Equities report: NASDAQ prints new all-time high

Over the past week, there have been bullish signals from US stock markets with all three major indexes moving higher since our report last week. Moreover, we note that since our last report, the NASDAQ 100 and Dow Jones 30, have broken above their all-time high figures, with the S&P 500 aiming for its all-time high figure as well.  In this report, we are to discuss fundamentals that could be affecting US stock markets, add a small comment for Apple and Tesla, Alibaba and finally conclude with a technical analysis of the Nasdaq 100.

Apple (#AAPL) halts sale of its Watch in the US, after losing a patent case

Apple (#AAPL) will be halting the sale of some smartwatches in the US, after losing a patent infringement case. The patent infringement case is over proprietary technology developed by Masimo Corporation, a medical device maker which is based in California. According to Masimo, Apple has violated its patents by allegedly stealing its pulse oximetry technology and incorporating it into the popular Apple watch. Following the court ruling, Apple stated that it would “pre-emptively” halt US sales of its latest Apple Watch models. Nevertheless, there are two aspects that could hurt Apple’s stock price. The first being that, with the halting of US sales during the busy Holiday season, Apple could potentially lose a significant amount of revenue, as the Christmas holiday period is one of, if not the biggest shopping season for the year, which generates sales for companies. The second being that, if Apple’s newer models are not permitted to feature the technology, it could hurt future sales and the potential $1.3 billion sum being asked by Masimo, could place a further dent on the company’s finances. Therefore, the court decision could weigh on Apple’s stock price. On the other hand, since the decision was made by the International Trade Commission or ITC for short, the current President of the United States, could in theory veto the ban, as was done by former President Obama in 2013, which allowed iPhone imports to continue, despite the company losing an ITC case against Samsung.

Does Tesla (#TSLA) have a Public Relations problem?

According to an investigation by Reuters, “Tesla blamed drivers for failures of parts it long knew were defective”. The investigation could potentially weigh on Tesla’s stock price, as it implies maliciousness by the company in terms of its attempts to “blame drivers for vehicle ‘abuse’” which is allegedly a manufacturer issue. Moreover, the investigation could open the company up to potential lawsuits from individuals and as such, the negative sentiment could be reflected negatively on the company’s stock price. Lastly, should Tesla be forced to recall parts or its cars in the US to fix potential issues, it could negatively impact the company’s reputation and thus stock price.

Alibaba (#BABA) imposes further changes in its structure

According to FT, the new group CEO Eddie Wu of AliBaba group, will be taking direct control over the company’s cloud and online retail divisions, in the latest series of the company’s restructuring efforts.  According to various news outlets, the divisions that Wu will be taking over, have apparently been ceding market share to other fast-rising competitors such as ByteDance’s Douyin, the Chinese version of TikTok. The market reaction appears to have been positive following the release, with FT stating that the company’s shares rose by as much as 4.3%. The consolidation of power amongst Alibaba’s various entities could aid the company in the future, as under a unified leader, the group’s ambitions may be simultaneously executed. Moreover, the emergence of one ‘leader’ rather than having the two entities being “split”, may increase consumer confidence and as such could be translated into a positive market sentiment for the company, thus potentially supporting the company’s stock price. On the other hand, the pessimism surrounding China’s economic recovery and the rising tensions in the US-Sino relationships could hinder a long-term appreciation of the company’s stock and as such, any positive momentum could be short-lived.

تجزیه و تحلیل فنی

US 100Cash Daily  Chart

Support: 16770 (S1), 16000 (S2), 15200 (S3)

Resistance: 17380 (R1), 18200 (R2), 19000 (R3)

US 100’s price action continued moving in a relatively tight upwards motion in the past week, with the index currently having broken just above its all-time high figure of 16770, which is our S1 support level. We maintain a bullish outlook for the index given that the RSI indicator remains slightly above the reading of 70 implying a rather bullish market sentiment, in addition to the upwards moving trendline which was formed on the 26  of October. Yet, we note that the Bollinger bands continue to widen, in a sign that the price action is picking up a bit of volatility. For our bullish outlook to continue, we would like to see a clear break above the 17380 (R1) resistance level with the next possible target for the bulls being the 18200 (R2) resistance level. Further than that, the next possible target for the bulls may be the 19000 (R3) resistance line. On the other hand, we note that the price action continues to run along the upper Bollinger band, which may slow down the bulls. Moreover, the RSI indicator is above the reading of 70, as we had mentioned before, yet it could also imply that the index is due a market correction to lower ground. Yet for a bearish outlook, we would like to see a break initially below the prementioned upward trendline in a first signal that the upward movement has ended and continue below the 16770 (S1) support level in addition to the breaking below the 16000 (S2) support level, with the next potential target for the bears being the 15200 (S3) support base. Lastly, for a sideways bias, we would like to see the index remain confined near the S1 level breaking the upward trendline guiding the index.

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