AM (redaction@boursorama.fr)
While markets have become more volatile in recent weeks and the trend is undoubtedly bearish, it is possible that the final months of the year will be gloomy for European and US equity markets. But, and this is one of the advantages of mastering trading, it is also possible to make money in the stock market in the short term, while long-term stock market investments are in the red.
Let’s discover together the best stocks to trade between now and the end of 2023 and analyze the key levels to monitor to trade these 3 stocks on the stock market.
Trade Tesla stock
When it comes to choosing a stock to trade, especially at the end of the year, you want to make sure you choose a liquid stock. With more than 114 million shares traded each day on average (or $23 billion in volume), Elon Musk’s stock appeared to be a relevant choice for us. Especially since Tesla stock is in a technical scenario that could lead to interesting opportunities.
Fundamental Analysis of Tesla Stock
From a fundamental standpoint, Tesla stock is going through a bad period with disappointing results. Although still profitable, the automaker’s margins are shrinking due to rising production costs. It is one of the consequences of inflation, but also of the increase in the price of a barrel of oil.
The release of Tesla’s latest results had a strong negative impact on Tesla’s stock prices, especially because analysts and traders did not expect a disappointing operating result. Tesla’s profits are down 22% from 2022.
Tesla’s profit graph (in billions)
Source: TradingEconomics
In addition, the number of cars delivered is falling, and Tesla needs to sell 500,000 cars during the last quarter of the year to reach the promised targets by 2023.
If analysts thought that Tesla could save the situation with the release of CyberTruck, it was without taking into account Elon Musk’s statement that Tesla would have dug its own grave with the CyberTruck project.
The bottom line is that Tesla stock has lost more than 30% of its value since August. Now let’s look at the trading opportunities that will present themselves in Tesla stock.
Technical Analysis of Tesla Stock
When we do a technical analysis of Tesla’s stock prices, we see that there are still opportunities despite alarming fundamentals. In fact, Tesla stock prices are still in the trading range that began to take shape from June to August 2023.
Graphical analysis of Tesla shares for the end of 2023
Source: ProRealTime Web
There are therefore two trading scenarios that arise for Tesla stock at the end of 2023.
The first hypothesis would be a recovery in Tesla stock prices at the $212 support zone, which could cause Tesla stock prices to return to an uptrend. A trader could then aim for a target of $265 or even $300 in extension of Tesla stock. However, let’s note that if this scenario is entirely plausible from a technical point of view, because the support zone that prices have reached is large… however, we must keep in mind that this will be a trade that goes against Tesla’s recent basic messages.
The second hypothesis would be a break of the support zone and a continuation or even an acceleration of the decline. In this scenario, Tesla stock prices could fall as low as $170, and even $110 if the second support were to give way.
In both scenarios, you need to be cautious in your positioning and be strict in your risk management. Remember to place your Stop Loss wisely beyond support and resistance levels, or on recent market ups and downs.
Trade Netflix Shares
Although the volume of Netflix stock is almost 10 times lower than the volume of Tesla stock, Netflix remains one of the most liquid and interesting stocks to follow in the implementation of a stock market plan.
Fundamental Analysis of Netflix Stock
The situation regarding Netflix’s revenue is radically different from the one we could analyze with Tesla. There is actually good news and positive results on the agenda with revenue up 8.1% and revenue up 20% year-on-year. Netflix’s revenue therefore reached 8.54 billion dollars for 1.6 billion in net profit. And it is therefore an increase in the Netflix stock that results.
Netflix’s latest results exceeded the expectations of analysts and traders.
Netflix revenue graph
Source: TradingEconomics
Technical analysis of Netflix stock
The trading strategy that will be possible to implement on Netflix shares by the end of 2023 will require some patience. At first glance, the first scenario would be to foresee Netflix stock prices rising.
As Netflix stock has taken a hit in recent months, Netflix’s positive fundamentals are a signal that could allow us to anticipate a rise. However, positioning to the upside is out of the question before Netflix share prices break through the $420 resistance zone.
Graphical analysis of Netflix shares for the end of 2023
Source: ProRealTime Web
In the event of a break of the resistance zone, it will be possible to target the next resistance at $480 per Netflix share. Conversely, if Netflix’s share price fails to break the resistance, we can expect a price return towards $350 and a short position may be relevant.
We are seeing increased volatility in Netflix stock prices, so caution is advised when trading this stock.
Trade Apple shares
We could not make a selection of stocks for trading without including at least one of the GAFAM stocks. Although Apple stock is the largest capitalization on Wall Street with a valuation of 2.700 billion, trading volumes on Apple stock remain slightly lower than those observed on Tesla stock, but largely sufficient to offer plenty of volume to make it to an interesting choice to implement a trade strategy at the end of 2023.
Fundamental Analysis of Apple Stock
We will have to wait for the release of Apple’s latest results on November 2, 2023 before rushing to set up a year-end trading strategy for Apple stock. However, the positive figures from previous quarters indicate good news for Apple. Remarkably, we can observe that Apple’s revenue is highly cyclical, cycles that match almost perfectly with the releases of various iPhone models.
Apple’s revenue graph
Source: TradingEconomics
While the iPhone 15 was released last September, we cannot risk predicting a results announcement that could satisfy analysts and traders on November 2, 2023. However, if the results were to be disappointing, this would have a strong negative impact. on Apple’s stock prices , breaking an earnings cycle that Apple investors are used to.
Technical Analysis of Apple Stock
Purely on the chart, Apple’s share prices are close to a key support zone ($170) that could be a buy level, a strategy that could pay off strongly if the fundamental announcements from Apple on November 2, 2023 validate the technical scenario.
If a purchase is possible now, keep in mind that this represents a significant risk until Q3 2023 revenue is announced. The risk taking may prove to be too much for some. On the other hand, less risk-averse traders may see it as an opportunity for greater gains: what pays in trading is taking risks.
Buyers will be able to target the price of $180 per Apple share as a target, or even $195 per Apple share should prices get carried away by a strong upward move.
Technical analysis of Apple shares for the end of 2023
Source: ProRealTime Web
In the event that the support zone were to experience a breakout, with or without the help of poor fundamental results, Apple stock prices could fall to the next support zone around $145.
You must therefore be careful in case of a long trade because the drop can be significant. A short trade is excluded before the publication of results on November 2, 2023 and/or before a clear break of the support zone at $170 per Apple stock.
In conclusion, we would like to remind you that trading is a much riskier activity than long-term investment. Derivatives, which include a leverage effect that allows you to invest more than your capital or benefit from a decline in a stock market value, involve significant risk that must be understood and controlled. Do not hesitate to consult our trading guides and articles on Café du Trading.
Also find this article at Café de la Bourse