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11/7/2019 9:53:55 AM Eastern Time

MORE THAN MARKING TIME
By Charles Payne, CEO & Principal Analyst

 Click here to download PDF version

On Wednesday, although most of the major equity indices finished lower with the S&P eking out a small gain, the session saw many more declining issues than winning issues. I bring this up because the notion of the “market” being up or down is so misleading when it’s reported in the news. The Dow Jones Industrial Average could be higher with the majority of its 30 components down on the session and visa-versa.

Your aim as an investor is to create your own market.

Build and manage a portfolio where you are in control, and the names are selected based on the ability to deliver stronger returns. Even when the object is a yield, you have the power to own stocks where big dividends aren’t erased by big hits to the principal.

This is one reason I like to share the market breadth with subscribers, which is a better look at the true nature of the session. Yesterday, the market breadth wasn’t great. However, against the notion of market consolidation and more media hysteria on the Chinese trade front, I think investors showed they want to be in the mix for the next leg higher.

NYSE

NASDAQ

Advancers 1,332

Advancers 1,137

Decliners 1,623

Decliners 2,004

New Highs 106

New Highs 92

New Lows 33

New Lows 76

Up Volume 1.71 billion

Up Volume 1.05 billion

Down Volume 2.80 billion

Down Volume 1.33 billion

Let Me Emphasize

It looks as if the market is spinning its wheels, but the current action is classic consolidation of gains, allowing weaker hands to sell while holding above previous key resistance points. It looks boring; perhaps foreboding to some, but this is good stuff. Pay attention to the market- it is telling us where to be for the next big move higher.

Charles V. Payne

Portfolio Approach

I continue to see the best value opportunities in the Industrial sector. We added two more fresh names to the model portfolio, as my favorite open ideas in the model portfolio are up too much for new subscribers to be on the same page as subscribers that might have much lower entry prices.

On that note, when you are buying a stock that’s up a lot for the session but down a lot for the year, you are NOT chasing fundamentals. There are times when you might consider buying a stock that is in the highs but only under the notion you are chasing fundamentals.  

Today’s Session

Initial jobless claims for the week of November 2 declined by 8,000 to 211,000 and near 50-year lows. 

The major indices are poised to open higher. 

Long Idea: STMicroelectronics N.V. (STM) @ $23.78
Industry: Technology; Semiconductors
Click here to view the trading alerts that followed this recommendation

Trading Parameters
Status Closed
Entry Price$23.78
Entry Limitsee comments
Stop LossN/A
Target$28.50

BACKGROUND: STMicroelectronics N.V., together with its subsidiaries, develops, manufactures, and markets semiconductor products worldwide. It operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The company offers a range of products, including discrete and standard commodity components, application-specific integrated circuits, full-custom and semi-custom devices, and application-specific standard products for analog, digital, and mixed-signal applications, as well as silicon chips and smartcards. It also provides subsystems, and assembly and other services. The company sells its products through its distributors and retailers, as well as through sales representatives. STMicroelectronics N.V. was founded in 1987 and is headquartered in Geneva, Switzerland.

SKINNY: Despite the challenging conditions in the sector, STM delivered on its guidance and beat expectations on revenues and margin in the third quarter. The stock is looking to break out at $24.20, from there we see the stock going to $25.80.


Key Fundamentals
PEG  0.44
Book Value  7.4
Institutional Holdings  4.16
Price/Sales  2.24
Average Daily Volume  2.09M
Shares Outstanding  891M
Market Value  20.92B
Insider Activity  N/A
52-week High  23.8
52-week Low  12
Annual Earnings Estimate  1.36

Analyst Coverage
 Cowen Reiterated  Outperform
 Goldman Upgrade  Buy
   



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