Top traded counters in September 2023 October 17, 2023

Top traded counters in September 2023

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The market at a glance:

  • Rising oil prices
  • Fed holds the rate steady with one more hike expected by the end of the year
  • 10-year US Treasury yields reach 16-year high
  • US dollar reaches a 10-month high
  • ARM & CART IPO surge on trading day


The 3 major indices continue trending down with the hawkish Fed stance.

NASDAQ DOW JONES S&P 500
Month Open 14,129.96 34,876.24 4,578.83
Month Close 13,219.32 33,507.51 4,507.67
Monthly return -6.44% -3.92% -5.35%


Oil prices have been heading up in recent times, mainly driven by expectations that OPEC+ will maintain tight supplies1. Saudi Arabia has led efforts to support prices by implementing voluntary output cuts. Oil supply remains constrained as Saudi Arabia and Russia, the second and third-largest oil producers in the world respectively, extended production cuts until the end of the year2. The market is now vulnerable to price spikes due to lower inventories and underinvestment in new oilfields.Additionally, positive economic indicators in China, the world’s largest Oil importer, have fuelled optimism about increased demand. The rising Oil prices may be dampening the Fed’s attempt to calm inflation.

The Fed chose to keep interest rates steady in September3, an indication of markets expecting a potential rate hike by the end of the year and subsequently fewer cuts in the following year. The Central Bank’s projections suggest that if the final hike occurs, it would mark the conclusion of the current cycle, making a total of 12 hikes since March 2022. As of now the 11 interest rate hikes have led to a total rate increase of 5.25%, from 0.25-0.5% in March 2022 to the current 5.5-5.75% rate. Despite the expected no-hike decision, uncertainty remains about the Fed’s future direction, with indications of a bias towards a more restrictive policy and a higher-for-longer approach to interest rates.

The Fed’s unexpected hawkish outlook caused the benchmark 10-year US Treasury yields to surge to a 16-year high4 at 4.490%, the highest since November 2007. Two-year yields also rose to 5.202%, the highest since July 2006.

The Equity markets also reacted, with the S&P 500 falling nearly 1%, and the Nasdaq Composite dropping 1.5%. To put this into perspective, on March 16 2020 when Covid got real for investors, the S&P 500 dropped 12% while the Nasdaq Composite fell 12.3%5. Fed Chair Jerome Powell then emphasised a cautious approach to additional policy firming, stating a desire to see more progress in the fight against inflation. Projections in the Fed’s dot plot suggest one more rate increase in 2023, followed by two cuts in 2024, reflecting a shift towards a more restrained monetary policy.

The Fed’s actions, including maintaining relatively high interest rates and reducing bond holdings, come at a critical time for the US economy. There is a shift in the Fed’s thinking towards a more balanced approach, after considering the potential impacts of previous rate hikes. However, caution is expressed about declaring victory too soon, and uncertainties, such as rising energy prices and potential economic disruptions, remain.

The US dollar hit a 10-month high6 due to a hawkish Central bank and a stronger than expected US economy. To take advantage of the strengthening US dollar, here are some ETFs for consideration:


WisdomTree Bloomberg US Dollar Bullish Fund ETF (NYSE-ARCA: USDU.US)

USDU is an ETF that seeks to provide total returns, before fees and expenses, that exceed the performance of the Bloomberg Dollar Total Return Index7. The Index tracks a long position in the US dollar measured against a basket of developed and emerging market currencies. The fund uses derivatives and high-quality fixed income instruments8 to produce a risk/reward profile of a short-term US government bond fund while hedging currency risk. The largest asset weight of the ETF is Treasury at 96.79%. USDU commenced on 18 Dec 2013 with an expense ratio of 0.5%. USDU’s 5-year performance as of 30 June 2023 is 2.36%.

USDU opened at US$26.87 and rose 2.79% to close at US$27.62 in September.

