News and analysis

Cardano (ADA) is up by 1.0% to $0.3550, slightly retreating from its high of $0.3681 earlier this week. In comparison, Bitcoin (BTC) also gained 1.0%, reaching $63,000.

Cardano has been in an uptrend for the second consecutive month, but it continues to face significant resistance around the $0.4000 level. Despite several attempts, the token has been unable to break through this barrier. The uptrend support remains intact, helping to keep the price buoyant. However, large investors have placed a series of short trades between $0.3880 and $0.4000, which could act as a firm ceiling for the token or, alternatively, provide the necessary fuel for a sharp breakout.

For the upside scenario to materialise, positive market sentiment will be crucial. If the token manages to break above the $0.4000 resistance level, it could trigger a rapid price increase.

A two-month bounce in AMD stocks continues. Many investment houses supposed that the second most important AI chip name after NVIDIA has been over-corrected, and so it proved. Price dips below $122 in early August were followed by a strong recovery to the area of post-covid highs around $165. Yet, my feeling is this is far from the end of AMD's bullish journey this year. The firm's long-awaited “Advancing AI” event is scheduled on October 10. It may prompt the Wall Street crowd to increase its positioning, first on positive expectations, and later on robust presentations of the firm. As a matter of pure facts, the same kind of public event organised by AMD on December 6 led to its stock price gains of almost 20% within one month and as much as 80% within three months, when it briefly renewed historical peaks at $227.30. NVIDIA's clear dominance over 85%+ in AI accelerators' market share is undisputable, yet AMD is occupying up to 7% in this hyping segment and at least 20% share in consumer and game graphic processing units. The company's roadmap updates in AI and cloud developments would be in focus in the course of the event. Any hints on useful know-hows and possible increase of sales in these two markets could become a great asset for further AMD rallying. The analyst consensus here is just above $5 billion in 2024, but with a potential to double to nearly $10 billion in 2025, and to $12.8 billion being on the table for 2026. The Bank of America estimates that AMD would be able to secure over 10% of the AI market share within the next two years. The forecast is based on prospects in open-source software, networking (infinity fabric), added by recent corporate acquisitions like ZT Systems and Silo AI. AMD’s MI300, its pivotal AI product, may bring $5 billion in the year, Barclays said in mid-summer, putting its price target for AMD to $180. Barclays noted that MI300 sales already jumped from initial $2 billion to over $4 billion for 2024, with $9 billion projections for 2025.

Globally stagnating demand on personal computers and, therefore, on central processing units (CPUs) may slow the speed of the non-AI related part of AMD business. However, I personally would bet on a re-test of $195 per share at least. I told you in April that AMD was ready for a recovery from below $160 per share that time to above $200 once again, and it soared to above $187 in just three months. The next stage of winning back for AMD may have a higher potential if its AI "Oktoberfest" would be successful. Broadcom (AVGO) is trying to compete with AMD in cheaper production of some competitive products. This IT giant is also one of the major favourites in my stock portfolio.

Maker (MKR) is down by 12.5% this week, trading at $1,447, underperforming the broader crypto market, where Bitcoin (BTC) has lost 6.4%, now priced at $61,300.

Despite this short-term decline, Maker continues to show promising long-term potential with ongoing development and expansion plans. The project is undergoing a major rebranding, and Grayscale's introduction of the MakerDAO Trust in August indicates increasing institutional demand for Maker’s products.

From a technical perspective, MKR has been forming a falling wedge pattern since April 4, which often signals an upcoming bullish reversal. With this in mind, a strong rebound could be on the horizon, potentially pushing the token towards the $2,000 mark and possibly breaking through the downtrend’s resistance.

We have already covered the on-going rally in the U.S. leading chains of home improvement stores, such as The Home Depot and Lowe's Companies. So, based on the Christmas quarter financial results released in late February 2024, our baseline scenario was waiting for fresh record peaks above $263 per share of Lowe's and a step-by-step recovery of HD's market price from its correction in April to May, so that we expected its slow ascent to $350 again, while keeping in mind upper levels like $400 for the mid-term. The two challenges were properly embraced by the investing crowd and transformed into achieving the targets.

However, stronger than expected quarterly earnings of both rivals in August and technical moves on charts afterwards hinted at more than we could initially supposed. So, it seems that now is still a right time at least to hold both stocks or maybe even add some additional volumes to buy positions, with possible price goals around $295 to $300 for Lowe's and at least $10 to $15 higher than $420 per share of HD. In case of Lowe's, the cumulative effect after the Q2 report allowed its shareholders to enter a higher space for the company's market cap. What is important, the stock is still feeling comfortable around fresh all-time highs for more than two weeks. This is enough time to validate investors' readiness to remain loyal to further purchasing the stock at small retracement within new ranges. Thus, the chances for a serious drawdown of the asset were fading as soon as markets got used to a new height. The same kind of a breakthrough journey for HD is yet to come, but it would hardly miss it.

After September 18, the growth of both consumer staples and consumer discretionary segments was about three times faster than the general climb in the Wall Street indexes, including techs. It is generally believed that launching monetary easing cycles has the most beneficial effect just on this type of business, allowing retail chains to optimize their costs and at the same time freeing up a little more money available on customers' credit cards.

In Q2, Lowe's business profit expansion accelerated further to $4.1 per share vs $3.06 in Q1 and $1.77 in the Christmas quarter. The current numbers are still lower than $4.56 in August 2023 and $4.67 in the same period of 2022, as inflated costs affected the whole sector, with Lowe's being no exception. However, the rate of profit recovery QoQ is so remarkable, the company's own projections for its gross revenue dynamics allow investors to continue marching on the bullish side. Oppenheimer financial advisors now reward Lowe's with an Outperform rating, suggesting possible growth faster than the market, with their target adjusted to $305. Maybe this goal is a little too high, and so we are addicted to somewhat moderated targets an inch below $300 where the Lowe's market value may reach the next saturation plateau.

As to The Home Depot, a decisive assault on historical peaks detected at the very end of 2021 may be related to surpassing consensus forecasts for the next November 12 report. According to Refinitiv, Wall Street pool of analysts agree with a potential income number of only $3.63 per share, on revenue of $39.2 billion. For comparison, in the previous report on August 13, The Home Depot delivered $4.67 per share on record revenue of $43.18 billion. It may be difficult to repeat such an achievement two times in a row, but the indications for the current quarter may not be as lower as the consensus expectations. Again, the outlook before the end of 2024 may be positively influenced by the store chain's own forecasts for the Christmas season, which are usually encouraging. If markets still tend to buy on expectations to sell later on fact checking. And so, the rally has extra time to become even more solid. As a result of this psychological aspect, reaching next peaking levels could be delayed until early months of 2025.