At a glance:

• Dow Jones and S&P 500 piggybacked on reflation trades to close near record levels.
• Rising bond yields and reopening put pressure on tech stocks, leading to NASDAQ’s underperformance. NASDAQ manged to climb back to 13,000 from a low of 12,600.
• Reflation trades continued to benefit cyclical stocks, aided by full-force vaccination across the US.

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

The two US major indices – Dow Jones, S&P 500 – continued to outperform their tech counterpart, NASDAQ Composite. They closed near record levels at the end of the first quarter. The Dow and S&P closed at 32,980 and 3,970 points respectively. The underperforming NASDAQ was affected by rising bond yields. At one point, it traded down to 12,600, a level not seen since December. It closed the month at 13,200 points.

March was an eventful month. Days after the US$1.9tn American Rescue Plan was signed into law, the Fed pledged its commitment to supporting the economic recovery. This benefitted cyclical stocks the most. After a short retreat on expectations that the Fed will keep interest rates low for longer, bond yields crept up. 10-year yields closed at 1.74%, their highest since January 2020. These led to the downfall of tech stocks.

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. Investors and traders are advised to do their own due diligence before making any trade.

Starting from the 10th position:

10th: EBANG International Holdings Inc (NASDAQ: EBON)A newcomer to our top 10 list, blockchain company Ebang broke record at US$12.71 on 15 March, before retracing nearly 40% to US$7.95 at month’s end.

Riding on the wave of crypto popularity, Ebang surged on news of a beta test version of its cryptocurrency exchange. Following the announcement, it touched an intraday high of US$11.30. This was up more than 45% from its previous day’s US$7.69 close. Volume traded swelled to 73 million from a daily average of 16 million shares ¹.

By month-end, Ebang closed sharply lower at US$7.95. This may be attributed to dilution fears on the back of its plan to sell more than 16.1m units (each unit consist of one share of stock and a warrant)². Dilution aside, the funds will be used for growth purposes.

Technical Analysis:

Status: Technical Sell

Support: about US$5.11 (recent low)

Resistance: about US$6.90 (20-period moving average)

Moving average sloping down may hold the trend down.

9th Apple Inc (NASDAQ: AAPL)The largest listed company in the world is no stranger to our top 10. Having dropped three ranks from the previous month, Apple came in at No. 9 in March. Rising bond yields continued to wallop the tech sector and Apple was not spared. It traded below US$117, last seen in November 2020, and closed at US$122.

In the past few months, Apple had given up more than 2-3% on a single day a number of times. There is no fundamental change in its business that warrants such weakness but the market has been generally averse to mega-cap tech stocks. This is an unfortunate reversal from a year ago when work-from-home tech stocks were all the rage. With reopening trades, the sector has been losing steam to cyclical peers. This is expected to be the case until reopening becomes a norm.

Not all things are bleak for Apple, though. The company stands to benefit from renewed spending on 5G, post-pandemic. Recent weakness may entice long-term investors to pick up Apple at more affordable levels than its previous sky-high valuations.

Technical Analysis:

Status: Technical Buy

Support: about US$124.5 (20-period moving average)

Resistance: Inconclusive

Moving average crossing up signals potential uptrend.

8th Riot Blockchain Inc – ADR (NASDAQ: RIOT)Riot moved up a spot to No. 8 from February. Even then, March was a volatile month for Riot on the back of cryptocurrency volatility. It peaked at US$67.85 on 18 March and troughed at US$39.13 on 25 March. This represented a more than 40% decline in just a week.

As a cryptocurrency miner, Riot should continue to gain traction as long as the popularity of cryptocurrency sustains. Upside to demand may come not only from retail but institutional investors, as more jump onto the bandwagon.

Technical Analysis:

Status: Neutral

Support: US$38-40 (recent low)

Resistance: about US$66.50 (recent high)

Trades in a channel.

7th Square Inc (NYSE: SQ)Square, a familiar face in our top 10, shed two positions to the 7th spot in March. Square pretty much continued its downtrend and even traded at an intraday low of US$191.36 on 5 March, a level not seen since December. It recovered slightly to US$212.83 at month’s end.