Technical Analysis

Top traded counters in September 2023

Status: Bullish

Support: 27.25 – 27.35

Resistance: 28.15 – 28.20

Bullish with a huge gap down area to be covered


Invesco DB US Dollar Index Bullish Fund ETF (NYSE-ARCA: UUP.US)

UUP is an ETF that seeks to track changes, whether positive or negative, in the level of the Deutsche Bank Long USD Currency Portfolio Index, plus the income from the Fund’s holdings of US Treasury securities, money market funds and T-Bill ETFs9. The index is a rules-based index composed solely of long US Dollar Index futures contracts that trade on the ICE Futures US exchange (USDX® futures contracts). The index is solely invested in the Dollar Index futures with more than half of the collateral made by Treasuries. UUP commenced on 20 Feb 2007 with an expense ratio of 0.77%. UUP’s 10-year performance as of 30 June 2023 is 2.74%.

UUP opened at US$28.82 and rose by 3.16% to close at US$29.73 in September.

Technical Analysis

Top traded counters in September 2023

Status: Bullish

Support: 29.30 – 29.45

Resistance: 30.00 – 30.18

Exhausted bull run, will require another leg of high lower for continuation towards the upside.

Here are some of the more popular US stocks – not ranked in any order – traded by POEMS customers in September 2023.


Salesforce Inc (NYSE: CRM)

CRM, a prominent cloud software company, surprised investors with quarterly results and forecasts that exceeded expectations, leading to a 6% surge in after-hours trading. The firm reported adjusted earnings of US$2.12 per share, surpassing the anticipated US$1.90 per share, alongside revenue of US$8.60 billion, slightly higher than the expected US$8.53 billion.

Despite this positive news, CRM confronts economic uncertainties. CFO Amy Weaver noted challenges in the US market, particularly in technology, retail, and consumer goods. She highlighted prolonged sales cycles and increased approval layers for deals, which have persisted since July 2022.

Looking forward, CRM provided an optimistic outlook for the upcoming quarter, projecting adjusted earnings per share between US$2.05 and US$2.06, and revenue ranging from US$8.7 billion to US$8.72 billion. These figures surpassed analysts’ projections of US$1.83 per share in earnings and US$8.66 billion in sales.

CRM also raised its full-year guidance, now anticipating adjusted earnings per share of US$8.04 to US$8.06, alongside revenue projections of US$34.7 billion to US$34.8 billion, indicating an 11% revenue growth. This exceeds earlier guidance, which predicted US$7.41 to US$7.43 in adjusted earnings per share and US$34.5 billion to US$34.7 billion in revenue, indicating a 10% revenue growth.10

In September, CRM opened at US$223.50 and dropped 9.27% to close at US$202.78.

Referring to this Phillip Research report dated 4 September 2023, the recommendation for CRM is Accumulate.

Technical analysis

Top traded counters in September 2023

Status: Neutral

Support: 198.70 – 202.80

Resistance: 215.20 – 217.00

Range-bound


Oracle Corporation (NYSE: ORCL)

In September, ORCL experienced a significant 9% decline in after-hours trading following a disclosure of revenue figures and guidance that fell below anticipated levels. The company’s adjusted earnings per share came in at US$1.19, surpassing analyst projections of US$1.15. However, revenue slightly missed the mark, totaling US$12.45 billion compared to the expected US$12.47 billion.

In terms of prospects, ORCL guided for the next quarter, anticipating adjusted net income in the range of US$1.30 to US$1.34 per share and a 5% to 7% growth in revenue. This differs from analysts’ predictions of US$1.33 in adjusted earnings per share and US$13.28 billion in revenue, indicating an 8% growth.

Cloud infrastructure revenue displayed a noteworthy 66% surge, although this represents a slight slowdown from the previous quarter’s 76%. ORCL remains in competition with major industry players such as Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOGL), and Microsoft (NASDAQ: MSFT) in this domain.

Larry Ellison, Oracle’s chair and technology chief, emphasised that AI development firms have committed to acquiring over US$4 billion in capacity within Oracle’s Gen2 Cloud.11

In September, ORCL opened at US$121.01 and dropped 12.47% to close at US$105.92.

