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A Recap of a Hectic Trading Week in an Oversold Market: A Day-by-Day Analysis

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“We witnessed an exhilarating rollercoaster of trading activity throughout the week, as the oversold market played host to a flurry of captivating trades. Let’s delve into the captivating day-by-day breakdown.”

This week, the stock market faced challenges due to elevated bond yields and geopolitical uncertainty. As a result, the overall market entered oversold territory. However, this presented an opportunity for us to invest and make four small purchases in accordance with our disciplined approach. Additionally, we decided to upgrade one of our tech giants, despite its stock being punished after reporting a stellar quarter.

The 10-year Treasury yield surpassed 5% for the first time since July 2007 on October 19, before settling slightly below that level at the end of the week. Bond yield volatility and concerns about the war in the Middle East have been influential factors in recent market movements, overshadowing the positive earnings reports from several mega-cap tech companies.

The S&P 500 Short Range Oscillator, a sentiment indicator used by Jim Cramer, flashed oversold on Monday and continued to deepen into oversold territory throughout the week. This prompted us to look for buying opportunities in the oversold market, while also considering trimming our positions during overbought markets.

On Monday, we took advantage of the unwarranted 6% drop in Oracle (ORCL) stock on October 20 and purchased an additional 75 shares. Despite the stock falling due to concerns about delayed revenue upside from AI workloads, we believe in the company’s fundamentals and see strong sustained demand for its AI services.

Tuesday presented an opportunity to add 30 more shares of Danaher (DHR) to our portfolio. Although the life sciences giant beat expectations on both the top and bottom lines, uncertainty surrounding the recovery of its key bioprocessing business caused the stock to falter. However, we believe stocks often bottom before their industry cycle, and Danaher is close to working through the excess supply that has limited new order demand.

On Wednesday, we made a small purchase of 20 more shares of Constellation Brands (STZ) after the stock dipped due to higher interest rates and concerns about potential impacts from weight loss drugs. We remain focused on the beer maker’s improving fundamentals and hope that the upcoming Investor Day on November 2 will serve as a catalyst for the stock. We would like to see a strategic review of the company, potential divestment of its lagging Wine & Spirits segment, and commitments to growing the dividend and repurchasing stock.

With the Oscillator at its worst oversold levels of the week on Thursday, we decided to increase our position in Coterra Energy (CTRA) by purchasing 200 more shares. This move followed our decision to take profits and exit Pioneer Natural Resources (PXD) last week. Coterra, which is about 50% oil and natural gas, is influenced by price movements in these commodities. We also upgraded Meta Platforms (META) to a buy-equivalent 1 rating on Thursday. Despite the stock experiencing a two-day losing streak after reporting solid third-quarter results, we believe in the company’s potential and its ability to navigate through advertising spending volatility.

As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive trade alerts before Jim makes a trade. It’s important to note that no fiduciary obligation or duty exists or is created by receiving information from the Investing Club. The outcome or profit from trades is not guaranteed.

Overall, despite the challenges in the market, we remain focused on finding opportunities to invest and grow our portfolio.

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