We kick off trading with market participants preparing for another busy week on the earnings front. The overall macro narrative remains consistent as investors expect ‘some form’ of fiscal stimulus, earnings remain relatively supportive of lofty valuations, and the vaccine roll out continues with mixed reviews but an understanding that the trend is improving. This has the S&P 500 pressing to all time highs as it tests the 3900 level for psychological resistance. The 4000 level is a stone’s throw away and will be an area to watch as the upward trend suggests a test of this level in the coming weeks, barring any major change to the macro environment.
One area that we will monitor is the push higher in bond yields as the 10-year pressed to 1.19% in overnight trade, marking an 11-month high. The 10-year has rolled back about 4 basis points this morning but remains elevated. This suggests an increased expectation by the bond market for inflation to press higher. Tomorrow, we will get the latest January Consumer Price Index numbers which bears watching. The most recent Bank of America Fund Managers Survey pegged a ‘taper tantrum’ as the second biggest risk to the current bull market rally. We will be on the qui vive for any changes to Financial Advisor search patterns that suggest this is a growing concern.
As for today’s Advisors in Focus, we want to take a look back at some of our recent newsletters to recap movements in names mentioned. We will occasionally circle back and repeat this exercise so we can track the progress of names mentioned as well as highlight aspects of the TrackStar data that are providing valuable information. We are cognizant that we are operating in a rare environment for stocks and will not get over our skis in terms of ‘pumping our winners’. We are well aware that we are going off a shorter time period which makes it difficult to discuss a longer return sought by FAs. However, overall performance showcases the value in the data.
Our key takeaway is that we continue to see volatility around retail search and there is value in studying the TrackStar data. An intriguing aspect is the pattern of seeing stocks settle down at key support levels and then press higher once some of the initial price action cools. There have been strong returns in this space with a few stocks up over 100% since mentioned in this newsletter. The names researched by Financial Advisors tend to be a little less volatile. The returns are not as strong but there is a steady price action that provides stability sought by FAs. We will continue to study the data and provide any insight into our findings.
One write up that we wanted to circle back to was from December 28 where we focused on the SPDR S&P Metals & Mining ETF (XME). We highlighted this name as a 2021 play on a potential re-inflation trade. The XME is up 9% since we discussed the basic properties of the XME. It was trading in the $32-34 range in late 2020 but is pressing above that level as interest rates creep higher. When looking at longer term investments, one wants to extend the time frame on a chart and the weekly and monthly charts are both encouraging. A glance at the weekly is showing this ETF pressing up against key resistance on a downward trend line in place since 2009. This helps highlight the perceived change in value around some of these miners. Two other names we highlighted in the December 28 newsletter were Amplify Lithium & Battery (BATT) and the VanEck Rare Earth Metals (REMX). BATT is up 18% and is pressing towards all-time highs as the battery space remains a key story for the energy sector. REMX is up 21% since mentioned and should continue to provide opportunity as the recent semiconductor chip shortage highlights demand for materials.
Here are some of the more notable names discussed in the pages of Advisors in Focus over the past month:
- Ocugen (OCGN)- Highlighted in the December 27 newsletter, this stock is up 757% since we mentioned it as the #2 search by retail investors in terms of total traffic. Shares have been rallying since the company announced plans to partner with Bharat Biotech to develop COVAXIN, a COVID vaccine play. The company did announce a secondary after its initial rally, but it is evident that investors were more than willing to digest the dilutive action. H.C. Wainwright upgraded the name to Buy from Neutral and has a $4.50 price target on the stock.
- Air-T, Inc (AIRT)- Highlighted on December 27 as the #1 Top Stock by Retail surge searches. AIRT rallied from $12 to over $40 on that day, leading to the increased surge activity. The company was the latest SPAC play to see interest as it announced letters of intent with three separate asset investment firms on that day. The stock would slip back to the $18 level before settling. We are seeing this SPAC breakout today as it rips back above the $31 level.
- BioNano Genome (BNGO)- Highlighted on January 3 as it was #2 in total traffic by retail. BNGO had been on search lists for a few weeks, reflecting steady interest in the name by Financial Analysts and Retail investors. We discussed Maxim’s positive outlook in the life science name while it traded in the $5 area. The stock is up 136% since our mention.
- Microvision (MVIS)- This made our list twice (December 27 and January 3) as it was a popular search for FAs and retail given the company’s involvement in the hot LiDAR space. Shares of MVIS were seeing volatility at the time, bouncing around the $5-7 area before settling and pressing higher. This is another name that has rallied over 100% since we discussed it.