Technical analysis

Top traded counters in September 2023

Status: Neutral

Support: 104.50 – 106.30

Resistance: 114.00 – 114.50

Range-bound


Adobe Inc (NASDAQ: ADBE)

ADBE reported a record-breaking Q3, achieving US$4.89 billion in revenue, surpassing estimates of US$4.87 billion, marking a 10% YoY growth. Earnings per share were US$4.09, also exceeding estimates of US$3.97, representing a 20% YoY growth.12

These stellar outcomes are attributed to a forward-looking product roadmap, propelling expansion across Creative Cloud, Document Cloud, and Experience Cloud. Notably, the integration of generative AI capabilities into ADBE suite is poised to usher in an entirely new era of AI-amplified creativity for users worldwide.

ADBE strategic drive to democratise creativity, bolster document productivity, and empower digital enterprises has evidently borne fruit, as reflected in the thriving Digital Media business. Notable achievements in this segment include net new Annual Recurring Revenue(ARR) of US$464 million and a revenue of US$3.59 billion, showcasing an impressive 14% YoY growth. Creative Cloud, renowned as the premier platform for creativity, offers a comprehensive array of products and services catering to diverse creative disciplines. The introduction of Adobe Firefly models, along with their seamless integration into Creative Cloud applications, has accorded users an unprecedented level of creative prowess.

The Digital Experience segment continues to forge ahead, posting revenue of US$1.23 billion, a noteworthy 11% YoY uptick. ADBE Experience Cloud remains at the forefront, orchestrating predictive, personalised digital experiences, solidifying ADBE standing as a trusted ally for customer experience management.

Looking forward, ADBE anticipates total revenue for the fourth quarter to range between US$4.975 billion and US$5.025 billion. Projections for Digital Media net new ARR hover around US$520 million, while Digital Experience segment revenue is expected to fall within the US$1.25 billion to US$1.27 billion range. These projections underscore ADBE’s optimistic outlook for concluding the year on a high note.13

In September, ADBE opened at US$564.80 and dropped 9.72% to close at US$509.90.

Referring to this Phillip Research report dated 22 September 2023, the recommendation for ADBE is Reduce.

Technical analysis

Top traded counters in September 2023

Status: Neutral

Support: 499.60 – 507.00

Resistance: 536.10 – 537.00

Range-bound


Arm Holdings PLC (NASDAQ: ARM)

ARM, a leading chip design company supplying tech giants like Apple(NASDAQ: AAPL) and Nvidia(NASDAQ: NVDA)14 saw a remarkable 25% surge on its debut trading day after pricing shares at US$51 each in its IPO. Their IPO was a bright spot on that day due to a wide market sell off. ARM’s IPO elevated its valuation to nearly US$60 billion, with SoftBank retaining around 90% ownership. The IPO’s pricing at the upper end of the expected range underscores the company’s confidence in its potential.

ARM’s CFO, Jason Child, highlighted their focus on royalty growth and the delivery of advanced products. Interestingly, a substantial portion of ARM’s royalties stems from products introduced several decades ago, demonstrating their enduring revenue streams. In a forward-looking presentation, ARM projected the chip design market to reach approximately US$250 billion by 2025, encompassing data centres and automotive applications.

The company’s architectural framework, renowned for its energy efficiency, underpins 99% of global mobile processors. This stands in contrast to Intel(NASDAQ: INTC) and AMD’s(NASDAQ: AMD) power-intensive x86 architecture. While some clients utilise ARM’s instruction set to create their own CPUs, others opt for complete designs under licence.

ARM’s resurgence into the tech market after a two-year hiatus is a pivotal industry development. The IPO’s success, coupled with its strategic vision beyond smartphones into data centres and AI, positions ARM as a major player in the rapidly evolving semiconductor landscape.15

In September, ARM opened at the price of US$56.10 and dropped 4.60% to close at US$53.52.

