Top Picks for 2023...New Year, a New Beginning...
Happy New Year to all our readers and best wishes for good health, wealth and prosperity.
As we have said earlier, the new year is just a continuation of what we did last year or the previous years. Our tickers just resets itself so we can have a measure of what kind of achievement we have and what we aspire to achieve in the new year.
2022 would have been a great year for most. Not that it is a great year for investments or trading, it would be one which have thought us a lot of things, from money management, having patience, perseverance, discipline, commitment, adaptability, and much more. If you have grew in any of these, then it would be a successful year and we just don’t measure our growth and performance by just looking at our profit and loss. Because, trading and investment is a journey and we do not end that journey only by what we see in a year but continue to do what we do best and love until it becomes second nature and it can financially cover all your needs into the future.
So lets make 2023 a successful year towards your goals and dreams as we continue to support you along the way. Here’s our top picks for 2023 to help you start off the year with a bit of guidance 😉.
SPX (3839)
We ended literally where we were last week at the 3800 level support. Although, we had a strong rally on Thursday after the job unemployment data came out as expected, we failed to continue the rally up as most took opportunity to take profits on a strong move up. Nevertheless, we see that the level is strongly supported as SPX had strongly bounced off 3800 when it was hit last Friday’s session.
This week, we expect some volatility through Wednesday’s session on the Fed Minutes release and Thursday Non-Farm Payroll report. Remember, good economic news is bad news for the stock market. 😆
On Tuesday when the market opens, we would expect the market to recover some positive grounds up till Wednesday before the Fed Minutes release and Non-Farm on Thursday. The trading strategies of taking profits early still plays well into 2023 as news flows can have two sided action that can wipeout your profits quickly especially if you position is mearing maturity.
The trading range for the week is between 3750 and 3870.
NDX (10939)
Not too brutal week for NDX as it had some relief post Thursday’s unemployment claim release. Although, it was a scarry week when it was going for the year’s low earlier part of the week. With Friday’s close above 10,900 levels would give some positive light to the market. TSLA’s decline seemed to have stopped for several days now but I would not be too fast to trigger for the upside for now. 😆
As usual, the China plays on reopening sizzled down after news of mass infections came out and the market held down China stocks once again. After 3 years of harsh lockdown and a sudden release, what other outcome did we expect actually? The move to end this is inevitable as a continuation of this would cripple the future of China as an economic power as many nations are taking opportunity to have a slice of its pie during the lockdown. As the big wave of infections have already passed, things would normalise quickly and again opportunities would come in again especially before the lunar new year when people would want to fill their pockets with money for the festive “Ang Pow” (money gift). We already took on some longer position on JD last week with some cheap zero cost entries for long term options. We will see if more opportunities would come on other Chinese stocks in the coming week.
Other plays in our radar would be AAPL, as it is holding off support at $129. have a read at our new “Quick Bites” newsletter which we issued last week.
The trading range for the week is between 10550 and 11050.
2022 Review
Let’s start the year with a review of where we were and ended the year. 1 year Heat Map.
Energy has been the best sector for the year, with companies like XOM up 81% and CVX up 52%. The other 2 sectors up was Healthcare and Defense. Worse performing sector is communication services, with companies like GOOGL down -39% and Meta -65%.
Next in line for worse performing sector is Consumer Cyclical, AMZN down -50%, TSLA -65%, HD -23% and NKE - 30%.
Technology also took a 35% hit for the year with AAPL down -27$ and MSFT -29%.
Overall, most of our positions would not be looking like these as these were measured from the top of 2022 obviously. Depending if we dollar averaged this year on the down move, our positions would be probably between breakeven or slight profits as most have ended in years lows at year end.
Where will the opportunities be in 2023?
Everywhere if you are trading as there is no one direction you are playing.
Investing wise, the core strategies would be the same, ie. looking at fundamentally strong companies primarily strong cash flows and low debt. Because of the depressed economy during times of high interest regime, we need the Companies to be resilient and have sustenance powers and also be able to catch opportunities to grow during this phase, eg. through M&As of chomping down weaker competitors, gaining market share etc.
Our Picks for 2023
This is not a recommendation but just for learning purpose.
Consumer Discretionary
Inflation or no inflation, everyone needs to buy stuff right? Only more or less but strong brands would be the choice.
NKE
NKE hit its lows of 82.22 and now at 117. If it breaks 120, it would likely trend back up towards previous highs in a longer term. Although there may be some risk in the US economy, the China side will cushion these temporary while US is able to gear back to health after 2023.
SBUX
Similar story to NKE, everyone needs a cuppa and there may be further upside back to 125 highs. Although not the best entries for investments now (best would have been the 90s levels earlier) it may exist some trading opportunities if it retraces. If you insist to enter investment positions now, mix it with strategies like covered calls to dollar cost down your investments. Alternatively, short puts may be another strategy if you decide it’s okay for a long term investment at a discount from now. For a 8% (91 strike) discount from current levels, a 1.5% premium per month, seems decent. Bear in mind, if the price continues to moves up, you will not get a buy in to your long term portfolio but just keep the premium.
AMZN
AMZN sitting now at covid lows, seems to be very tempting but with the US economy situation still in doldrums and uncertainty, we just need to be a little more patient on this one. If it continues to slide, 65 would be a crazy level of great opportunities.
Otherwise, just watch for the reversals if current levels forms support, which may be a bit doubtful it will. Big boys fall harder when it is bad 😂
Financials
V
V would be our pick for the financials. It seems to be facing some resistance for the current moment mainly because of the depressed or being depressed economy but once the economy sign turns this would be one that will move up fast. Watch for the Fed’s second and third pivot ie. no more rate increase and then reduction of interest rates. Until then, it it moves down back to 190 levels would be a good opportunity once again.
While waiting, neutral strategies would still workout good when the stock moves sideways. Higher risk is on upside, so watch at which price levels you are putting this on. Double Bull Put Spread with a single Bear Call Spread may reduce upside risk a bit.
CME
CME is not a common stock people would know about. But do you know that this is the clearing house for your futures and options trade? Over the longer term, trading volumes continues to go up and the exchange also adds on new products and makes acquisitions of other exchanges. Additions of cryptocurrencies products into the exchange would give it new growth for the next decade as most people would go for established crypto exchanges on fear of collapses of like FTX in the most recent case.
150 would be a good entry target for us and we really hope that it will come further down in 2023. Need to be a little patient on this one though. In the meantime, possible trade entries would be like calendar to finance the long term calls. Premiums may not be that high though for this counter. If you are patient enough, just wait.
Technology
AAPL
Have been one of the most resilient big cap stocks in 2022 only down by 27% for the year. In fact the earlier part of the year, it was even going back all the way back to its high in August 22. Last quarter had been a bad one. It is now coming back to 2022 support at $129 and at current levels it is an acceptable long term entry.
If you are looking for income and is also okay to do long term investment buy in, short put at 8% discount from current level (strike 118) would give close to 2% monthly premiums.
I think, it’s just the start of the year…more to come from us. Just stick around and if you find this useful, do share with your friends our Newsletters including “Quick Bites”
TRADERS TALK
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TIKTOK VIDEOS
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DISCLOSURES
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
MYstyework is an Online Financial Literacy Educator and materials provided is solely by MYstylework and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. MYstylework, through its contents, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. MYstylework is not in the business of transacting securities trades or an investment adviser.