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Sunday Watchlist

Week of December 2nd, 2019

Happy Holidays to you and yours.  We hope you had a great Thanksgiving break.

Trade war issues are emerging – again.

All after China’s Foreign Ministry said it would take “firm counter measures” if the U.S continues to interfere with Hong Kong issues. They note that new legislation signed by President Trump to back Hong Kong protesters was a serious interference that is “doomed to fail,” as reported by Reuters.  However, as long as the U.S. does not implement any of the law’s measures, trade negotiations may still be on track, reports The Wall Street Journal.  

“It does spoil the mood, but it shouldn’t interfere with the trade talks,” said Wang Yong, a professor of international relations at Peking University. “Both sides have enough reasons to keep trade, Hong Kong and political issues on separate tracks.” 

As we wait to see what happens next, here’s what’s piquing our interest.

Opportunity No. 1

Marvell Technology (MRVL)

We believe there’s further room for MRVL to run, as it gets caught up in the 5G boom.  “Our design win momentum continues in 5G, and we recently announced a significant long-term partnership with Samsung to deliver multiple generations of embedded processors and baseband processors for both LTE and 5G base stations. We expect shipments of our 5G products to start to ramp toward the end of the fiscal year 2020 and continue to grow rapidly into fiscal 2021 and beyond,” said company CEO Matthew MurphyThe stock was also just upgraded to outperform from market perform at Wells Fargo.

Opportunity No. 2

NIO Inc. (NIO)

The company is optimistic about production going forward, expecting to launch its ES3 SUV. We also have to consider China wants EVs to make up 20% of auto sales by 2025. With a good deal of negativity priced into this stock, we believe NIO is a diamond in the rough.

Opportunity No. 3

Home Depot (HD)

Even at $223 a share, Home Depot is aggressively oversold.  However, the stock appears to have caught support and is just beginning to pivot higher.  We’d like to see a bearish gap refill around $237 a share, near-term. It’s also oversold on RSI and Williams’ %R.