5 stocks we are looking at this month

Here are 5 stocks we’re keeping an eye on here at FXTM

Amazon – Support into Prime Deal Day

Amazon is part of the so-called “Magnificent 7” group of megacap tech titans. The stock is up handsomely this year and continues to trade in a bullish ascending channel since the lows in March. The shares advanced beyond the 100-week simple moving average a few weeks ago.

The most recent earnings report saw the stock jump up to 12-month highs. Prices have come off since then, but the 50-day simple moving average has acted as solid support through this year. Amazon recent partnered with Shopify while it is well-positioned for a US economic slowdown. If we do get more evidence of this, then valuations will stop resetting and focus will turn to earnings growth which is projected to be good for the eCommerce giant. The second Prime Deal Day in October will also hugely benefit sales.

Apple – Bumpy time for the megacap

The iPhone maker based in Cupertino has had a bit of a rocky time recently. Its recent earnings weren’t well received while its launch of the latest iPhone and watch was “no revolution”, as one Wall Street analyst called it. The news that Chinese officials flagged the iPhone for security issues, coupled with reports of higher iPhone prices in China and India have also been a drag. 

But Apple’s all-time high hardware installed base of over 2 billion of the world’s population should ensure some market share gains and also support the iPhone replacement cycle. This could also act as a buffer against any upcoming regulatory risks. Chart wise, the mid-August low should act as strong support, otherwise the 200-day simple moving average, a widely watched momentum indicator doesn’t appear until $164. 

Citigroup – Value Play

The giant US banking group has had a miserable year along with much of the banking sector. The stock has been down over 10% in 2023. This compares to the broader S&P 500 benchmark which has enjoyed strong gains so far. Citigroup may be hampered in its ability to repurchase its stock and so increase its dividend due to higher capital requirements as it increases its credit risk. The delayed sale of its Banamex Mexico division is also a current headwind.

But the stock is now cheap, trading at just seven times forward earnings and selling at less than half of its book value. It also still offers a relatively healthy 5.1% dividend yield. On the charts, prices have rebounded from a strong support zone around the October 2020 and 2022 lows. An initial target for bulls will be the 50-week simple moving average with bullish momentum pushing up to the psychological $50 level. If we lose the support area, sellers will eye up the May 2020 spike low. 

Disney – Time for a bounce?

Disney stock has fallen by more than 60% from its record high in March 2021. Since then, the company has hugely underperformed the blue-chip S&P 500. With an historic, hugely valuable brand name, Disney is endeavouring to ramp up profitability in its streaming business which kicked off in 2019. Active subscribers grew by 1.4 million in the prior quarter and net losses have fallen, according to the latest results, with a price increase also announced. Other business areas are solid with international parks growing by a notable 13%, as China slowly benefits from reopening and stimulus measures. 

A potential reinstatement of the dividend could be in the offing with bumper free cash flow compared to the same quarter a year ago while its recent dispute with Charter looks to be resolved. Wall Street analysts remain bullish on the stock with a consensus price target of $116.80. That represents major upside and could be realised if prices bounce off the long-term pandemic support low just above $79. 

Ford – Technical Rebound

The weekly price chart for the car maker has grabbed our attention as the stock has been tracking along the 200-week simple moving average. This is a widely followed momentum indicator which buyers and sellers congregate around in order to get filled as “longs” or “shorts”. It has acted as very strong support for the stock on multiple occasions this year going back to June 2022. 

The low of this move was at $10.61 fifteen months ago. If we see buyers step in, as we have seen five times before over that period, prices could revisit $14 and above fairly quickly. A swift resolution to the first-ever simultaneous strike in Detroit would certainly help. 

October has traditionally been known as a very volatile time for stock markets. But it is in fact September that has been the worst month for the benchmark S&P500 according to records going back to 1928. We have highlighted a variety of companies from different sectors which are of interest and could provide trading opportunities during this period.