Resistance: around US$45 (recent high)
50-period shown to be a good support.
3rd: Apple Inc (NASDAQ: AAPL)
Apple has always been a staple in our top traded list. Hence, no surprise to see it in third spot in January. Stellar quarterly earnings on all-time record revenue of US$111.4bn cheered investors. Earnings per diluted share were US$1.68, up a good 35% year-on-year.10
Apple continues to lead the world in innovation and its latest M1 chip is expected to revolutionise the CPU market space.
Technical Analysis:
Support: around US$133.50 (uptrend line)
Resistance: around US$145 (recent high)
20-period MA staying above 50-period MA, suggesting intact uptrend.
2nd: Nio Inc (NYSE: NIO)
Nio maintained its second position for the second consecutive month. Investors bid up its shares ahead of its highly-anticipated annual Nio Day on 9 January.
Investors rubbed their hands with glee as Nio showcased its new product range and technologies, including a new flagship sedan using autonomous driving technology, during a lavish event over the weekend.
Its stock soared to a record US$66.99 on the following Monday on optimism over the company’s outlook.11Share price reversed after Nio Day to dip to US$57.01 on the last trading day of the month.
Technical Analysis:
Support: around US$55 (recent lows)
Resistance: around US$65-67 (recent high)
Support line at around US$55 seems to be holding.
1st: Tesla Motors Inc (NASDAQ: TSLA)
Still the undisputed top traded US stock on POEMS. The electric car maker has monopolised the top spot in six out of the previous eight months. You may explore our Market Journal series here on the past top 10 stocks.
Tesla shows no signs of slowing down.
Its inclusion in the S&P 500 index last December provided the catalyst for its share price to balloon from US$585 in December to over US$890 in January.12
That said, the company delivered mixed results in its latest report, with revenue beating consensus estimates but earnings falling behind.13
Technical Analysis:
Support: around US$830 (50-period moving average)
Resistance: around US$880-900 (recent highs)
Strong uptrend still unbroken. 50-period MA likely acting as stronger support.
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References:
1. https://www.fool.com/investing/2021/01/27/should-you-buy-bionano-genomics-stock/
2. https://oilprice.com/Energy/Energy-General/Which-Chinese-EV-Stocks-Are-Worth-Betting-On.html
3. https://markets.businessinsider.com/news/stocks/gamestop-short-sellers-squeezed-losses-reddit-traders-army-cohen-palihapitiya-2021-1-1030006226
4. https://finance.yahoo.com/news/xpeng-extends-record-streak-deliveries-081916774.html
5. https://wallbox.com/en_us/how-norway-became-a-global-ev-leader
6. https://www.marketwatch.com/story/alibaba-could-show-big-earnings-from-11-11-shopping-event-but-regulatory-concerns-increasing-11612200612
7. https://www.marketwatch.com/story/square-seems-to-be-picking-up-cash-app-users-amid-robinhood-drama-says-analyst-2021-02-01
8. https://www.investors.com/news/technology/sq-stock-buy-now/?src=A00220
9. https://seekingalpha.com/article/4401473-palantir-demo-day-delivers
10. https://www.apple.com/newsroom/2021/01/apple-reports-first-quarter-results/
11. https://www.nio.com/blog/nio-announces-new-product-and-technologies-nio-day-2020
12. https://www.straitstimes.com/business/companies-markets/tesla-to-join-elite-sp-index-on-monday-shaking-up-wall-street
13. https://www.cnbc.com/2021/01/27/tesla-tsla-earnings-q4-2020.html
Disclaimer
We do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors like (but not limited to) a stock`s risk reward profile, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation
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