The recent slump in Square may present buying opportunities for long-term investors. This is because Square looks set for greater innovations. On top of a thriving ecosystem built around its Seller and Cash App platforms, Square recently secured an industrial banking charter. This means it can scale up its financial services and offer lending services to customers. This development, along with its successful ecosystems which include cryptocurrency, presents long-term growth prospects.

Technical Analysis:

Status: Technical Sell

Support: about US$203 (recent low)

Resistance: about US$258 (recent high)

Trades in a channel.

6th Palantir Technologies Inc (NYSE: PLTR)Another household name is Palantir, which likewise dropped two ranks to No. 6 in March. The data analytics company never regained its last record price of US$39. It traded sideways at the US$20 level in March. Its high in the month was US$27.47 on 15 March while it closed at US$22.

Towards the end of the month when all high-growth tech stocks wilted under rising bond yields, Palantir sank to US$21.88. This was its lowest since 23 November. It prompted flagship fund Ark Innovation ETF to add 1.2 million shares. This helped to buoy the stock and the ETF now owns 11.8m shares in Palantir³.

You may ask, should investors resonate with Cathie Wood’s decision to buy Palantir after a 40% correction? Well, the company needs to substantially grow its topline and diversify from its heavy reliance on the government. In Q4 2020, government revenue grew 85% YoY while corporate revenue was up only 4% YoY⁴ . This will serve to diversify and to immunise the company’s revenue from exogenous shocks on the government revenue stream.

Technical Analysis:

Status: Technical Sell

Support: about US$21 (recent low)

Resistance: about US$23 (downtrend line)

Formation of descending triangle.

5th GameStop Corp (NYSE: GME)After a hiatus in February, GameStop popped back up in our March list. Its share-price movements replicated its January short-squeeze saga when it shot up 230% to US$348.50 on 10 March before beating a retreat to US$120 on 24 March.

GameStop’s loss began after it announced Q4 results on 23 March. Revenue fell short at US$2.12bn vs consensus expectations of US$2.21bn⁵ . This caused the stock to tank more than 30%.

The video-game retailer is considering taking advantage of the overall recent surge in its share price to offer US$100m new shares to raise funds for business transformation⁶ . This makes sense as it is a golden opportunity to raise a significant amount of cash with little shareholding dilution due to the price surge but the market floating shares remains the same.

GameStop remains a highly speculative investment, especially with net losses in each of the last two years. Sales are declining as demand shifts away from digital game purchases. The risk of huge price swings remains, as GameStop is still a target for speculation due to huge price swing which can be from any news released.

Technical Analysis:

Status: Neutral

Support: about US$120.50 (recent low)

Resistance: about US$348.50 (recent high)

Trading in a narrow range.

4th SOS Ltd (NYSE: SOS)The second newcomer in the month, SOS catapulted to an intraday high of US$15.88 on 17 February. This was a more than 900% jump, although the stock has given up about 70% and now trades around US$5.

The company has been transitioning away from its traditional business of insurance marketing and providing consumer credit data to blockchain and cryptocurrencies. To take advantage of the surge in demand for cryptocurrency, SOS Ltd deployed 5,000 mining rigs for Bitcoin and Ether back in February. And it again announced on 15 March that it will double capacity to 10,000⁷. The company’s stock price is directly related to cryptocurrency prices, particularly Bitcoin and Ether.

Investors applauded the news of its move to blockchain and crypto. This will help the company move out of a sunset industry to a high-growth New Economy sector. The move, however, comes with risks as the underlying assets are susceptible to extreme market volatility. Investors should do their homework before investing in such a company.

Technical Analysis:

Status: Technical Sell

Support: about US$6 (50-period moving average)

Resistance: about US$4.20 (recent low)

Formation of descending triangle.

3rd Airbnb Inc (NASDAQ: ABNB)The last but not least newcomer is Airbnb, which managed to squeeze to the top 3!

