Technical analysis

Two stocks to watch: week 5, 2024

By Antreas Themistokleous

30 January 2024

two stocks to watch week 5

Week 5 is presenting a very animated stock market, and two huge companies are showing unmatched opportunities. Let’s Explore MCD and BABA.

McDonald's Corporation (MCD)

Shares in McDonald's Corporation (symbol ‘MCD’) gained around 14% in the last quarter of 2023 and managed to cover the losses incurred in the previous quarter. The company’s earnings report for the fiscal quarter ending December 2023 is set to be released on Monday 5th of February, before market open. The consensus EPS for Q4 is $2.81 compared to Q4 2022’s $2.59. 

The company’s outstanding performance in the last quarter of the year is also reflected in the financial image. With a noteworthy 17% year-over-year growth in net income, coupled with a current ratio of approximately 171% as of September 30, 2023, the company exhibits a robust financial position. This indicates that the company can repay its short-term losses with the current assets at hand, in simple terms it can withstand any short-term difficulties.

On the technical side, the share performed exceptionally well in the last quarter of the year and has found sufficient resistance on the upper band of the Bollinger bands in recent sessions causing it to correct to the downside at the time of this report being written. The Stochastic oscillator is in the neutral levels meaning it does not show any overbought or oversold indications while the 50-day moving average is still trading well above the 100-day moving average further validating the overall bullish momentum in the market.

Alibaba Group Holding Limited (‘BABA’)

Shares in Alibaba Group Holding Limited (symbol ‘BABA’) incurred losses in the fourth quarter of around 11%. The company’s earnings report for the fiscal quarter ending December 2023 is set to be released on Wednesday 7th of February, before market open. The consensus EPS is $2.40 compared to the same quarter of last year at $2.44. 

As of 30 September 2023, the price-to-earnings ratio (P/E ratio) of the company was at 9.39 which is considered relatively low compared to the average of S&P 500 for example which is around 23. This means that investors are not expecting any significant growth for the company and are somewhat reluctant to invest. Also, the company has around 3.2% more long-term debt year over year and is making up almost 25% of the total liabilities.

On the technical side, the price is testing the resistance level of the 50-day moving average trading just above the support of the 78.6% of the monthly Fibonacci retracement level. The Stochastic oscillator has moved away from the extreme overbought levels while at the same time the faster moving average is trading below the slower one indicating that the overall bearish momentum in the market is still valid.

If the price manages to make a valid break above the 50-day moving average then the first level of possible resistance might be seen around the $80 price area which consists of the psychological resistance of the round number, the 100-day moving average and is also just below the 61.8% of the monthly Fibonacci retracement level. 


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.