Technical analysis

Top traded counters in September 2023

Status: Neutral

Support: 49.90 – 51.30

Resistance: 56.15 – 56.80

Range-bound


Maplebear Inc (NASDAQ: CART)

CART, the grocery delivery company more popularly known as Instacart, experienced a 12% rise in its Nasdaq debut after its highly anticipated IPO. Initially, the stock surged 40%, opening at US$42, but closed at US$33.70 as investors took profits. The IPO, priced at US$30 per share, valued CART at roughly US$10 billion on a fully diluted basis, a decrease from its private market valuation of US$39 billion in early 2021 during the height of the Covid pandemic. At the close of trading hours on 19 September, the company’s worth stood just above US$11 billion.

Founded in 2012, CART delivers groceries from major supermarket chains like Kroger, Costco, and Wegmans. To make itself more attractive to retail investors, CART significantly reduced their IPO price. The company focused on profitability over rapid growth to conserve cash and to garner interest from investors. In the second quarter, revenue increased by 15% to US$716 million, a slowdown from the 40% YoY growth and a stark contrast to the 600% surge during the early pandemic months.

CART turned profitable in the second quarter of 2022 and reported US$114 million in net income in the latest quarter, a significant increase from the US$8 million in the previous year. With a valuation of US$11.2 billion, CART is valued at approximately 3.9 times its annual revenue. They face significant competition from Amazon (NASDAQ:AMZN) and major brick-and-mortar retailers like Target (NYSE:TGT) and Walmart (NYSE:WMT), who have their own delivery services. Only about 8% of CART’s outstanding shares were made available in the offering, with 36% of those sold belonging to existing shareholders. The IPO wasn’t primarily focused on raising funds, but rather on providing liquidity to employees who hold stocks. Co-founders Brandon Leonardo and Maxwell Mullen are each selling 1.5 million shares, while Apoorva Mehta, another co-founder, is selling 700,000. Additionally, former employees, including those in executive and product engineering roles, are collectively selling 3.2 million shares. The offering brought in over US$420 million in cash for CART, complementing the nearly US$2 billion in cash and equivalents the company already held as of June.16

In September, CART opened at US$42.00 and dropped 29.31% to close at US$29.69.

Technical analysis

Top traded counters in September 2023

Status: Bearish

Support: Psychological level of 24.00 – 25.00

Resistance: 28.50

Bearish movements since IPO, will require bullish momentum and volume to come in before price can attempt to reach US$31 again.


CONCLUSION

Recent oil price increases have been attributed to expectations of continued tight supplies by OPEC+ and Saudi Arabia’s voluntary output cuts. With Russia also extending production cuts, the market faces vulnerability to price spikes due to low inventories and underinvestment in new oilfields. Positive economic indicators in China, the largest oil importer, contribute to optimism about increased demand. The rising oil prices, however, pose challenges for the Federal Reserve’s efforts to manage inflation. In September, the Fed maintained interest rates but signalled one more rate hike by year-end, causing 10-year US Treasury yields to surge to a 16-year high. The unexpected move led to market reactions, including a drop in the S&P 500 and Nasdaq Composite. Fed Chair Jerome Powell emphasised a cautious approach to policy firming, reflecting a shift towards a more restrained monetary policy in the face of uncertainties, such as rising energy prices and potential economic disruptions.


Bloomberg analysts’ recommendations

The table below shows the consensus ratings and average ratings of all analysts updated on Bloomberg in the last 12 months. Consensus ratings have been computed by standardising analysts’ ratings from a scale of 1 (Strong Sell) to 5 (Strong Buy). The table also shows a number of analysts’ recommendations to buy, hold or sell the stocks, as well as their average target prices.

Security Consensus Rating BUY HOLD SELL 12 Mth Target Price (US$)
Salesforce Inc (NYSE: CRM) 4.38 40 (72.7%) 14 (25.5%) 1 (1.8%) 258.61
Adobe Inc (NASDAQ: ADBE) 4.22 25 (62.5%) 14 (35%) 1 (2.5%) 600.58
Oralce Corporation (NYSE: ORCL) 3.70 15 (40.5%) 20 (54.1%) 2 (5.4%) 128.14
Arm Holdings PLC (NASDAQ: ARM) 3 1 (20%) 3 (60%) 1 (20%) 50.81
Maplebear Inc (NASDAQ: CART) 3 0 2 (100%) 0 30.25



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Top traded counters in September 2023


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