The GMD Commentary: Sunday, November 12, 2017

There are two industry groups that have been especially strong for the past several months.

#semiconductor stocks and companies that provide payment processing services.

Therefore, when selecting stocks for the featured list, I have taken chip companies and payment processing companies into account.

Last Week:

Last week the featured stocks were: ON Semiconductor (ON), ASML Holding (ASML), Total System Services (TSS) and STMicroelectronics (STM).

There was a minor panic in the markets on Thursday.  Doubts began to infect the markets regarding the planned Republican tax plan.  And the markets are beginning to question whether the proposals will get bogged down in Congress and never become law.  This caused the major indexes to decline. The S&P 500 lost .21% on the week; the NASDAQ lost .20%.

In the wake of the mini-panic three of the four stocks on my featured list declined. Only TSS rose on the week. It was up just .10%. ON slipped .42%, ASML fell 2.7% and STM fell 2.36%. However, all of them came off their lows and recovered a bit on Friday.  On Friday TSS rose .14%, ASML rose .89%, ON rose .61% and STM gained 2.56%.  For this reason, I am inclined to stay with three of these four. More below.

This was a good example of why it is always important to keep our stop losses in place.  This collapse came very suddenly.  In addition, technical indicators gave no advance warning. Technical indicators for the major market indexes were not especially robust, but they were not obviously negative either. They were stuck in neutral territory as they have been for the past several months.

On the other hand, if you had just ridden out the fall, you would not have done terribly. You would have recovered somewhat on Friday and you would be well positioned for this coming week.

Energy:

Energy and energy service stocks have begun to react positively to the recent rally in energy prices. The prices of energy commodities have been rising for about three months. During that time energy stocks have had good days, but it seemed that investors were having a difficult time accepting that the energy rally was for real. Very good days were soon followed by very bad days. In short, energy related stocks were performing erratically. Now it appears that the prices of energy stocks are beginning to gather momentum.

This sector has been beaten down badly for at least a year.  Hence, I am not ready to put any of them on my list of featured stocks.  However, if you believe that a recovery in these stocks is here to stay, there are some attractive opportunities among this group.  For example, Chevron (CVX) is paying a dividend of 3.68%. Exxon (XOM) is paying a dividend of 3.7%.

Featured Stocks for This Week:

Here are my featured stocks for the coming week:

ON Semiconductor (ON)

Total System Services (TSS)

STMicroelectronics (STM)

Integrated Device Technology (IDTI)

EPAM Systems (EPAM)

WNS (Holdings) Limited (WNS)

The first three were on my featured list last week. I omitted ASML from the list this week.

ON, EPAM and STM have enjoyed especially positive analysts’ reviews.

EPAM, TSS and WNS are all payment processing companies.  The others are semiconductor companies.

There are articles on my website and on my Twitter, LinkedIn and Facebook pages discussing all of these companies.

Remember: DYOD. Do your own due diligence.

Special Note: The Disclaimers and Disclosures are an essential part of this Commentary. Be sure to read Disclaimers and Disclosures which are linked here.

And be sure to visit The Global Macro Digest ® Main Page for many articles that I hope you find interesting.

And follow me on Twitter for timely alerts: @DigestMacro.

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