I'm Stalking These Stocks in a Tough Trading Environment
Several names are on my radar as I hunt for opportunities in a weakening market.
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Market action is poor on Tuesday morning, with breadth running around two to one negative. Most notably, the number of stocks hitting new 12-month highs has contracted to just 150 names. My list of stocks moving up more than 10% is also very short, which indicates little speculative interest.
On Monday, the strength of Nvidia NVDA helped cover up the broad weakness of the Nasdaq 100 QQQ. On Tuesday, Microsoft MSFT is performing the coverup. Only about 30 stocks in the Nadaq 100 are in the green, but Microsoft's gain of around 2% is offset by weakness in dozens of stocks. Alphabet GOOGL is also helping the Magnificent Seven names again.
Small-caps IWM are lagging for the second day in a row with a decline of 0.7%. This isn't the first time in 2024 that small-caps have had a strong run and then abruptly given back substantial gains. The problem for the smaller stocks is sustained momentum.
It is currently a very tough trading environment. The indexes are still holding key support levels, and there aren't too many major breakdowns, but there aren't many stocks with good upside action. Strength is fizzling out very quickly.
Although I'm not doing any buying right now, I am stalking a few names and looking for some entry points.
Number one on my list is Uber UBER, which reports earnings on October 31 after the market closes. UBER has had a number of positive analyst comments recently, as well as price target increases. Jefferies raised its target on UBER to $105 Tuesday morning.
UBER jumped sharply on October 11 following disappointment with Tesla's TSLA robotaxi presentations, but then it dropped sharply on the rumor that it was interested in acquiring Expedica EXPE. Those rumors have been dismissed, but the stock never bounced back.
I'm looking for the stock to start to anticipate a strong earnings report and am increasing my position. There is still a gap on the chart, down to around $78.40, which would be an ideal entry point, but I am not sure it will get there before the report.
Another stock that I've been holding for a while and want to add is Core Scientific CORZ. Today, CORZ announced that CoreWeave, which is an AI hyperscaler, has exercised its final option to contract for additional infrastructure for hosting high-performance computing (HPC). CORZ will modify infrastructure at one of its sites to deliver approximately 120 incremental MW of critical IT load to host CoreWeave's Nvidia Graphics Processing Units,
The new contract with CoreWeave is expected to add approximately $2 billion in additional cumulative revenue over the hosting contract's 12-year term to the $6.7 billion in projected cumulative revenue associated with previously announced contracts with CoreWeave, for a total of $8.7 billion.
CORZ is also a Bitcoin miner, so it has the benefit of the HPC demand as well as the upside of Bitcoin prices. This is my top play on Bitcoin, and will be looking for entry points as the chart develops.
I'll continue to hunt for opportunities, but there isn't much right now.
At the time of publictaion, Rev Shark was long UBER, CORZ and NVDA.
