Second Down Week In A Row For Markets – What Comes Next?

For the second week in a row, the major stock indices declined, with the tech heavy Nasdaq leading the way. In fact, the Nasdaq saw its worst pullback since March, and fell about 10% below its all-time high in just six trading days. On average, stocks last week fell about 2.5%. There was not one single catalyst which caused the down week. However, concerns about over stretched valuations, concerns about a second stimulus package passing, and concerns about a slowing recovery in the labor market, all weighed on the sentiment.

While this does not necessarily signify the end of the fast and furious rally which has occurred since the lows of March, this could be a sign of more volatility to come, and profits being taken. The path forward could be bumpier and the pace of the recovery slower, and as a result, stocks could start to consolidate some of the recent gains. Digging ourselves out of the bottom in March was the easy part. Now the hard part of reaching pre-pandemic levels is beginning, and bumpier roads to reach that point in the recovery could be on the horizon. A lot of it depends on the trajectory of the coronavirus, and how leadership fiscally handles the economic situation.

A good sign, however, is that consumer prices rose in August, signifying firmer and more stable inflation, and higher costs for a variety of goods. This rise is a sign that the economy and demand for goods is slowly recovering. Q.ai’s deep learning algorithms have used Artificial Intelligence (“AI”) technology to identify Unusual Movers for the last week.

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Top Buys

We identified two Top Buys this week from our unusual movers:

Applied Materials Inc (AMAT), KLA Corp (KLAC)

Our AI systems identified two Top Buy unusual movers this week. Both stocks are in the semiconductor space- Applied Materials (AMAT) and KLA Corp (KLAC). These stocks had both unusual price and volume movements. Our systems rated AMAT C in Technical, A in Growth, C in Momentum Volatility, and B in Quality Value. AMAT closed down 10.51% to $55.0 on volume of 9,203,264 vs its 10-day price average of $59.50 and its 22-day price average of $62.36. Its closing volume of 9,203,264 was also way off its 10-day volume average of 11,283,254.9 and its 22-day volume average of 9,907,361.55. The stock is down 8.96% for the year. Revenue grew by 11.36% in the last fiscal year and grew by 10.68% over the last three fiscal years. Operating Income grew by 19.73% in the last fiscal year and grew by 1.91% over the last three fiscal years. EPS grew by 20.28% in the last fiscal year and grew by 5.85% over the last three fiscal years. Revenue was $14608.0M in the last fiscal year compared to $14698.0M three years ago, Operating Income was $3350.0M in the last fiscal year and compared to $3936.0M three years ago, and EPS was $2.86 in the last fiscal year compared to $3.25 three years ago. ROE was 35.94% in the last year compared to 42.48% three years ago, and Forward 12M Revenue is expected to grow by 7.72% over the next 12 months. AMAT is also trading with a Forward 12M P/E of 12.01.

Our systems rated KLA Corp (KLAC) C in Technical, A in Growth, B in Momentum Volatility, and B in Quality Value. KLA closed down 14.63% to $171.94 on volume of 1,318,835 vs its 10-day price average of $192.6 and its 22-day price average of $201.84. Its closing volume of 1,318,835 was also way off its 10-day volume average of 1,678,302.6 and its 22-day volume average of 1,299,899.18. The stock is down 3.01% for the year. Revenue was $5806.42M in the last fiscal year compared to $4036.7M three years ago, Operating Income was $1757.02M in the last fiscal year compared to $1537.19M three years ago, and EPS was $7.7 in the last fiscal year compared to $5.1 three years ago. ROE was 45.35% in the last year compared to 54.45% three years ago, and the stock is trading with a Forward 12M P/E of 15.15.

Attractive

General Mills Inc (GIS), Molson Coors Beverage Co (TAP)

The two stocks identified as attractive are both food and beverage retailers- General Mills Inc (GIS) and Molson Coors Beverage Co (TAP). Both stocks showed unusual price activity in the last week. Our AI systems rated General Mills F in Technical, C in Growth, A in Momentum Volatility, and B in Quality Value. The stock closed down 7.04% to $58.54 on volume of 3,557,378 vs its 10-day price average of $61.76 and its 22-day price average of $62.98. The stock is up 12.17% for the year. Revenue was $17626.6M in the last fiscal year vs. $15740.4M three years ago, Operating Income was $3118.4M in the last fiscal year vs. $2700.2M three years ago, and EPS was $3.56 in the last fiscal year vs. $3.64 three years ago. ROE was 26.30% in the last year compared to 33.63% three years ago. The stock is also trading with a Forward 12M P/E of 16.51. Regarding Molson Coors, our deep learning algorithms have identified factor scores of C in Technical, C in Growth, B in Momentum Volatility, and B in Quality Value. The stock closed down 7.66% to $35.09 on volume of 2,806,006 vs its 10-day price average of $37.28 and its 22-day price average of $37.49. The stock is down 34.9% for the year. Revenue was $10579.4M in the last fiscal year compared to $11002.8M three years ago, Operating Income was $1501.1M in the last fiscal year compared to $1832.1M three years ago, and EPS was $1.11 in the last fiscal year compared to $7.23 three years ago. ROE was 1.80% in the last year compared to 12.80% three years ago. Forward 12M Revenue is expected to grow by 2.56% over the next 12 months, and the stock is trading with a Forward 12M P/E of 10.15.