- Marathon Petroleum (MPC)- Highlighted on January 3 as it was #12 in total traffic by retail. Market participants were in search of energy plays at the back end of 2020 and this was a name that found its way onto radars. The stock caught our eye as the chart was in a steady upward trend as oil prices recovered. MPC was trading around $40 at the time of the write up and has seen a nice 20% rally as it presses toward its best levels since early March of 2020.
- FuboTV (FUBO)– On December 27, we highlighted the volatility in FUBO. The stock was in the midst of running from $30 to the $60 area and trading around $42 at the time of the post. Shares would tumble to $26 support over the final days of 2020 before settling and launching back to $50. Streaming TV will remain a key story in 2021 as evident by the number of TV commercials we saw running during last night’s Super Bowl. Barrington Analyst James Goss initiated the stock with a Buy rating and a $40 target on January 23 stating, “fuboTV offers a packaged collection of programming at subscription price levels that provide value relative to both roughly comparable packages from cable and satellite service providers as well as in comparison with the aggregate cost of cobbling together a customized selection of services”. Valuation will remain a concern but the market will continue to sift through streaming names looking for winners.
- Bonso Electronics (BNSO)- Highlighted on January 3 as it was the #1 name in surge traffic by retail. Shares in the Hong Kong-based company, which develops electronic sensor-based and wireless products, jumped from $4.50 to $8 on no apparent news. BNSO would give up the majority of the gains before settling around $5.50. The stock is climbing higher toward $6.50 but is seeing some questions around its valuation given the financial backdrop.
- Gamestop (GME)- Highlighted on January 17 which we would note was a week before the Reddit Rebellion put the name on the front pages of nearly every publication. GME was the #8 search by retail on total traffic. GME squeezed from $20 to $43 earlier in the week after it had reported December sales which reflected a positive trend in same store sales as well as an incredible rise of 309% year over year in digital sales. We were happy to see that the TrackStar data was able to identify this as a focus of the retail space before it launched into legendary status.
- Zomedica Corp (ZOM)- Highlighted on January 17 as a development stage veterinary diagnostic and pharmaceutical company. The week we wrote it up, ZOM had seen a pop to $1.48 before pulling back and settling around $1 for a period of sideways consolidation. We are seeing the stock press higher with increased volume over the past couple of sessions. This also had us looking at the PAWZ ETF.
- Petco Health & Wellness (WOOF)- Highlighted on January 17 as the #1 stock in retail surge traffic. WOOF was a brand new IPO which had opened for trade at $26, 44% higher than its IPO price. Shares have been holding steady in that range the first couple of weeks of trade. We are always intrigued by IPOs that price well above their original price and trade in a sideways direction, consolidating early gains. $25 will set up as a key level for investors to watch as this develops a trading history. WOOF’s quiet period ended which has led to a number of initiations including a Buy-level rating at Citigroup and Evercore while receiving neutral ratings from Bank of America, Guggenheim, and Credit Suisse. We are watching the PAWZ ETF for further activity.
- Cambium Networks (CMBM)- Highlighted on January 14 as it was the #3 stock search by All FAs in surge traffic. This is a 5G play as it provides wireless broadband networking infrastructure. At the time we wrote, ‘Basically, they provide products that allow networking equipment to amplify broadband connectivity. This latency is of course the holy grail of 5G. CMBM is seeing ample interest as the 5G buildout is under way. The company handily beat Q3 expectations and provided an upbeat outlook for 2021 as the 5G roll out continues. The stock is trying to breakout above the $30 level and holds a reasonable valuation, relatively speaking, of 27x Forward Price to Earnings’. We are encouraged to see a steady push higher in the stock as it hits an all-time high of $42.33 in trade this morning.
- Voxx International (VOXX)- Highlighted January 14 as it was #17 in Top Stocks All FAs surge traffic. This jumped onto radars after posting a strong round of earnings results, leading to an Outperform reiteration by Oppenheimer. VOXX has been able to consolidate those gains in the $19-24 area and is pressing to all-time highs in trade today. The company makes automotive and consumer electronics such as in-vehicle entertainment, automotive security, reception products and audio components.
- iShares USA Quality Factor (QUAL)- Highlighted in the January 14 newsletter as it was the #3 Top ETF search by All FAs surge traffic. When we highlighted the name, we were seeing a cool down from the late 2020, early January 2021 rally. We noticed search activity take a step back and look for safer places to park money. FAs were focusing on higher quality and QUAL caught our attention. The ETF is trading in a steady sideways direction but we are seeing signs of a possible breakout as it creeps to all-time highs.