Reaping the Rewards of Year-End Investing
Studying the stock market can be an overwhelming task, as there are so many variables that can affect the price of a stock. However, one constant in the stock market is the bullish runs that usually happen near the end of the year (aka the “Santa Rally”).
Today, I will discuss the most bullish scenarios for three stocks: SPY (S&P 500 ETF), AMD (Advanced Micro Devices, Inc.), and MSFT (Microsoft Corporation). I will analyze the historical trends of each stock and explain how the bullish scenarios could occur. I will also discuss the potential risks associated with each stock and what investors should consider when making their investment decisions.
SPY Overview
The S&P 500 is a market index that measures the performance of the 500 largest companies in the United States. It is one of the most important indexes in the world as it acts as a barometer for the overall health of the economy. The S&P 500 is often referred to as a “proxy” for the stock market, and it is a popular choice for investors who are interested in gaining exposure to the US stock market. As the index generally tracks the performance of the broader US economy, it can provide investors with an indication of where stocks may be headed in the future.
Bullish Scenario
With a test of the ~$386-387 support level, we could see a bounce with continued upside into the lower $400’s. The relative strength index (RSI) is sitting right at the mid-level, indicating that we are not “poised” or “due” for any sort of extended pullback, which helps our bullish scenario.
For this scenario to play out, the SPY needs continue to operate above the $386-387 support level! There’s not much else to it, on a technical level at least.
Why I Am Bullish
SPY, as mentioned before, tends to have a Santa Rally into the end of the year. Furthermore, the overall market trend is positive, with the S&P 500 up about 12.5% since the beginning of October. Secondly, SPY has strong technical support at its 200-day moving average (weekly timeframe), which it has held above for the past year. And, finally, the overall market sentiment as shifted from being extremely fearful, providing institutional money the confidence they need to begin flushing money into the market.
AMD Overview
Advanced Micro Devices (AMD) is an American multinational semiconductor company that specializes in designing and manufacturing computer processors and related technologies. AMD is a major player in the computer hardware industry and is known for its innovation in the field of graphics processing units (GPUs). The company has seen strong growth in recent years and has been at the forefront of emerging trends such as cloud computing, artificial intelligence, and machine learning. AMD has become a popular choice for consumers looking for powerful processors at a relatively low cost.
Bullish Scenario
For AMD to really see extended movement to the upside, we need to see a retest of the 200 EMA or 200 MA on the weekly (or daily) timeframe. AMD is currently sitting on its support level of ~$70, and an expected bounce can be anticipated at this level! Additionally, the RSI is sitting right at the mid-level, like the SPY, which gives us further conviction of no “expected” or “due” pullbacks.
Why I Am Bullish
Well, if SPY follows its bullish scenario AMD should follow, to some degree. AMD has seen massive drops in its share price this year, due to a variety of supply chain & demand (etc) issues this year. BUT we have seen AMD bounce more than 25% since its low in October & it would not be out of thequestion to see AMD continue this run into the end of the year…. Especially if SPY runs!
MSFT Overview
Microsoft Corporation (MSFT) is a global technology company with a market cap of $1.6 trillion. It is the largest software company in the world and is known for its Windows operating system, Office Suite, and various other products and services. Founded in 1975, MSFT has a long and successful track record of providing innovative products and services to its customers worldwide. The company has been a bellwether of the technology industry for many years and it is one of the most popular stocks on Wall Street.
Bullish Scenario
MSFT’s technical picture looks bullish, with the stock trading above its 200 moving average (weekly timeframe) and recent consolidation around $240. Again, this RSI is at the mid-level indicating no surprises! Ideally, we see MSFT move up with the rest of the market as we finish this year. MSFT is sitting at a good level of support and if it holds here, we could see $270 in the coming weeks!
Why I Am Bullish
There are numerous reasons to believe that Microsoft Corporation (MSFT) could be bullish into the end of this year. Firstly, the company has strong fundamentals, with a robust balance sheet and a history of profitability. Secondly, with a beta value of .93 MSFT tends to follow the SPY very closely and this means that we have increased conviction of a bullish scenario IF the SPY also follows its bullish scenario.
Closing Thoughts
In conclusion, studying the stock market can be a daunting task. However, with the right knowledge and research, it can be a great opportunity to make a profit. This article has discussed the most bullish scenarios for the stocks SPY, AMD, and MSFT. By analyzing their historical trends and understanding the potential risks, investors can make informed decisions and potentially benefit from the Santa Rally. Ultimately, it is up to the investor to conduct their own due diligence and decide which stocks are best suited for their portfolio.
Want More Insight?
You can check out the video AmmaJamma did on our YouTube channel for more insight into our Christmas List