Neutral Rated

Apple Inc (AAPL), Nvidia Corp (NVDA)

Both stocks identified this week with neutral ratings are two of the biggest behemoths in the tech space- Apple (AAPL) and Nvidia (NVDA). While Apple showed unusual price activity last week, Nvidia showed unusual volume. Our AI systems have rated Apple F in Technical, B in Growth, C in Momentum Volatility, and B in Quality Value. Apple closed down 7.35% to $112.0 on volume of 180,860,325 vs its 10-day price average of $121.69 and its 22-day price average of $120.48. The stock is up 52.57% for the year. Revenue grew by 5.26% in the last fiscal year and grew by 19.47% over the last three fiscal years. Operating Income grew by 5.02% in the last fiscal year and grew by 9.45% over the last three fiscal years. EPS grew by 10.89% in the last fiscal year and grew by 43.16% over the last three fiscal years. Revenue was $260174.0M in the last fiscal year compared to $229234.0M three years ago, Operating Income was $63930.0M in the last fiscal year compared to $61344.0M three years ago, and EPS was $2.97 in the last fiscal year compared to $2.3 three years ago. ROE was also 55.92% in the last year compared to 36.87% three years ago. Forward 12M Revenue is expected to grow by 8.68% over the next 12 months, and the stock is trading with a Forward 12M P/E of 30.61.

According to our AI systems, Nvidia is rated D in Technical, B in Growth, C in Momentum Volatility, and B in Quality Value. The stock closed with volume of 15,923,172 vs its 10-day volume average of 19,123,342.5 and its 22-day volume average of 15,735,638.5. The stock has been one of the better COVID performers and is up 107.07% for the year. Revenue grew by 19.66% in the last fiscal year and grew by 34.5% over the last three fiscal years, Operating Income grew by 31.1% in the last fiscal year and grew by 16.23% over the last three fiscal years, and EPS grew by 20.44% in the last fiscal year and grew by 12.94% over the last three fiscal years. Revenue was $10918.0M in the last fiscal year compared to $9714.0M three years ago, Operating Income was $2846.0M in the last fiscal year compared to $3210.0M three years ago, and EPS was $4.52 in the last fiscal year compared to $4.82 three years ago. ROE was 25.95% in the last year compared to 46.05% three years ago, and Forward 12M Revenue is expected to grow by 11.2% over the next 12 months. Nvidia is also trading with a Forward 12M P/E of 48.71.

Unattractive

General Motors (GM), Citizens Financial Group (CFG)

Two stocks were identified as unattractive- car manufacturer General Motors (GM), and financial stock Citizens Financial Group (CFG). Both stocks traded with unusual volume last week. Our AI systems rated GM a C in Technical, D in Growth, C in Momentum Volatility, and D in Quality Value. The stock closed up 0.96% to $30.46 on volume of 13,613,226 vs its 10-day price average of $30.48 and its 22-day price average of $29.72. The stock is down 18.51% for the year. Revenue was $137237.0M in the last fiscal year compared to $145588.0M three years ago, Operating Income was $6444.0M in the last fiscal year, compared to $10150.0M three years ago, and EPS was $4.57 in the last fiscal year, compared to $(2.6) three years ago. ROE was 15.03% in the last year compared to 0.82% three years ago. Forward 12M Revenue is expected to grow by 12.26% over the next 12 months. Our AI systems rated Citizens Financial a B in Technical, D in Growth, C in Momentum Volatility, and F in Quality Value. The stock closed up 1.31% to $27.11 with volume 7,692,117 vs its 10-day volume average of 7,747,825.1 and its 22-day volume average of 5,435,277.09. The stock is down 30.27% for the year. Revenue has only grown by 0.39% over the last three fiscal years and was $6098.0M in the last fiscal year compared to $5386.0M three years ago. Operating Income was $2251.0M in the last fiscal year compared to $1912.0M three years ago, and EPS was $3.81 in the last fiscal year compared to $3.25 three years ago. ROE was 8.33% in the last year vs. 8.26 three years ago, and the stock is trading with a Forward 12M P/E of 13.63.

Top Short

Occidental Petroleum Corp (OXY), Noble Energy Inc (NBL)

Both of the top shorts identified are in the hard hit energy space: Occidental Petroleum Corp (OXY) and Noble Energy Inc. (NBL). While Occidental had unusual price movements last week, Noble Energy had unusual volume. Our AI systems gave Occidental ratings of D in Technical, D in Growth, F in Momentum Volatility, and C in Quality Value. The stock closed down by a whopping 18.82% to $10.22 on volume of 35,157,771 vs its 10-day price average of $11.81 and its 22-day price average of $12.89. The stock is also down by a significant 73.62% this year. Revenue grew by 5.48% in the last fiscal year and grew by 71.97% over the last three fiscal years, and was $20393.0M in the last fiscal year compared to $12508.0M three years ago. Operating Income was also $2579.0M in the last fiscal year compared to $694.0M three years ago, and EPS was $(1.22) in the last fiscal year compared to $1.7 three years ago. ROE was -1.825% in the last year compared to 6.23% three years ago. Our AI system rated Noble Energy C in Technical, F in Growth, F in Momentum Volatility, and F in Quality Value. The stock closed down 5.66% to $9.17 with volume of 25,659,235 vs its 10-day volume average of 25,378,615.3 and its 22-day volume average of 15,978,614.14. Year to date, the stock is also down a significant 62.72%. Revenue was $4387.0M in the last fiscal year compared to $4079.0M three years ago. Operating Income grew by -17.45% in the last fiscal year and was $(1513.0)M in the last fiscal year compared to $221.0M three years ago. EPS was also $(3.16) in the last fiscal year compared to $(2.38) three years ago. ROE was -14.59% in the last year compared to -10.39% three years ago, and Forward 12M Revenue is expected to grow by 4.12% over the next 12 months.

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