This online marketplace for vacation rental declined on the first few trading days of the month, before picking up by about 16% to trade near a record US$210. It lost steam in mid-month and closed at US$188 at month-end. This may be attributed to third waves of the pandemic in Europe and renewed lockdowns, which would hurt tourism.

Airbnb successfully navigated the pandemic last year which almost brought the company to its knees. It even got itself listed, at US$68 a share! Having waded through the worst of the pandemic, it can be expected to do relatively well this year when the economy picks up and travel resumes. Still, keep a lookout for pandemic hotspots in Europe which may affect the company’s near-term performance.

Technical Analysis:

Status: Technical Buy

Support: about US$178 (uptrend line)

Resistance: about US$210 (recent high)

Formation of ascending triangle

2nd Nio Inc (NYSE: NIO)Nio was second again for the fourth consecutive month. This Chinese EV maker continued its downtrend and traded more than 40% off its high of US$67 on 11 January at the beginning of March. It was sold off along with the other growth stocks, by 30% over a period of five days. The stock picked up a little before trading sideways at around US$35, a price not seen since last November.

Nio’s weakness was not just a function of the market selloff of high-growth stocks. The EV space in China is increasingly competitive, especially after the introduction of Model Y, a luxury SUV EV by Tesla. This challenges Nio’s bestselling car, the EC6. Furthermore, a global shortage of semiconductors has affected the production of auto companies. Now that its valuations have almost halved, investors with a higher risk appetite may be tempted to snap up its shares. Beware, though, that the volatility of growth stocks has not gone away.

Technical Analysis:

Status: Technical Sell

Support: about US$35 (recent low)

Resistance: about US$40 (downtrend line)

Formation of descending triangle.

1st Tesla Motors Inc (NASDAQ: TSLA)Tesla topped our list for the fourth consecutive month. That said, it was still a roller-coaster month for the largest EV maker in the world. After strong selling pressure for five straight days when the stock shed 22% to US$563, it jumped almost 20% on 9 March. The was when bond yields dipped. Even with the one-day jump, Tesla was still down about 25% from its all-time high of US$900 on 25 January.

Interest in Tesla may be sustained by recent China Passenger Car Association data, which shows retail sales of passenger cars in China quadrupling to 1.2m units in February from last February. China is Tesla’s second-largest market, after the US. Of this total, Tesla was responsible for selling 18,318 cars. Its robust sales came despite a Chinese New Year holiday from 11 to 17 February.

Even though China’s EV space is heating up, Tesla advocates may grab hold of its recent dip to buy the stock for its market leadership and battery insourcing. These are seen as long-term competitive advantages over much smaller peers.

Investors should look out for its first-quarter delivery numbers for indications of demand strength. Current market estimates are 162,000 deliveries, down from a peak estimate of 182,000 vehicles in January⁸.

Technical Analysis:

Status: Technical Sell

Support: about US$630 (uptrend line)

Resistance: about US$708.50 (recent high)

Formation of ascending triangle.

References:
1. https://www.nasdaq.com/articles/ebon-stock%3A-crypto-play-ebang-international-soars-on-blockchain-beta-testing-news-2021-03
2. https://www.investorsobserver.com/news/stock-update/heres-why-ebang-international-holdings-inc-ebon-is-down-on-monday
3. https://markets.businessinsider.com/news/stocks/cathie-wood-arkk-etf-palantir-stock-price-buy-dip-pltr-2021-3-1030246321
4. https://www.forbes.com/sites/greatspeculations/2021/03/29/is-palantir-stock-a-buy-after-40-correction/?sh=724442002238
5. https://www.forbes.com/sites/chuckjones/2021/03/24/gamestops-day-of-reckoning-may-have-arrived/?sh=482e574c67c7
6. https://www.usnews.com/news/business/articles/2021-03-24/gamestop-weighing-stock-offering-to-fund-transformation
7. https://www.fool.com/investing/2021/03/15/why-sos-limited-stock-soared-today/
8. https://www.barrons.com/articles/teslas-delivery-numbers-are-always-a-big-deal-the-stakes-are-higher-now-51617143107

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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